By now you’ve probably heard of universal basic income. Giving everyone a set amount of money is billed as the solution to the the changing nature of work, when automation renders large swathes of the population unemployable. It has a surprising amount of political support, with proponents saying it can reduce both poverty and bureaucracy.
Now, thanks to Finland, we will get an idea of how basic income programs might work in practice. For the next two years, the Finnish government is handing out €560 ($583) tax-free every month to a group of citizens.
In this trial period, 2,000 people aged 25 to 58 will get the monthly stipend and won’t have to report how they spend it. The trial will determine if basic income can become a “a blueprint for the Finnish social security system,” the Social Insurance Institution of Finland, or Kela, said. The scheme isn’t fully universal. Only people on unemployment benefits will be eligible and they will keep getting the money even if they get a job.
Many people say that a basic income removes the incentive for people to find work, but Finland doesn’t see it that way. Instead, the government believes standard unemployment benefits keep people from looking for work because they lose their benefits once they find a job. Under Finnish logic, people on basic income will take jobs they might otherwise not have considered such as self-employment or casual work because their benefits won’t be cut. Officials also hope they can reduce the headache of coordinating Finland’s complex social security measures, which require recipients to report when they are in and out of work.
If successful, the program should cut Finland’s unemployment rate, which at 8.8% in November, according to the EU’s statistics office, is high by Nordic standards. In Sweden and Denmark, unemployment is below 7%; it’s about 5% in Norway.
Finland is implementing partial basic income because a report last year (pdf) found that a universal program would be too expensive. However, other countries are testing the idea. The Economic Security Project, a coalition of technologists, investors, and activists in the U.S., announced last month that it’s committing $10 million over the next two years to see if universal basic income could “ensure economic opportunity for all.” The Netherlands will run a smaller scheme this year and Scotland is investigating trials.
Finland’s experiment is the largest so far. Already researchers are recommending that the scheme be extended next year to people under 25 and those on low incomes. Whatever the outcome, the Finnish experiment seems a clear step towards testing universal basic income and providing some much needed data on the idea.