Is Finland’s basic universal income a solution to automation, fewer jobs and lower wages?

Is Finland’s basic universal income a solution to automation, fewer jobs and lower wages?
Both left and right are promoting the idea of a basic wage for everyone, currently on trial, as a solution to the new world of work
By Sonia Sodha
Feb 19 2017
https://www.theguardian.com/society/2017/feb/19/basic-income-finland-low-wages-fewer-jobs

When he got the letter after Christmas saying he was entitled to an unconditional income of €560 (£478) a month, Mika Ruusunen couldn’t believe his luck. “At first I thought it was a joke. I had to read it many times. I looked for any evidence it might be false.”

But the father of two was not the victim of a scam. He has been selected to take part in an experiment being run by the Finnish government, in which 2,000 unemployed people between the ages of 25 and 58 will receive a guaranteed sum – a “basic income” – of €560 a month for two years. It replaces their unemployment benefit, but they will continue to receive it whether or not they find work. The government hopes it will encourage the unemployed to take on part-time work without worrying about losing their benefits.

Ruusunen lives in Kangasala, a half-hour bus ride from where we meet in Tampere, the country’s second city, known as the “Manchester of Finland”. Like its namesake, the signs of the 19th-century wealth generated by the industrial revolution are strikingly visible.

Today, the Finnish economy continues to struggle in the wake of the financial crisis, which hit just as communications giant Nokia’s star was starting to wane. This left Ruusunen, who lost his job as a baker two years ago, struggling to find work. He was unemployed when participants for the basic income pilot were randomly selected, but had started a paid IT apprenticeship by the time he got the letter.

“For me, it’s like free money on top of my earnings – it’s a bonus,” he tells me. But he thinks the basic income will make a big difference to others who are unemployed, especially those who are entrepreneurially minded. “If someone wants to start their own business, you don’t get unemployment benefits even if you don’t have any income for six months. You have to have savings, otherwise it’s not possible.”

Juha Järvinen, another participant in the pilot scheme who lives in western Finland, agrees the benefits system holds the unemployed back. He has been unemployed for five years since his business collapsed. “I have done a lot for free – wedding videos, making web pages – because I’ve liked it. But before a basic income I would get into trouble if I got any money for that work.”

Finland’s experiment is a variation on the idea of a universal basic income: an unconditional income paid by the government to all citizens, whether or not they’re in work. The Finns have long been perceived to be at the cutting edge of social innovation, so this is a fitting setting for the first national experiment of its kind.

But the idea of the basic income has captured a zeitgeist extending far beyond the borders of Scandinavia. Enthusiasts include Silicon Valley’s Elon Musk, former Clinton labour secretary Robert Reich, Benoît Hamon, the French socialist presidential candidate, and South Korean presidential candidate Lee Jae-myung. On Friday, Glasgow city council commissioned a feasibility study for its own basic income pilot.

The basic income is a big idea with a pedigree. It owes its roots to Thomas Paine, the 18th-century radical, who in 1797 proposed paying all 21-year-olds a £15 grant funded through a tax on landowners. Since then it has captured the imagination of many a philosopher, but until the past couple of years never gained much political traction beyond the fringes.

So what explains the sudden jump this centuries-old idea has made from political fringes to the mainstream?

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