This country gave its unemployed people R8,600 a month for 2 years and here’s what happened

What happens when a country’s homeless citizens are given money each month to spend as they please?

Finland, a Nordic champion of social welfare, just spent the last two years finding out. On Friday, the social services agency Kela revealed a preliminary assessment of how receiving 560 euros (R8,677) of free money a month affected the livelihoods of 2,000 randomly selected jobless people aged between 25 and 58.

Unlike with regular unemployment benefits, the experiment’s participants were free to top up their allowance by taking up part-time jobs and weren’t required to actively seek a full-time position.

Preliminary results of the basic income experiment showed that while self-perceived wellbeing improved, during the first year, there were no effects on employment.

“The basic income experiment did not increase the employment level of the participants in the first year of the experiment.

“However, at the end of the experiment the recipients of a basic income perceived their wellbeing as being better than did those in the control group,” Kela said. The results are to some extent preliminary, and it is not yet possible to draw any firm conclusions regarding the effects of the basic income experiment, the group pointed out.

It said that the study of the employment effects of the basic income experiment is based on register data for the first year of the experiment. The results for the second year of the experiment will be published in the first few months of 2020.

“On the basis of an analysis of register data on an annual level, we can say that during the first year of the experiment the recipients of a basic income were no better or worse than the control group at finding employment in the open labour market,” said Ohto Kanninen, research coordinator at the Labour Institute for Economic Research.

The recipients of a basic income had on average 0.5 days more in employment than the control group, Kela said. The average number of days in employment during the year was 49.64 days for the recipients of a basic income and 49.25 for the control group.

The proportion that had had earnings or income from self-employment was approximately one percentage point higher for the recipients of a basic income than for the control group (43.70% and 42.85%).

Then again, the amount of earnings and income from self-employment was on average 21 euros lower for the recipients of a basic income than for the control group (€4,230 and €4,251), the report’s findings said.

Recipients of a basic income perceived their wellbeing as being better

The effects of the basic income experiment on wellbeing was studied through a survey which was done by phone just before the experiment ended, Kela said.

According to the survey, the recipients of a basic income perceived their wellbeing as being better than did the control group.

More than half (55%) of the recipients of a basic income and 46% of the control group perceived their state of health as good or very good. 17% of the recipients of a basic income and 25% of the control group experienced quite a high degree or a very high degree of stress.

‘The recipients of a basic income had less stress symptoms as well as less difficulties to concentrate and less health problems than the control group. They were also more confident in their future and in their ability to influence societal issues’, said Minna Ylikännö, lead researcher at Kela.

The recipients of a basic income were also more confident in their possibilities of finding employment. In addition, they felt that there is less bureaucracy involved when claiming social security benefits and they were more often than the control group of the opinion that a basic income makes it easier to accept a job offer or set up a business.

‘The results of the register analysis and the survey are not contradictory. 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’, said Ylikännö.

The response rate for the survey was 23% – 31% for the recipients of a basic income and 20% for the control group.

The recipients of a basic income were selected through random sampling among those who in November 2016 received an unemployment benefit from Kela.

The control group consisted of those who in November 2016 received an unemployment benefit from Kela but were not selected for the experiment.

In the experiment, 2,000 randomly selected unemployed persons were paid a monthly tax-exempt basic income of 560 euros regardless of any other income they may have had or whether they were actively looking for work.

The experiment was begun on 1 January 2017 and ended on 31 December 2018.


Read: Finland gave its citizens R8,700 for free each month as part of an experiment

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This country gave its unemployed people R8,600 a month for 2 years and here’s what happened