News - 31.08.2016 klo 08.14

Basic income pilot scheme set to start with 2,000 unemployed

A pilot scheme is selecting 2,000 unemployed to receive a basic income of 560 euro a month. The pilot is due to get off the ground in January 2017.

The Finnish Ministry of Social Affairs and Health has published a draft bill in relation to the basic income pilot project. The idea is to choose by means of random sampling a test group of 2,000 people between the ages of 25 - 58 who are now receiving a basic unemployment allowance or labour market support under the Unemployment Security Act.

The monthly 560 euros is tax-free and will be paid by Kela, the Social Insurance Institution of Finland. Participation in the pilot is obligatory in order not to distort the results.

The goal of the pilot is to encourage unemployed people to take a job. For this reason a control group is being created from unemployed people without a basic income. A follow-up study will then examine whether basic income has a positive impact on employment or not.

The pilot project is one very dear to the the hearts of the present Government, as they want to reduce so called incentive traps. These mean that - according to the theory - unemployed people do not want to take low income jobs, temporarily or on a part time basis, as their unemployment benefit would then be cut.

During the pilot these kind of jobs will not affect the basic income. The pilot scheme is to last for two years until the end of 2018.

The Government also wants to find out whether this basic income scheme will result in less bureaucracy and can be used to make the system of public benefits more simple.

The draft bill is now under consultation until 9 September 2016. After that the Government will submit its proposal to Parliament and include the cost of the pilot in the budget proposal for 2017.

Trade unions have not yet widely commented on the pilot as they will have their say during the consultation period.

Joonas Rahkola, an economist at the Central Organization of Finnish Trade Unions SAK wrote in Twitter that the model chosen for the pilot would be far too expensive if it were to cover the whole population.

Written by: Heikki Jokinen