Finland's get-a-job plan: Pay basic income

Pilot scheme will pay recipients even if they find work; 2,000 to be chosen randomly

HELSINKI • Finland is pushing ahead with a plan to test the effects of paying a basic income as it seeks to protect state finances and move more people into the labour market.

The Social Insurance Institution of Finland, known as Kela, will be responsible for carrying out the experiment that would start next year and include 2,000 randomly selected welfare recipients, according to a statement released on Thursday.

The level of basic income would be €560 per month (S$855), tax-free, and mandatory for those picked.

"The objective of the legislative proposal is to carry out a basic income experiment in order to assess whether basic income can be used to reform social security, specifically to reduce incentive traps relating to working," the Social Affairs and Health Ministry said.

To assess the effect of a basic income, the participants will be held up against a control group, the ministry said. The target group will not include people receiving old-age pension benefits or students.

The level of the lowest basic income to be tested will correspond with the level of labour market subsidy and basic daily allowance.

Finnish authorities were clear on one thing as they embark on their study: "An experiment means that, at this point. Basic income will not be paid to the whole population."

Ms Hanna Mantyla, the Minister of Social Affairs and Health, said in April that the project was needed because the Finnish social security system faced "big challenges in the future" if it was not simplified, the Indpendent reported.

The newspaper also quoted Professor Olli Kangas, leader of the working group on Finland's plan, as saying "it would encourage people who are afraid of losing their unemployment or other benefits to take short-term jobs".

The idea of a basic income, or paying everyone a stipend, has gained traction in recent years.

It was rejected by a wide margin in a referendum in Switzerland in June, where the suggested amount was 2,500 francs (S$3,500) for an adult and a quarter of that sum for a child.

Supporters of the Swiss plan said that introducing a monthly income for adults and children under 18 no matter how much they work would promote human dignity and public service.

Opponents, including the government, said it would cost too much and weaken the economy.

The idea of fixed income has also drawn interest in Canada and the Netherlands.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on August 27, 2016, with the headline 'Finland's get-a-job plan: Pay basic income'. Print Edition | Subscribe