Finland begins trialling ‘Universal Basic Income’ for unemployed

The two-year-long social experiment started with 2,000 randomly selected citizens on 1 January 2017.

Finland has become the first European country to start trialling a ‘universal basic income’ for unemployed people in a bid to reduce poverty, boost employment and cut government red tape.

The two-year-long social experiment, which started on 1 January, will see 2,000 randomly selected citizens who receive unemployment benefits paid a monthly income of E560 ($587).

Finnish government agency KELA, which administers social benefits, is responsible for the scheme, but will not require participants to report on how they spend the money. The amount will be deducted from any benefits they already receive and they will continue to receive it even if they find a job.

KELA’s Olli Kangas said that the idea behind the scheme was to remove the “disincentive problem” among the workless. Unemployed people may currently refuse to take a low-income or short-term position if they believe their financial benefits would be cut drastically under Finland’s complex and generous social security system.

As a result, the trial is attempting to remove fears of “losing out on something”, Kangas explained. “It’s highly interesting to see how it makes people behave,” he said. “Will this lead them to boldly experiment with different kinds of jobs? Or, as some critics claim, make them lazier with the knowledge of getting a basic income without doing anything?”

Kangas added that over time, the experiment could be extended to other low-income groups such as freelancers, small-scale entrepreneurs and part-time workers.

According to official data, the unemployment rate in Finland, a nation of 5.5 million people, was 8.1% in November 2016, amounting to 213,000 workless people. The average private sector income in the country is E3,500 per month ($3,626).