Finland Experiments with Basic Income

Finland is pushing ahead with a plan to test the effects of paying a basic income as it seeks to protect state finances and move more people into the labor market.

The Social Insurance Institution of Finland, known as Kela, will be responsible for carrying out the experiment that would start in 2017 and include 2,000 randomly selected welfare recipients, according to a statement released Thursday. The level of basic income would be 560 euros per month ($632), tax free, and mandatory for those picked.

“The objective of the legislative proposal is to carry out a basic income experiment in order to assess whether basic income can be used to reform social security, specifically to reduce incentive traps relating to working,” the Social Affairs and Health Ministry said.

For a QuickTake explainer on basic income, click here.

To asses the effect of a basic income, the participants will be held up against a control group, the ministry said. The target group won’t include people receiving old-age pension benefits or students. The level of the lowest basic income to be tested will correspond with the level of labor market subsidy and basic daily allowance.

The idea of a basic income, or paying everyone a stipend, has gained traction in recent years. It was rejected in a referendum in Switzerland as recently as June, where the suggested amount was 2,500 francs ($2,587) for an adult and a quarter of that sum for a child. It has also drawn interest in Canada and the Netherlands.

Finnish authorities were clear on one thing as they embark on their study: “An experiment means that, at this point, basic income will not be paid to the whole population.”

Source: ©2016 Bloomberg L.P.