Finland's widely publicised basic income trial to end

Finland's jobless rate stands at 9.2 per cent. That, and the complexity of the Finnish social benefits system, had fuelled the calls for ambitious social security reforms, including the basic income trial.
Finland's jobless rate stands at 9.2 per cent. That, and the complexity of the Finnish social benefits system, had fuelled the calls for ambitious social security reforms, including the basic income trial.PHOTO: REUTERS

Sample group of 2,000 jobless to stop getting paid next January

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

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

A random sample of 2,000 unemployed people aged 25 to 58 are being paid a monthly €560 (S$905), 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," Professor Olli Kangas, one of the experiment's designers, told the BBC.

The payments 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 researcher Miska Simanainen told Swedish paper Svenska Dagbladet.

The initial plan was for the experiment to be expanded early this year to include the employed as well as jobless, but that did not happen.

Without employed people in the project, researchers cannot study whether basic income would allow people to make new career moves, or enter training or education.

Prof 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 next year, reported BBC. Another reform option being considered by Finnish politicians, Prof Kangas told BBC News, 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 stands at 9.2 per cent, higher than its Nordic neighbours.

That, and the complexity of the Finnish social benefits system, had 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 said a universal basic income would provide a safety net and boost innovation, creativity and personal well-being, as well as help the unemployed find temporary work, reported The Telegraph.

It would counteract the insecurity of rising number of short-term contracts for employees and boost labour mobility by encouraging people to take the risk of moving jobs.

The basic income idea has been taken up by US venture capitalist Sam Altman. His start-up funder Y Combinator will select 3,000 individuals in two US states and randomly assign 1,000 of them to receive US$1,000 (S$1,300) per month for three to five years, without conditions, the BBC reported.

But others have rejected the basic income idea. 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$3,400) for adults and 625 Swiss francs for each child.

A version of this article appeared in the print edition of The Straits Times on April 25, 2018, with the headline 'Finland's widely publicised basic income trial to end'. Print Edition | Subscribe