Giving no strings attached money to unemployed people will improve their wellbeing even if there is not yet evidence that it helps them get a job, according to the preliminary results of Finland’s universal basic income trial.
Between January 2017 and December 2018, a group of 2,000 people were given a monthly sum of €560 (£490) by the government, no strings attached, for two years. They were selected from a pool of 175,000 unemployed Finns, aged 25 to 58, to take part in one of the most prominent universal basic income trials in the world.
The scheme, which cost €20 million (£17.5 million), was designed and administered by the country’s social insurance agency, Kela. The aim was to help the country assess how to respond to the changing nature of work and – given its 8% unemployment rate at the time – how to get people back into the labour market.
The trial ended in December 2018 and, while the final results won’t be available until 2020, preliminary results were revealed on Friday.
The impact on jobs was minimal. “Nothing statistically significant in terms of effects on employment can be drawn from this data,” said Ohto Kanninen, research coordinator at the Labour Institute for Economic Research, who studied the country’s income register to determine results for the first year of the trial.
The real benefits so far have come in terms of health and wellbeing. The 2,000 participants were surveyed along with a control group of 5,000. Compared to the control group, those taking part had “clearly fewer problems related to health, stress, mood and concentration,” said Minna Ylikännö, senior researcher at Kela. Results also showed people had more trust in their future and their ability to influence it.
“Constant stress and financial stress for the long term – it’s unbearable. And when we give money to people once a month they know what they are going to get,” said Ylikännö. “It was just €560 a month, but it gives you certainty and certainty about the future is always a fundamental thing about wellbeing.”
Aware that Finland’s scheme is under an international spotlight, Olli Kangas, scientific leader of the scheme and professor at the University of Turku, expressed hope that the experiment not be written off on the basis of preliminary employment results. “The things that we have been able to reveal, that’s not the whole truth,” said Kangas, “the whole truth is much more complex, we need many more studies and research to find out.”
Universal basic income is an idea that’s been swirling around for centuries and has been trialled across the world. While it has come to mean many different things, in its purest definition, a universal basic income is granted to everyone, regardless of wealth, income or employment status, on an unconditional basis.
The policy has supporters on both sides of the political spectrum. Those on the left say it will help tackle poverty, reduce yawning inequality and help people fend off the threats of automation on jobs. For advocates on the right, UBI is seen as an attractive way to simplify complex systems of welfare payment.
A lack of bureaucracy was certainly a bonus for Tuomas Muraja, one of the participants, who said being on the scheme “was actually like winning the lottery.” Since losing his staff job as a journalist in 2013 he had struggled to find permanent work. The basic income scheme gave him freedom. He could keep the cash even if he got work and he was released from the endless bureaucracy of Finland’s complex welfare system.
“When you feel free you are creative, and when you are creative you are productive and that helps the whole of society,” said Muraja, who has written a book about his experiences on the trial.
But UBI is controversial, too. There’s the cost issue – critics say a tax hike would be needed need to pay for it. Others see UBI as an expensive, free handout that will disincentivise work and encourage laziness.
This criticism, however, holds no water for 31-year-old Tanja Kauhanen, a participant in the scheme. While the results have yet to show an improvement in employment, she believes UBI can help people who are struggling. “Think about it. It’s such a carrot to get a job immediately, even if it’s low paid.”
She used the money – and the time freed by no longer having to apply to multiple agencies for welfare benefits – to take a telemarketing job. Pay was low but, topped up with the basic income, it dramatically changed her quality of life. It helped her finally sort out her finances, after years of scouring grocery stores for the cheapest bread, milk and cheese. “I could go to a restaurant and have a normal dinner without thinking that, okay, I am going to have to eat noodles for the rest of the month.”
The end of the scheme was a shock, she said, for everyone on the trial. “We all are in big trouble now to be honest, because what would happen to you if your income decreased by €600 (£525)?”
She’s still working at her job but is already €1,000 (£875) in debt and desperately searching for better paid work.
The end of Finland’s scheme was also a blow to those who had hoped the trial would be expanded and extended. Politicians “wasted the opportunity of a lifetime to conduct the kind of trial that Finnish social policy experts had done preliminary research for for decades,” said Antti Jauhiainen, a director of the think tank Parecon Finland.
He believes that the government was never really behind the experiment, “because the government was simultaneously pushing for cutting the existing benefits and adding surveillance and control of the unemployed.” The Finnish government has now introduced an “activation model” which requires unemployed people to complete a minimum of training or work to receive their full benefits.
The announcement that Finland had no plans for more UBI schemes coincided with the cancellation of another UBI trial in Ontario, Canada. Launched in April 2017, the scheme involved 4,000 people on low incomes who received up to $13,000 (£10,000) a year for individuals and up to $18,000 (£13,900) for couples, although payments were reduced by 50 cents for every dollar they earned. It was axed in 2018, following the election of right wing politician Doug Ford in the province. A press release announcing the decision referred to the “extraordinary cost for Ontario taxpayers.” All payments will cease by March 2019.
But there are experiments that are still going. A program in Kenya, for example, run by the charity GiveDirectly, has been giving out unconditional money since 2016 to more than 21,000 people in villages across the country in a trial set to last 12 years. Initial result show those on this trial are also seeing a boost to their wellbeing.
And there are others on the horizon. In the U.S., a trial is about to kick off in Stockton, California, which will give $500 (£385) a month to 100 low-income families in the city. And in Oakland, the tech incubator Y Combinator intends to start a UBI trial this year which would hand $1,000 (£770) a month with no strings attached to 1,000 people across two U.S. states for three years. While in India, the main opposition party is running on a pledge to introduce a guaranteed minimum income income for the country’s poor.
As a policy idea, UBI is certainly not dead in the water yet. “Whether UBI is considered workable will of course depend on the results of these kinds of experiments and the political situation,” said Matt Bruenig of the People’s Policy Project. “It’s important to remember that there is a basic income program in the United States already that has been running for around 40 years: the Alaska Permanent Fund Dividend. So it’s not as hypothetical as some people seem to think.” Alaska hands its residents annual, unconditional checks of between $1,000 (£770) and $3,000 (£2,300) a year.
Finland is readying itself for elections in two months time and some hope that UBI could be back on the table. Kauhanen is among them. “I loved the basic income experience,” she said, “and I wish that it would be for all people in Finland, I know it’s expensive but, on a smaller scale, I think it would be just what we need because right now in Finland, the poor people are the ones who are getting cut off.”
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