The Finnish government ran a two-year trial to provide basic monthly income for 2,000 unemployed people even after they had found jobs. They were exploring alternatives to its current social security model. The results of the trial showed that while it did not motivate them to get a job to supplement their income, it did improve their wellbeing.
Economists argue that the lack of impact on employment was not surprising as many unemployed have few skills or struggle with difficult life situations or health concerns. Financial incentives would not solve the root of the issue.
On the other hand, most participants reported a psychological boost, and one said the basic income provided her the confidence to start a business with her friends.
The considerations factored in for the design and implementation of such benefits are multifaceted. Besides understanding the behavioral change of the recipients, basic income schemes have political implications as well. Higher taxes needed to pay for these schemes may make voters unhappy, and the political party in government may lose their mandate in the next elections.
Read the full article on Channel NewsAsia: Finland’s basic income trial boosts happiness but not employment
Analysis:
Unemployment is a complex issue to address. Governments have to take a systemic approach to address the problem of unemployment as it can be a symptom of deeper societal issues. Even in the Nordic countries like Finland where welfare is greater and income inequality is lower than the most countries, they need to adjust their systems to meet the needs of current issues.
Many people tend to look at Nordic countries and wonder why their own countries cannot provide similar welfare benefits. However, they are not aware of the history and context of how Nordic countries can implement such systems. There are unique conditions that Nordic countries have such as high levels of social solidarity and taxation, and a level of ethnic and cultural homogeneity which promote trust and cooperation. Their welfare model is not easily exported to elsewhere in the world.
Welfare systems have their own set of issues. Trials of universal basic income in different countries show the complexity of problems that governments are dealing with. In Canada, a basic income pilot was cancelled after a new party took over, and some of the recipients are now filing a lawsuit against the government.
Questions for further personal evaluation:
- Are you supportive of universal basic income? Why, or why not?
- Would Singapore’s society and economy benefit from a universal basic income scheme?
Useful vocabulary:
- ‘imposition’: the action or process of imposing something or of being imposed
- ‘overhaul’: a thorough examination of machinery or a system, with repairs or changes made if necessary
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