Finland's basic income trial boosts happiness but not employment
Finland's basic income trial
boosts happiness but not employment
Friday, 8 February 2019 13:40 GMT
* Two-year trial of basic income ended last month
* Little impact on employment but boost
* Experiment watched as govts seek to
reform welfare (Adds comment from trial's economist, OECD view)
By Anne Kauranen
HELSINKI, Feb 8 (Reuters) - 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 wellbeing, researchers
said on Friday as the government announced initial findings.
The two-year trial, which ended a month
ago, saw 2,000 Finns, chosen randomly from among the unemployed, become the
first Europeans to be paid a regular monthly income by the state that was not
reduced if they found work.
Finland -- the world's happiest country
last year, according to the United Nations -- is exploring alternatives to its
social security model.
The trial was being watched closely by
other governments who see a basic income as a way of encouraging the unemployed
to take up often low-paid or temporary work without fear of losing their
benefits. That could help reduce dependence on the state and cut welfare costs,
especially as greater automation sees humans replaced in the workforce.
Finland's minister of health and social
affairs Pirkko Mattila said the impact on employment of the monthly pay cheque
of 560 euros ($635) "seems to have been minor on the grounds of the first
But participants in the trial were
happier and healthier than the control group.
"The basic income recipients of the
test group reported better wellbeing in every way (than) the comparison
group," chief researcher Olli Kangas said.
Chief economist for the trial Ohto
Kanniainen said the low impact on employment was not a surprise, given that
many jobless people have few skills or struggle with difficult life situations
or health concerns.
"Economists have known for a long
time that with unemployed people financial incentives don't work quite the way
some people would expect them to," he added.
Sini Marttinen, 36, had been unemployed
for nearly a year before "winning the lottery", as she described the
Her basic income gave her enough
confidence to open a restaurant with two friends. "I think the effect was
a lot psychological," the former IT consultant told Reuters.
"You kind of got this idea you have
two years, you have the security of 560 euros per month ... It gave me the security
to start my own business."
Her income only rose by 50 euros a month
compared to the jobless benefit she had been receiving, "but in an instant
you lose the bureaucracy, the reporting", Marttinen said.
Mira Jaskari, 36, who briefly found a
job during the trial but lost it due to poor health, said losing the basic
income had left her feeling more insecure about money.
The centre-right government's original
plan was to expand the basic income scheme after two years as it tries to
combat unemployment which has been persistently high for years but reached a
10-year low of 6.6 percent in December.
That followed the imposition of benefits
sanctions on unemployed people who refused work.
The basic income has been controversial,
however, with leaders of the main Finnish political parties keen to streamline
the benefits system but wary of offering "money for nothing",
especially ahead of parliamentary elections due in April.
Prime Minister Juha Sipila's Centre
Party has proposed limiting the basic income to poor people, with sanctions if
they reject a job offer, while Conservative finance minister Petteri Orpo says
he favours a scheme like Britain's Universal Credit.
The higher taxes that the Organisation
for Economic Co-operation and Development (OECD) says would be needed to pay
for basic income schemes might also be off-putting for voters.
In a review of the Finnish scheme last
year, the OECD warned that implementing it nationally and cost-neutrally for
the state would imply significant income redistribution, especially towards
couples from single people, and increase poverty.
The researchers have acknowledged that
the Finnish pilot was less than realistic because it did not include any tax
claw-back once participants found work and reached a certain income level.
Swiss voters rejected a similar scheme
in 2016. Italy is due to introduce a "citizens' wage" in April in a
major overhaul of the welfare state, which will offer income support to the
unemployed and poor.
Trial participants were generally
positive, however, with Tuomas Muraja, a 45-year-old journalist and author,
saying the basic income had allowed him to concentrate on writing instead of
form-filling or attending jobseekers' courses.
He said the end of the two-year trial,
during which he published two books, had made it difficult again for him to
accept commissions, because "I ... can earn only 300 euros per month
without losing any benefits".
"If people are paid money freely
that makes them creative, productive and welfare brings welfare," Muraja
told Reuters about his experience of the pilot.
"If you feel free, you feel safer
and then you can do whatever you want. That is my assessment."
($1 = 0.8817 euros) (Reporting by Anne
Kauranen; Additional reporting by Attila Cser and Philip O'Connor; Editing by
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