The world’s happiest country is about to answer a question that’s intrigued political philosophers and economists for centuries: What happens when citizens are given money with no strings attached?
Finland, a Nordic champion of social welfare, just spent the last two years finding out. On Friday, the social services agency Kela will reveal 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.
Against the background of a global debate on how to deal with rising inequality, the pilot project is being closely watched by economists, sociologists and billionaires, including Mark Zuckerberg and Elon Musk.
The idea of a basic income as a replacement for means-tested welfare payments has its share of supporters on both the left and the right of the political spectrum. Advocates say it eliminates poverty traps and redistributes income while empowering the individual and reducing paperwork.
The concept has inspired Italy’s populist government, which this week started honouring its election promise of a “citizen’s income” for the poor.
Other countries have taken different avenues, with the UK opting instead for a Universal Credit system that replaced six means-tested benefits and tax credits with a single monthly payment.
Finland’s experiment, the first of its kind on a national level, was implemented by the government of Juha Sipila, the country’s first millionaire prime minister, between 2017 and 2018.
Despite solid economic growth and falling unemployment, Finland suffers from an ageing population. It’s eager to redesign social security and adapt it to a labor market in which fewer people are likely to take on traditional nine-to-five jobs.
The country is seen as a trend-setter when it comes to social policy, with its education system and baby boxes (containers full of baby clothes and care products delivered to expectant mothers) admired around the world.
With its road-testing of a basic income, the government wanted to find out whether recipients would still be willing to take on part-time or freelance work. Researchers at Kela also wanted to measure its impact on bureaucracy and on the participants’ general well-being.
Friday’s preliminary results will only look at the first year and will focus on statistical data, with a final report not due until 2020.
”The basic income experiment is important and can tell us a lot about how unemployed people behave when they are given more freedom in the labor market,” said Heidi Schauman, chief economist at Aktia Bank Oyj.
Whatever the outcome, Finland is unlikely to adopt a basic income any time soon.
According to some estimates, adopting it on a nationwide basis would add around 5 percentage points to Finland’s public deficit relative to gross domestic product.