Finland’s basic income experiment

Apr 3, 2017


By Lyndsey Hall 

With advances in technology rendering many jobs obsolete, talk of a national basic income has been bubbling under the surface for years. It is often touted as a way of cutting welfare bureaucracy as well as poverty, providing individuals with a basic income that they can top up by finding employment.

Now, Finland is providing a tax-free monthly payment of €560 (£490) to 2,000 unemployed Finns for two years, costing the government €20m. The idea behind the experiment by social insurance agency Kela is to see whether the basic income will encourage the unemployed to take on short-term jobs.

Finland has the highest rate of unemployment in Northern Europe, with 213,000 unemployed out of a working population of 2,413,000 (8.1%). Short term contracts have become a key feature of Finland’s labour market.

The problem with the benefit system in many cases is that it provides little incentive to go into low-income jobs, because welfare is reduced if you start earning.

“Every single euro that a person earns diminishes his or her social benefits. In some cases an unemployed person is afraid of losing their benefits in the future, if he or she receives a temporary employment,” says Olli Kangas, head of society relations at Kela.

The 2,000 participants were selected at random from those on the lowest rate of unemployment benefit. After tax, the new basic income of €560 will be equal to or more than what they were already receiving. The difference is that they will receive it automatically, without filling in a form, and even if they get a job it will not change for the next two years.

Liisa Ronkainen, 26 from Helsinki, has been out of work for over half a year and was chosen to take part in the experiment.

“I was so surprised when I got the letter, and a bit sceptical too. While I’m unemployed I will only get €36 more per month with the basic income. I’ve always been positive about the idea though, so it was nice to be one of those who were chosen. Now that I will get a salary in addition to the basic income I might try even harder [to find work].”

The trial has attracted international attention, with many planning trials of their own. The eyes of the world governments will be on Finland as they answer the burning question about how out of work people will respond to the idea of a basic income. Some might start a new business, return to education or change careers, but others might use it as an excuse to remain jobless.

In June 2016, Switzerland voted overwhelmingly to reject paying all adults a basic income, but four Dutch cities are planning to take part in a trial – Groningen, Tilburg, Utrecht and Wageningen. The Canadian province of Ontario will hold its own trial, and Scottish councils in Fife and Glasgow may also stage a trial.

What are your thoughts on the concept of a national basic income? Would it encourage the unemployed to find work by boosting their benefits rather than replacing them? Or do you believe most would choose to remain out of work? Join the conversation in the comments or on Twitter and Linkedin.


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