Finland launches basic income experiment with Jan. 1 cheques for those in pilot project

Finland launches basic income experiment with Jan. 1 cheques for those in pilot project
Project could see jobless citizens receive $587 US a month with no rules on how to spend it
By The Associated Press
Jan 2 2017
http://www.cbc.ca/news/business/basic-income-finland-1.3918671

Finland has become the first country in Europe to pay its unemployed citizens a basic monthly income, amounting to 560 euros ($587 US), in a unique social experiment which is hoped to cut government red tape, reduce poverty and boost employment.

Olli Kangas from the Finnish government agency KELA, which is responsible for the country’s social benefits, said Monday that the two-year trial with the 2,000 randomly picked citizens who receive unemployment benefits kicked off Jan. 1.

Those chosen will receive 560 euros every month, with no reporting requirements on how they spend it. The amount will be deducted from any benefits they already receive.

The average private sector income in Finland is 3,500 euros per month, according to official data.

Removes disincentive to work

Kangas said the scheme’s idea is to abolish the “disincentive problem” among the unemployed.

The trial aims to discourage people’s fears “of losing out something”, he said, adding that the selected persons would continue to receive the 560 euros even after receiving a job.

A jobless person may currently refuse a low-income or short-term job in the fear of having his financial benefits reduced drastically under Finland’s generous but complex social security system.

“It’s highly interesting to see how it makes people behave,” Kangas said. “Will this lead them to boldly experiment with different kinds of jobs? Or, as some critics claim, make them lazier with the knowledge of getting a basic income without doing anything?”

The unemployment rate of Finland, a nation of 5.5 million, stood at 8.1 per cent in November with some 213,000 people without a job — unchanged from the previous year.

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