Daily Management Review

Will basic income experiment in Finland work out?


12/23/2016


Social Security Administration of Finland announced an experiment on unconditional basic income starting from January 1, 2017.



The organizers chose 2 thousand men by random-sampling algorithm. They will be receiving an unconditional basic income of 560 euros per month from January 9, 2017 and in the next two years. The participants will not be receiving unemployment benefits during this term. 

One of the experiment’s purposes is to find out whether unconditional income of € 560 will motivate people to find a job, including the low-paid. As reported, the payments will be terminated if a participant starts to receive allowance for child care, move abroad or joins the military.

Unconditional basic income is a sum paid monthly to citizens regardless of their employment status. In 2016, Switzerland decided to pay 2.2 thousand euro to residents, and after heated debates put the matter to vote. Surprisingly, majority eventually voted against getting a payment enough to pay for housing, food, clothing, and maybe for some entertainment. Canada and Finland have also expressed a desire to experiment with the basic income. 

Opponents claim that citizens, having everything they need, would not agree to work. Those in favor argue that people, as social beings, would not refuse their jobs at least for the sake of belonging to a group. They use opinion polls to show that only 4% would leave their jobs if they received unconditional income. In practice, however, good old-fashioned laziness may be stronger than, for example, fear to give up communicating with colleagues.

Workers and unemployed have repeatedly proven that opponents of unconditional basic income are right. For example, some citizens of Portugal once deliberately refused to work in summer thanks to high benefits for unemployed. They left their employees, preferring to live on the dole and spend that time on their own, and then resumed working in autumn. Entrepreneurs then complained that they could not find employees for several months.

In Finland, number those who refused work without good reason in 2015 reached 17 thousand people, which almost three times exceeded a figure of two years ago. Number of vacancies offered by government to the unemployed increased to 500 thousand, despite the fact that total number of unemployed, according to stat.fi in October 2016, amounted to 217 thousand people. Officials have recently even begun to deprive those who refuse the offered job of the benefits.

Officials have repeatedly stated The fact that the benefits prevent unemployed from looking for work. In 2014, for example, US Senator from Arizona John Kyl said that unemployment benefits are an obstacle to employment, because people receive the money regardless of whether they work or not.

Later, the senator said that he did not mean that, having received the money, people stop to look for a job, and only said that they are looking for it less active. Eventually, it is assumed that applicants expect to find a job that could be more or less in line with their expectations. Indeed, 40% of respondents in a study of American labor market said they weren’t actively searching a job, when they had some income. 59% completely agreed with the statement that they can just live for themselves by getting the payment.

 






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