Tue. Feb 25th, 2020

Minimum guaranteed income, how does it work?



This Wednesday, in his first appearance at the Congress, Pablo Iglesias announced that there will be a minimum state income for all households “as soon as possible”.

It was one of the star electoral promises of Podemos, among the economic proposals of its program, They defended to guarantee an income of 600 euros per month to complete insufficient income.

Currently, in Spain there is a system managed by the autonomous communities that, according to Iglesias, has low levels of coverage and is not well coordinated, resulting in imbalance.

What is the minimum guaranteed income?

The minimum guaranteed income is a monetary benefit – not in kind such as health or education – that the State pays to all citizens of a country unconditionally and for the mere fact of being so. It is an unconditional and universal public monetary allocation to the entire population.

This income corresponds to a redistributive social policy. Thus, the tax authorities seek to guarantee a minimum level of income for all citizens and reduce social inequalities. It consists of guaranteeing the collection of the same level of income for each citizen, regardless of your personal situation.

The implementation of policies such as basic income, which involve money transfer without imposing conditions, makes the political debate extremely complex.

Basic income in other parts of the world

Throughout history, numerous initiatives aimed at the implementation of a universal basic income have been launched, but there has never been a general consensus on how to realize it.

The first region that granted basic income throughout its territory was Alaska. The first tests of the 49th state of the United States date back to 1976 with the creation of «Alaska Permanent Found», a sovereign fund financed through oil revenues in order to store, manage and distribute the lucrative fuel export dividends. And since then, “the big land” distributes certain sums of money to all its citizens annually.

Since then, several initiatives have been carried out in the United States and have begun to focus on studying basic income, especially from local administrations. In New York City, there is a pilot program that provides citizens with a guaranteed income level in order to help them adjust the use of time between paid work and job training or educational programs, improving their long-term outlook. term and future earnings. As Ana Berenguer explains in the study of the LaCaixa Observatory ‘Strengthening social welfare: from minimum income to basic income’, “Regardless of the form that basic income takes, given the challenges posed by the new economy, a basic income should be unconditional and provide a minimum wage to mitigate economic insecurity when employment is lost or work hours are cut. “

At the beginning of 2017, the Finnish government launched a basic income pilot program. During this trial, 2,000 Finnish unemployed between 25 and 58 randomly selected received a monthly basic income of 560 euros tax-free throughout 2017 and 2018, an income they continued to receive even if they found work during that period.

The objective of the experiment, the first nationwide to be carried out in the world, was to analyze whether basic income served to encourage job search, reduce bureaucracy and simplify the complex Finnish social benefits system.

According to preliminary conclusions, waiting for the final ones, establish that the granting of a basic income it does not help stimulate employment, although it does increase the feeling of well-being of those who receive it.

The Swiss rejected last week the guaranteed basic income plan. Almost 80% of the voters opposed the payment of 2,250 euros per month for all adults. Despite having obtained around 20% of the votes in favor, the defenders were satisfied by the popularity that a concept has achieved that, they claim, sooner or later will have to be launched. No political group openly supported a proposal that, according to estimates, would require additional income for public coffers exceeding 22,000 million euros.

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