The basic income experiment in FinlandSocial Innovation Summit 26.10.2016

Henna Keränen, Sitra

@KeranenHenna @SitraFund

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“A basic income is an income unconditionally paid to all on an individual basis, without means test or work requirement.” Van Parijs (1992: 3)

• Full basic income– replaces all insurance-based benefits

• Partial basic income– Replaces all basic benefits (around 600 euros

per month) but almost all insurance-based benefits left intact

• Negative income tax– Income transfers via taxation– Possible in 2018

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Basic income models

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Basic income: shared values and tricky issues

1. Liberal mindset: trust in people

2. A will to reduce bureaucracy

3. A will to boost the employment rate

1. The employment rate?

2. Other social security benefits?

3. How much is enough?

What would be the right amount?

Would you work less if you received 600 € per month?

• First mentioned in the 1970´s (negative income tax)

• 1980´s (citizen’s income): threat from automation

• After the 1990´s depression: an increased flexibility in the job market

• 2000´and 2010´s: A way to improve incentives to work

• 2007: a committee for redesigning social welfare5Sitra • Henna Keränen • 26.10.2016 •

A short history of basic income

• If Finland wanted to test universal basic income, this would be best done using a field experiment

• Negative income tax is the most viable model

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Sitra, Tänk & Tela 2014

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Prime Minister Juha Sipilä’s (centre) governmental programme 2015: the basic income pilot study will begin

• New government was ready for the basic income experiment The Centre Party, the True Finns Party and the Coalition Party

• Prime minister´s party has been calling for basic income for years• The weight of the previous government reforms did not happen • Expensive and ineffective social security system with a rising

national debt reforms needed

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Political momentum

• Our current social welfare system was built in 1960s, 70s and 80s

• The gig-economy & non-standard employment• Bureaucratic traps• Shifts in employment/social security statuses may cause

problems and uncertainty among the benefit recipients • To simplify and tighten the basic security safety net: social

(security) stress

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Basic income is seen as a solution to a number of problems

• Which models are the most suitable for the experiment?

• What is the level of the monthly payment? (Living costs vary.)

• How can we combine basic income with income-related benefits and other basic benefits?

• Tax treatment of different models (flat or progressive?)

• Strengths and weaknesses of different models EU legislation and the Finnish Constitution

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Mission impossible? Or is it?

• 600 euros per month• Replaces minimum benefits

• Not housing benefits• Sample of unemployed job seekers

• 25-58 years of age• 2000 people• Two years

• Estimated costs 8.8 million euros for two years• The government is willing to widen the

experiment in 2018.

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#BasicIncome

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