IV: How Universal is Universal Basic Income?
Marjukka Turunen, director at Kela, August 2017
When we get old, things that are destined to come about start to happen, and at last we’re capable of believing those things we once doubted, and even when we find it difficult to believe that such things can happen, we believe that they will happen.
Jose Saramago, Balthasar and Blimunda
Universal Basic Income, everyone’s favorite pie in the sky. Neoliberals think of it fondly because nothing makes them more excited than defunding welfare and streamlining bureaucracy. Socialists want to use basic income to tackle inequality and poverty. Both sides agree UBI could save us when automation decimates the workforce. One more thing they have in common is that they only ever talk about it in speculative terms. In the last couple of years UBI gained traction in the mainstream but without real progress. In 2016, Switzerland held a referendum about introducing basic income. It was, however, a grassroots initiative without support from any political party and it lost by a landslide. In Oakland, the Venture Capital fund Y Combinator is running a basic income study, but it’s just a bunch of tech investors sponsoring a small project they fancy.
And then, there was Finland.
The Nordic country made headlines last year when it started a basic income trial, offering 2,000 unemployed citizens 560 euro a month. It was a small sum and a limited group but proponents of UBI were triumphant. Basic income was not just a utopian talking point anymore — it had been legitimized. But the optimism turned out to be premature yet again. We already know that the Finnish government will not expand the trial, even though the results will not be fully analyzed by late 2019.
Before Fins decided against moving forward with the project, I talked to Marjukka Turunen from Kela (Social Insurance Institution). She has been responsible for implementing the experiment and we discussed the details, hopes, and challenges associated with rolling out Europe’s first attempt at basic income.
Wojtek Borowicz: The idea of Universal Basic Income has been rising in prominence recently. What happened?
Marjukka Turunen: European countries are facing the problem of their social security legislation being past due. They’re not keeping up with changes in the working life. For example, in Finland unemployment benefits are designed to support you if you’re fully employed or fully unemployed but they don’t account for part-time work and entrepreneurship. We need more flexible and innovative solutions. That’s part of the reason why people have been talking about basic income in the recent years. It could be part of the solution for social security in western countries.
Talking about flexibility, should universal basic income exist alongside a welfare state or instead of it? Should it replace or accompany other social security benefits?
That’s a good question and I don’t have an answer for it. I look at it from the implementer’s side. At Kela, we’re taking care of all basic social security benefits in Finland. Right now, there are over 40 benefits in our system. And there are other institutions with other benefits, too. We’ve been building our social security system for decades, as have been all other countries. So if we decided to replace everything with basic income all at once, it would be too dramatic. You cannot just wipe out every piece of the puzzle and replace it with a single element. We don’t know how people would behave.
Right, but the fundament of this question is where would the funding for basic income come from. From the rich via taxes or from the poor via defunding other social benefits?
Financing is a big problem if you’d seriously think about basic income for everyone. If we were to give everyone in Finland the same amount we give people in this experiment, 560 euro a month, it would cost 15 billion euro a year. That’s about the same amount we pay for all the 43 benefits we provide. So we kind of have the funding there and we’re actually thinking about reorganizing the benefits, because we have too many of them.
But money is only one of the issues. The idea of giving the same amount to everybody — young or old, rich or poor, people who are able to work or unable to work — and not expect them to do anything is a bigger problem standing in the way of basic income becoming a wider benefit in Finland. Especially now, when we’re discussing if people should participate more in society to be eligible for benefits.
15 billion euro is a lot of money. And that’s just at the current payout rate. But the poverty line in Finland is around 1500 euro. Is that 560 euro enough to measure the potential of basic income?
The amount we pay in this experiment is close to the basic unemployment benefit, 730 euro a month on average. But sometimes it’s not worthwhile for people to look for a job if finding one means losing the unemployment benefit, because they can end up with less money. So we want to see if the unconditional 560 euro will be enough for people to go back to work. That’s our main goal here.
Of course it’s not enough for people to survive but there are other benefits available as well. The biggest cost is housing, so you get the housing allowance if you don’t have enough income. You might also be entitled to social assistance.
Why are you only targeting people on unemployment benefits? Wouldn’t the data be more conclusive if you had a comparison between different groups?
We had to compromise. The government ruled the experiment has to start at the beginning of 2017 so we were in a hurry with the legislation. We also only had a 20 million euro budget. That’s not enough money to take a lot of people into the experiment, so we narrowed it down. We discussed enrolling students, employed people, and self-employed but eventually decided to start with the unemployment benefits recipients.
There was a lot of arguing in the media about why is this only 2,000 people and only unemployed. But as I said, it’s a compromise. We had to narrow it down and decide on something to start the experiment. Otherwise it wouldn’t be possible. And we’re already talking about running another experiment including the self-employed and other groups as well. I also wanted to clarify that our experiment is not only about the 2,000 unemployed who receive the basic income. We also have the control group we’re monitoring and gathering information from — these are the 175,000 people receiving the basic unemployment benefits.
Will there be another stage of the experiment including other groups?
It’s still to be decided. Last April our government had a mid-term review and they wanted to renovate the social security system. They want to use the data from the basic income experiment, so we’re waiting for the results and then we’ll figure it out. One idea I like is to give the same basic income to every recipient of social security benefits and then, case-by-case, top it up with a housing allowance and child support. It would harmonize our system. I think it’s a great idea.
How would the success of your study look like?
Depends on who you ask. For our government, it will be a success if the 2,000 people enrolled in the experiment take on jobs. But I think it’s already a success. It’s drawing attention to the bureaucratic side of the social security in Finland. It shows there is too much burden on the administration and on the recipients.
We’ve been building up our social security system from the 1930s’. The puzzle is growing all the time and getting really, really complex and it’s creating traps for people. They’re thinking: should I apply for a part-time job and lose my unemployment benefit? Or: if I get this benefit, does something else happen? It’s hard for people to figure it out and they end left without a safety net or jumping from one benefit to another. So from my point of view, it’s already a success.
You’re a few months into the experiment. Are people receiving the basic income already returning to the workforce?
We don’t have enough data yet. But we are getting feedback from many recipients and they’re also sharing it on social media. They’re very happy. They think it’s going to be key to solving the problems we have, especially the bureaucratic side. With the unemployment benefit, you have to reapply for it every four weeks and if you’ve been working part-time you need to bring in the paychecks. Then we need to process this. Many people who pick up part-time work don’t know if they will receive their unemployment benefits and how much will it be. But this is only feedback and comments from the media, we don’t have the full data yet.
When does the experiment end?
At the end of 2018.
Any surprising insights so far? Anything you didn’t expect?
There are bits and pieces of feedback that expose problems all around our social security system. For example that we don’t have enough people to take care of the elderly. One participant told us her parents need help but are not old or sick enough to be admitted to a hospital. She can now stay home with them thanks to basic income. Students who are in the experiment are happy because unlike with the student benefits, they don’t have to report progress in their studies and it gives them more time and freedom.
We’ve been building up our social security system from the 1930s’. The puzzle is growing all the time and getting really, really complex and it’s creating traps for people.
If the experiment is successful, will Finnish government expand the payouts?
I don’t know. It’s for them to decide. It raises a lot of questions. For example, our constitution says you cannot put one group of people in a better financial position than another. So if we widen the basic income to all the unemployment people in Finland, that begs the question: what about the health care benefits recipients? What about the social assistance? It might be against our constitution, so it’s a really hard question.
Do you think Universal Basic Income on a global scale is realistic in our lifespan?
That depends on what you mean by universal basic income. It’s a controversial term and hasn’t been defined enough. It also depends on whether the idea is to tackle poverty or is it an incentive to take on work. Because it might not be as much as 2,000 euro, but some kind of safety net is coming in different places around the world. I believe the idea will be implemented one way or another in different parts of the world.
