Basic income pass for working age population

LAB2050
LAB2050
Jul 10 · 9 min read

[IDEA2050_008E]

Jae-eun Seok, Professor, Department of Social Welfare, Hallym University

Photo by Shutterstock

Professors are often the envy of people in other lines of work. It is mainly because they enjoy a sabbatical — a year of paid leave — every several years. Recently, some universities raised the criteria for sabbaticals, being conscious of the envious eyes of society.

We ought to spread good traditions and eliminate bad ones. But does shortening sabbaticals for the sake of ‘fairness’ do much good to all of us? A more desirable scenario would be adopting sabbatical schemes in other fields of occupation as well.

A sabbatical program called ‘Rest Program’ for social workers was initiated 15 years ago by a private social welfare foundation, and its reception was positive. The program was much needed for social workers who listened to and alleviated difficulties of others but did not have enough time to take care of themselves. It is a pity that this program did not spread to the entire industry.

Everyone Needs A Sabbatical

I’ve had several sabbatical years as a professor. Going on a sabbatical is very beneficial. Having a rest refreshes my body and mind. It gives me an opportunity to broaden and deepen my thoughts by looking at my work from a distance and a different angle. During sabbatical year, I can build a foundation for my research by exploring basic studies or writing books, which I was able to do during term time because of professional duties. I could spend some time to build new networks. It is a time to save the energy to work for the next few years.

What I realized during my sabbatical years was that creative and innovative ideas blossomed in laziness and idleness. Had I not gone on sabbaticals, I wouldn’t have been able to maintain my passion for my work, having been burnt out already.

Everyone needs a rest. What would happen if everyone, including housewives and those who are out of job, could enjoy sabbaticals? What if everyone could go on a few years of leave in their lifetime while getting paid?

Wouldn’t there be more people preparing for a better tomorrow by realigning their priorities, recharging themselves and learning new things? Wouldn’t this change our society for the better?

A Right to Focus on Dreams

A 32-year-old screenwriter with a promising future starved to death in 2011. It was hard to believe that such an incident happened in Korea, the 11th largest economy in the world. This led to legislation of the Artist Welfare Act, but not many artists are eligible to receive benefits because of its stringent criteria. The ineffectiveness of the law was demonstrated by a 40-year-old actor who died for the same reason in his tiny room in 2015.

The Artist Welfare Act was revised on May 4, 2016, but not many artists are eligible for the benefits. Image by the Ministry of Culture, Sports and Tourism

Whenever I hear these stories, adopting universal sabbaticals seems essential. There must be a way for many talented people to focus on their dreams without worrying about making their ends meet at least for a few years, until they can finally demonstrate their potential. Success is not guaranteed, but their life will change because at least they tried. The failure would give them invaluable lessons for the next phase of life.

I have had similar thoughts while working as the head of the University for Creative Korea project over the past five years. I was able to collect some sound ideas by hosting a competition for elderly-friendly ICT services. Some of the ideas were developed further by student entrepreneur clubs with the help of professional mentors. But those ideas were rarely turned into actual businesses as students rarely started a business. There were simply too much uncertainties to start a business.

What if they had stability unconditionally provided for a fixed period? They would have tried a little longer and perhaps, that would have triggered innovation beneficial for themselves and our society.

Of course, innovation requires more than just stability. There should be a sound ecosystem to invest in startups and supports in areas such as housing should be provided in some cases. But the essence of all is income for living. More youths will invest their time and effort for their dreams if financial stability is guaranteed.

Time to Be Prepared for Take 2 in Life

The older generation, maybe more than the youths, needs sabbaticals. The knowledge and skills they learned at their school age become obsolete when they reach late middle age. To cope with ever-changing industrial and technological landscapes, and to successfully lead the second part of life, they need to take some time off from work to learn.

These opportunities are rarely given to the middle-aged for complex reasons. As they are often breadwinners of their families, taking time off from work could affect their children and their dreams. This means benefits should be given to individuals, not to households.

Basic Income Is As Good As Sabbaticals

Basic income has been garnering attention recently for its underlying rationales. It is a system that universally provides a certain amount of income to every citizen regardless of their labor, contribution or need.

It started with an idea that giving everyone an unconditional right to live a stable life would allow them to participate more actively in meaningful work, learning and activities. This would, in turn, contribute to sustainable development of communities as well as growth of individuals.

Basic income is a necessary condition to foster active citizens (Choi, 2019) and can be a sturdy solid foundation for them to pursue innovative values even amid high uncertainties.

The asymmetry between capital and labor may become more severe in the era of cognitive capitalism that utilizes hyper-connected networks and big data. Photo by Pxhere

Some argue that basic income is necessary because of the large changes in jobs. The decline of job availability brought by artificial intelligence, robots and smart factories, the rise of temporary jobs driven by platform economy, and the advent of completely new types of labor such as YouTube creators are some of the changes occurring in today’s society. These changes exacerbate instabilities and uncertainties in people’s lives.

The asymmetry between capital and labor may intensify in the era of cognitive capitalism. Giant tech companies such as Google, Facebook and Amazon that utilize hyper-connected networks and big data are behind this change. The social security system is supposed to alleviate inequality and bipolarisation caused by this, but the system revolving around social insurances based on labor income would not be enough to mitigate side effects of all the changes going around.

A solution lies in an alternative welfare system that corresponds to a new production system. Offe (1997) suggests citizenship-based universal basic income for the same reason.

A Realistic and Feasible Suggestion, Four Sabbatical Years

There is a heightened interest in universal basic income in Korea, but not much progress has been made in social discussions due to concerns over financial capabilities and economic conditions.

The introduction of basic income should be gradual to minimize repercussions. I would like to suggest a ‘basic income pass for young and middle-aged adults,’ which would be both feasible and effective. It is a system to minimize financial burdens while taking advantage of basic income.

Basic income here not only redistributes currencies, but also guarantees sabbatical periods by redistributing time. This is in the similar context with Offe’s suggestion (2000) on sabbatical accounts and the ‘individual economic activity accounts’ (Hong, 2018). The individual economic activity accounts implemented in France and Germany were freely used by account owners and included all work experiences.

The ‘Basic Income Pass for Young and Middle-Aged Adults’ intends to take advantage of basic income while minimizing financial burdens. Photo by Shutterstock

My suggestions could be expanded in following details. First, we could introduce a ‘basic income pass’ which young and middle-aged adults can use for a fixed period. Second, we could guarantee income for a minimum living standard. It would be around 500 thousand won per month if it is set to 30% of the median income which is the level of subsistence.

Third, we could limit the benefit period to four years at first. Two years are allocated to young adulthood and two to middle age, and individuals can receive it as they need.

Fourth, anyone can apply for and receive benefits within limits. Benefits are universal, but those who are willing to relinquish their benefits can do so. Fifth, benefits are provided for six months per each application for administrative efficiency.

19 Trillion KRW A Year Can Move The Needle

This plan has many advantages. First, individuals including young people looking into their career paths, those in special job sectors including artists, the working population in job transitioning period preparing for the second part of their life, parents bearing and rearing children and family of caregivers can plan their income for a certain period of their life.

Second, all citizens have an opportunity to benefit from the system. The working-age population would be the beneficiaries first, but child allowances and basic pensions could be combined with basic income later without the age and labor classification. Third, it is an unconditional welfare system based on citizenship, which means every citizen is eligible for it. Fourth, it guarantees minimum living expenses.

Fifth, citizens can choose whether and when to use it, which maximizes the merits of the system. Sixth, it increases feasibility and minimize financial burdens by limiting the benefit period.

Seventh, it allows the government to flexibly adjust the benefit period based on the changes in the production system and labor market. Eighth, it is a more efficient and effective system that causes less moral hazards compared to the approach that complements and adds exceptions to the current social security system.

It takes 19 trillion won, around 1.03% of GDP, to implement this as of 2019. The budget was calculated with an assumption that 10% of the population aged between 25 and 64 receive basic income every year, as they can receive benefits for maximum four years during the 40-year life period. The income level was set to 30% of the median income, which is the subsistence level and minimum cost of living.

Monthly basic income of 512 thousand won * 12 months * [young and middle-aged adult population (25–64) * 0.1] = 19.3567 trillion won

* 10% of young and middle-aged adult population (25–64) as of 2019 = 3.15 million

* Basic income budget scale: around 1.03% of GDP

Raising Solidarity Fund through Social Security and Cognitive Capital Taxes

It can be operated along with social security benefits in the initial stage where the benefit period is limited, but it needs to replace the social security benefits in the long term. However, unemployment and youth allowances currently being reviewed can be alternatives of basic income.

Diversifying financial sources can be helpful to fund basic income. It would be worthwhile to review social security taxes that impose earmarked basic income taxes on consumption expenditures and all types of income. Data and digital taxes on cognitive capital should be reviewed as well.

Moreover, a social solidarity fund should be raised to stably support basic income scheme. The demand for basic income benefits is unpredictable, which means it is difficult to fund it in a stable manner with general accounting. The government can review ways to raise the social solidarity fund through social security, cognitive capital and other forms of taxes.

After raising the fund to operate basic income for a year or two, the government can allocate a budget to the social solidarity fund every year for young adults entering the working age bracket.

The problem is that the demand is likely to be concentrated in the initial phase, which is why it is important to find a way to keep it at an appropriate level. If the government controls the demand and randomly prioritize applications, it would infringe the principle of unconditional benefits. But the government would have to coordinate the demand based on the size of the fund in the initial stages.

This ‘basic income pass for young and middle-aged adults’ is a gradual and moderate approach that cements cracks and complement limitations of Korea’s social security system. At the same time, it can be a realistic, effective and practical alternative of any other basic income schemes that have been suggested or reviewed as it contains future-oriented values that support free and adventurous choices of individuals based on stability.

Humans are naturally freer and more creative when their freedom is backed by stability. The ‘basic income pass for young and middle-aged adults’ can be the perfect alternative for future society as it provides stability. Future society would be full of unlimited opportunities and instability coming from seismic shifts such as the fourth industrial revolution.

Jae-eun Seok, Professor of the Department of Social Welfare, Hallym University

LAB2050

다음세대 정책실험실

LAB2050

Written by

LAB2050

다음세대 정책실험실 Policy Lab for Next Generation

LAB2050

LAB2050

다음세대 정책실험실

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade