Is Finland’s basic universal income a solution to automation, fewer jobs and lower wages?

Mari Saarenpää with her dog Oiva in Paltamo, Finland. She was randomly selected to take part in the basic income experiment. Photograph: Tuomas Härkönen

Mari Saarenpää with her dog Oiva in Paltamo, Finland. She was randomly selected to take part in the basic income experiment. Photograph: Tuomas Härkönen

When he got the letter after Christmas saying he was entitled to an unconditional income of €560 (£478) a month, Mika Ruusunen couldn’t believe his luck. “At first I thought it was a joke. I had to read it many times. I looked for any evidence it might be false.”

But the father of two was not the victim of a scam. He has been selected to take part in an experiment being run by the Finnish government, in which 2,000 unemployed people between the ages of 25 and 58 will receive a guaranteed sum – a “basic income” – of €560 a month for two years. It replaces their unemployment benefit, but they will continue to receive it whether or not they find work. The government hopes it will encourage the unemployed to take on part-time work without worrying about losing their benefits.

Today, the Finnish economy continues to struggle in the wake of the financial crisis, which hit just as communications giant Nokia’s star was starting to wane. This left Ruusunen, who lost his job as a baker two years ago, struggling to find work. He was unemployed when participants for the basic income pilot were randomly selected, but had started a paid IT apprenticeship by the time he got the letter.

“For me, it’s like free money on top of my earnings – it’s a bonus,” he tells me. But he thinks the basic income will make a big difference to others who are unemployed, especially those who are entrepreneurially minded. “If someone wants to start their own business, you don’t get unemployment benefits even if you don’t have any income for six months. You have to have savings, otherwise it’s not possible.”

Juha Järvinen, another participant in the pilot scheme who lives in western Finland, agrees the benefits system holds the unemployed back. He has been unemployed for five years since his business collapsed. “I have done a lot for free – wedding videos, making web pages – because I’ve liked it. But before a basic income I would get into trouble if I got any money for that work.”

There is now a growing band of politicians, entrepreneurs and policy strategists who argue that a basic income could potentially hold the solution to some of the big problems of our time. Some of these new converts have alighted upon the basic income as an answer to our fragmenting welfare state. They point to the increasingly precarious nature of today’s labour market for those in low-paid, low-skilled work: growing wage inequality, an increasing number of part-time and temporary jobs, and rogue employers routinely getting away with exploitative practices.

This grim reality collides with an increasingly punitive welfare state. Our welfare system was originally designed as a contributory system of unemployment insurance, in which workers put in during the good times, and took out during temporary periods of unemployment. But a big chunk of welfare spending now goes on permanently supporting people in jobs that don’t pay enough to support their families. As the contributory principle has been eroded, politicians have sought to create a new sense of legitimacy by loading the system with sanctions that dock jobseeker benefits for minor transgressions.

Anthony Painter, a director at the RSA thinktank, paints a picture that will be familiar to viewers of Ken Loach’s film, I, Daniel Blake. “You are late for a jobcentre appointment – so you get a sanction. You’re on a college course the jobcentre doesn’t think appropriate, so you get a sanction. Your benefits are paid late, so you face debt, rent arrears and the food bank. That’s the reality for millions on low or no pay – they are surrounded by tripwires with little chance of escape.”

Read the complete article in The Guardian newspaper web site here.

 

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