Finnish Basic Income Trial: Creates Happiness, But Not Jobs

AP photo by David Goldman
In this Saturday, July 29, 2017 file photo, Finland's flag flies aboard the Finnish icebreaker MSV Nordica as it arrives into Nuuk, Greenland. A nationwide experiment with basic income in Finland has not increased employment among those participating during the first half of the two-year trial, but their general well-being seems to have increased, a report said Friday Feb. 8, 2019.

COPENHAGEN, Denmark (AP) — A nationwide experiment with basic income in Finland has not increased employment among those participating in the two-year trial, but their general well-being seems to have increased, a report said Friday.

The Social Insurance Institution of Finland, or Kela, said "it was not yet possible to draw any firm conclusions" from the first half of the experiment, where about 2,000 randomly selected, unemployed people aged 25-58 got tax-free income of 560 euros ($636) a month with no questions asked.

Finland is looking into ways to reshape its social security system and became in January 2017 the first European country to launch the trial, which will end in 2020.

Proponents say that universal basic income can empower people to start new businesses, knowing that they would continue to receive monthly income no matter how well their new venture does. Critics say it would merely reduce incentives for people to look for work.

"Earlier, I didn't accept all small jobs out of fear of losing my benefits and having to reapply for them," said writer Tuomas Muraja as he was on his way to a sauna before heading out for an evening at the opera.

"I feel much more secure now that short-term jobs no longer reduce my benefits or delay their payment."

In the Finnish experiment, the basic income is below what unemployment benefits pay, which is 32.40 euros a day, or almost 1,000 euros ($1,135) a month — subject to income tax of about 30 percent. The basic income is tax free, but barely enough to live on for someone paying rent, so it keeps pressure on the recipients to join the work force.

Minna Ylikanno, a researcher with Kela, said the basic income recipients appeared less stressed, healthier and more confident in the future than a 5,000-member control group of unemployment benefits recipients.

The report found that those on basic income and the unemployed people in the control group ended up working roughly the same number of days.

"The basic income may have a positive effect on the wellbeing of the recipient even though it does not in the short term improve the person's employment prospects," Ylikanno added.

The participants in both the trial and the control group were selected randomly among those who received unemployment benefits from Kela in November 2016 , Ylikanno told The Associated Press.

The Nordic country's official unemployment rate was 5.4 percent in 2018.

 

By AP reporter Jan M. Olsen

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