Trends to watch: a universal basic income?

08 March 2017
by Catherine MALLET

The debate on universal basic income has recently resurfaced, which you may know if you have been following French politics. Benoît Hamon, the socialist candidate who was running in the French presidential election, made the proposal for a universal basic income (regular sum paid to all citizens or residents whether or not they are in work) one of the key points of his manifesto.  The idea is to compensate for the possibility of large-scale job losses brought about by digital automation, among other things. Funding such a programme however, is argued to be too expensive for many countries, but supporters of universal basic income argue that it can be more efficient and more equitable than traditional welfare systems.

Several experiments have been launched to test their impact, including in Finland and in Utrecht, (The Netherlands), and in Switzerland a referendum on the issue was organised last year. Finland has become the first country in Europe to pay its unemployed citizens an unconditional monthly sum. Under the two-year, nationwide pilot scheme, which began on 1 January, 2,000 unemployed Finns aged 25 to 58 receive a guaranteed sum of €560. The income replaces their existing social benefits and will be paid even if they find work. The idea is also being considered in Scotland by Glasgow City Council who last month met with Guy Standing, the radical economist who founded the Basic Income Earth Network, who encouraged them to pilot a “universal basic income” in parts of Fife and Glasgow.

Universal basic income is not to be confused with minimum income schemes[1]. Basic income schemes are strictly individual (with no condition regarding the income of other members of a household), truly universal income is allocated to all citizens regardless of their employment status and not related to any obligation of availability on the labour market. 

Until now The Salvation Army EU Affairs Office has been supporting the recommendations to the EU that it adopts a Framework Directive on adequate minimum income. The idea is that minimum income schemes act as essential safety nets to prevent people from falling into the poverty trap, but also as economically sound instruments since the money spent on these schemes immediately re-enters the real economy. Of course minimum income schemes, however, only work if set at adequate levels (many member states of the EU have such schemes but are inadequate and therefore don’t prevent people falling into poverty).

Social Platform’s position paper calling for an EU framework directive on Adequate Minimum Income Schemes explains why adequate minimum income schemes benefit social as well as economic goals:  

· They ensure that people who receive them remain integrated and participate in society, they help them reconnect to the world of work and allow them to live in dignity

· They can play a positive role in reversing the destructive trend of rising numbers of working poor in Europe when they ensure a positive hierarchy with minimum wages in order for minimum wage to be higher than minimum income;

· They are a very small percentage of the government’s social spending and represent a huge return on investment;

· As the base for high-level social protection systems, they act as “economic stabilisers”.

· They are effective economic stimulus packages, as the money is used to address pressing needs and immediately re-enters the real economy

Tags: Europe