Finland has become the first country in Europe to pay its unemployed citizens a basic monthly income, amounting to 560 euros, or $587, in a unique social experiment it hopes will 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 Monday.
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.
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 on something,” he said, adding that the selected people 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?”
A similar idea, called a universal basic income, has been promoted by some as an answer in the U.S. to the displacement of low-skilled workers by robots and other automation.
The guaranteed income would be provided to every adult, enough to support a basic standard of living, regardless of whether they were employed.
Some proponents see guaranteed incomes as a way to prepare for an economy that produces fewer jobs. Others see it as a way to cut back existing government security net programs.
Two local councils in Scotland are considering introducing trial programs with basic incomes later this year, in Glasgow and Fife.
The unemployment rate of Finland, a nation of 5.5 million, stood at 8.1% in November with some 213,000 people without a job — unchanged from the previous year.
The scheme is part of the measures by the center-right government of Prime Minister Juha Sipila to tackle Finland’s joblessness problem.
Kangas said the basic income experiment may be expanded later to other low-income groups such as freelancers, small-scale entrepreneurs and part-time workers.