October 23, 2020

Basic income does not activate employment in Finland but increases security and well-being



The allocation of a basic income to the unemployed hardly stimulates job search, but contributes to increasing their economic security and mental well-being, according to the definitive conclusions of an experiment carried out in Finland between 2017 and 2018 and presented this Wednesday in Helsinki.

The aim of this essay, which cost 20 million euros, was to study the modernization of the Finnish social security system to adapt it to the challenges of a labor market that increasingly requires less manpower due to robotization and new technologies.

Although other countries such as Canada, the Netherlands and Scotland have also launched basic income experiments, Finland is the first in the world at the national level, randomized and whose participation is mandatory by law, which brings more reliable conclusions, according to those responsible.

The Finnish trial consisted of allocating a monthly basic income of 560 euros tax-free to 2,000 unemployed people aged 25 to 58 randomly selected during 2017 and 2018, an income that they continued to receive even if they found work during that period.

At the same time, a control group was established, made up of unemployed people of the same age group who were not granted basic income but received the usual subsidies, and with whom the results obtained were subsequently compared.

According to the final data, those who received the basic income worked an average of 78 days in the second established comparison period -between November 2017 and October 2018-, while the unemployed in the control group managed to work 73 days.

The differences of the first comparison period -the year 2017- were even more insignificant, since the recipients of the basic income worked an average of 49.6 days, compared to 49.3 days for the control group.

“In general, the effects on employment were small. This indicates that for some people receiving unemployment benefits, the problems of finding a job are not related to bureaucracy or financial incentives,” researcher Kari Hämäläinen said in a statement. from the study authors.

According to Hämäläinen, the employment results of this trial were affected in 2018 by the entry into force of the so-called “job activation model”, a reform that tightened the criteria for receiving unemployment benefits, but not basic income.

Instead, the study authors agree that basic income did have clear effects on the unemployed’s perception of their own economic and mental well-being, as confirmed by a survey conducted shortly before the end of the pilot program.

Of the basic income recipients who participated in the survey, 13% said they live comfortably and 47% did not experience serious financial difficulties, compared to 8% and 44% in the control group, respectively.

At the other extreme, 12% of those who received the basic income affirmed that they barely survive and 28% are in serious financial difficulties, while in the control group the equivalent figures were 15% and 32%, respectively.

“Respondents who received basic income had a more positive perception of their income and economic well-being than the control group. Most feel that their financial situation is manageable and that they have room for maneuver,” said Minna Ylikännö, researcher at the Finnish Social Security (Kela).

Regarding mental well-being, 22% of the recipients of the basic income admitted suffering depression, ten percentage points less than the control group.

Likewise, the satisfaction with life of the recipients of the basic income was 7.3 (on a scale of zero to ten), compared to 6.8 in the control group.

A FINNISH MODEL UNDER THE EXTERNAL PURPOSE

The Finnish experiment aroused great international interest and many voices considered it a failure when the Nordic country presented the preliminary results in February 2019, something that the Finnish authorities do not share.

“The execution of the experiment was successful and provided new information that would not have been possible without it,” researcher Olli Kangas, head of the trial, said in a statement.

Finnish Health and Social Affairs Minister Aino-Kaisa Pekonen agrees with Kangas and believes that “the information obtained through the experiment will be used to tackle the reform of the social security system.”

Juanjo Galán

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