Finland to end widely-publicised basic income trial after two years

Finland's two-year pilot scheme started in January 2017, making it the first European country to test an unconditional basic income.
Finland's two-year pilot scheme started in January 2017, making it the first European country to test an unconditional basic income.PHOTO: REUTERS

LONDON - The Finnish government has decided not to extend a basic income trial which has drawn much international interest, reported British media.

Finland's two-year pilot scheme started in January 2017, making it the first European country to test an unconditional basic income.

A random sample of 2,000 unemployed people aged 25 to 58 have been paid a monthly 560 euros (S$907), with no requirement to seek or accept employment. Should they find a job during the two-year trial, they still get to keep the money.

The government has turned down a request for extra funding from Kela, the Finnish social security agency, to continue the experiment, reported The Guardian.

"The eagerness of the government is evaporating," Olli Kangas, one of the experiment's designers told the BBC.

Payments to current participants will end next January and the Finnish government is now examining other ideas to reform its social security system.

It has also introduced legislation making some benefits for unemployed people contingent on taking training or working at least 18 hours in three months.

 
 

"The government is making changes taking the system away from basic income," Kela's Miska Simanainen told the Swedish newspaper Svenska Dagbladet.

The initial plan was for the experiment to be expanded in early 2018 to include workers as well as non-workers early in 2018, but that did not happen.

Without workers in the project, researchers are unable to study whether basic income would allow people to make new career moves, or enter training or education.

Professor Kangas told the Finnish public broadcaster YLE: "Two years is too short a period to be able to draw extensive conclusions from such a big experiment. We should have had extra time and more money to achieve reliable results."

The pilot's full results will not be released until late 2019, reported BBC.

Prof Kangas told BBC News another reform option being considered by Finnish politicians is a negative income tax.

Under that scheme, people whose income fell below a certain threshold would be exempt from income tax and would actually receive payments from the tax office.

Finland's unemployment rate of 9.2 per cent, higher than its Nordic neighbours.

That, and the complexity of the Finnish social benefits system, fuelled the calls for ambitious social security reforms, including the basic income trial.

The widely publicised basic income trial was aimed primarily at seeing whether a guaranteed income might incentivise people to take up paid work by smoothing out gaps in the welfare system.

Supporters argue that a universal basic income would provide a safety net and boost innovation, creativity and personal well-being, as well as helping the unemployed find temporary work, reported The Telegraph.

It would counteract the insecurity of increasing number of short term contracts offered employees and boost labour mobility by encouraging workers to take the risk of moving jobs.

US venture capitalist Sam Altman, who runs start-up funder Y Combinator, is organising a basic income experiment. Y Combinator will select 3,000 individuals in two US states and randomly assign 1,000 of them to receive US$1,000 per month for three to five years.

Their use of the unconditional payments will be closely monitored, and their spending compared with those who do not get the basic income, reported BBC.

In 2016, Swiss voters overwhelmingly rejected a proposal to introduce a guaranteed basic income for all.

Supporters of the proposal had suggested a monthly income of 2,500 Swiss francs (S$3,389) for adults and also 625 Swiss francs for each child.