Published: Sun, February 10, 2019
Worldwide | By Isabel Fisher

Basic income trial: creates happiness, but not jobs

Basic income trial: creates happiness, but not jobs

Finland, a Nordic champion of social welfare, just spent the last two years finding out.

"You kind of got this idea you have two years, you have the security of €560 per month". Unlike with regular unemployment benefits, the experiment's participants were free to top up their allowance by taking up part-time jobs and weren't required to actively seek a full-time position.

Finland's basic income scheme did not spur its unemployed recipients to work more to supplement their earnings as hoped, but it did help their well-being, researchers said yesterday, as the government announced the trial's initial findings.

"The basic income experiment is important and can tell us a lot about how unemployed people behave when they are given more freedom in the labor market", said Heidi Schauman, chief economist at Aktia Bank Oyj.

The study involves giving a "basic income", a guaranteed but small monthly income with no strings attached, to 2,000 unemployed people rather than standard state assistance.

Finland's Minister of Health and Social Affairs Pirkko Mattila said the impact on employment of the monthly pay cheque of €560 (S$860) "seems to have been minor on the grounds of the first trial year".

The program was created by the Social Insurance Institution (Kela), which is a Finnish government agency.

"The basic income may have a positive effect on the wellbeing of the recipient even though it does not in the short term improve the person's employment prospects", Ylikanno added.

The BBC recently reported on the results of Finland's new basic income program.

The amount of earned and entrepreneurial income was an average of 21 euros lower among the participants. However, 55 percent of them described their health as good or very good - compared to only 46 percent of the control group.

Those on the basic income were also more confident in their possibilities of finding employment. In addition, they felt that there is less bureaucracy involved when claiming social security benefits and they were more often than the control group of the opinion that a basic income makes it easier to accept a job offer or set up a business.

Researchers from Kela are now busy analysing all of their results, to figure out what else - if anything - they can tell us about basic income's uses and shortcomings.

Proponents assert that a basic income can empower people to start new businesses and have a safety net, no matter how well their venture does.

The OECD also warned that UBI could, in fact, raise Finland's poverty rate from 11.4 percent to 14.1 percent.

The recipients of a basic income were selected through random sampling among those who in November 2016 received an unemployment benefit from Kela.

The data shows that the people who were selected to participate in the trial worked on average only a half-a-day more than people in the control group.

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