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Basic income made Finns happier

| Text: Björn Lindahl

Finland’s basic income experience came to an end 2018. The 2,000 unemployed people who received a basic income for two years instead of other benefits did not work more in the end, but they grew happier.

The experiment’s budget is 20 million euro. The final assessment will not be ready until 2020, because so far register data exists only for the first of the two years the experiment lasted. Another major survey will also be carried out.

When the Finnish Minister of Finance Petteri Orpo decided not to extend the experiment with one more year, many foreign media described it as a failure. But when results were presented during a Helsinki seminar on the 8th of February, both Finland’s Minister of Social Affairs and Health Pirkko Mattila and Olli Kangas, the head of research at the Social Insurance Institution of Finland, were proud:

“The experiment has caught the world’s attention, and has been positive for Finland’s image. It has provided us with unique information which we can use in the coming social and healthcare reform,” said Pirkko Mattila.

"The project was not carried out in the way we originally had presented it. Due to various factors such as finance, time and both EU and Finnish legislation, the project was both smaller and watered down when it got off the ground. Despite this fact, it is exceptional and the best research project on basic income which has ever been carried out,” said Olli Kangas. 

He was worried about how the project would be interpreted, but pointed out that the results did not mean the research project had failed. The aim was not to get unemployed people to work more, but to see what would happen if they got a basic income instead of unemployment benefits with their accompanying demands.

Basic income supporters argue such a reform would be liberating. It would give people the opportunity to be creative, empower them and reduce their economic uncertainty. Participants would also avoid wasting time on bureaucracy, filling in forms and looking for jobs in a labour market where unemployment was 7.6 %. Instead, they would be able to create their own businesses. 

“The official paperwork hell is crazy, and you get even more stressed by not knowing whether you will get your money. And I also don’t have to take part in the job centre’s obligatory courses anymore, where they treat people like idiots,” Liisa Ronkainen, one of the experiment participants, told Finnish broadcaster Yle.

Families with children, however, did have the opportunity to apply for unemployment benefits rather than the basic income, since this was higher. So some within the group chose to fill in forms after all. 

When they were interviewed at the end of 2018, the participants were positive to the introduction of a basic income. 57.2 % of the test group agreed it would reduce bureaucracy involved when accepting a job offer. The control group’s number was 37.3 %. The nearly 20 percentage point difference is the biggest in the survey. 

The test group was more positive in their answers to all questions regarding their self-perceived assessment of health, their financial security and their own ability to influence their own situation.

Those answering somewhat or strongly agree to questions about their life situation:

Good health 55.4 % 46.2 %
Good financial wellbeing 42.2 % 30.3 %
High confidence in their own future 58.2 %  46.2 %
Good opportunity to influence their own situation 28.9 % 22.6 %

Participation was obligatory, which makes the Finnish experiment different from former experiments, which have all been voluntary. The basic income project has faced a lot of criticism, however. In a survey byLännen Media, seven out of the ten largest trade unions were negative to the idea of a universal basic income. Their main argument was the risk of a passivating effect.

“You cannot start dishing out money without anything being expected in return from people who potter around at home. It is unhealthy for the country’s economy and for the individual. Work is what the Finnish welfare society is built on,” Olli Luukkainen, the President of the Trade Union of Education in Finland, OAJ, told the survey.

No employment effect

Critics of a basic income also highlight the fact that the experiment did not lead to higher employment numbers. The test group only worked half a day more than the control group.

But as Ohto Kanninen, one of the project’s researchers, pointed out at the seminar:

“Perhaps two years is not enough time if you want to measure any effect, or perhaps the test group only escaped a limited amount of bureaucracy. Thanks to the Finnish registries we are able to follow the test group beyond the end of the experiment.

“The lack of a difference between the two groups is actually interesting, and it does not mean the experiment failed. The test group had a stronger incentive to accept jobs, since they did not risk losing any of their basic income,” he pointed out.

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Facts about the experiment
  • 2,000 people were selected among those who were unemployed in November 2016.
  • They each were given a monthly 560 euro basic income in 2017 and 2018, instead of unemployment benefits.
  • They were allowed to work without loosing any of the basic income.
  • Several laws were changed in order to make the experiment obligatory.
  • The participants and the control group were interviewed towards the end of 2018, about how they felt.

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