Finland Tries Paying Its Unemployed a Basic Income

Experiment aims to discourage 'disincentive problem'
By Newser Editors and Wire Services
Posted Jan 3, 2017 9:11 AM CST
Finland Tries Paying Its Unemployed a Basic Income
A 2012 file photo shows Nokia workers in Salo, Finland. Nokia's downsizing led to many employees finding themselves out of work; the country's unemployment rate currently stands at 8.1%.   (AP Photo/Lehtikuva, Jussi Nukari, File)

Finland is the first country in Europe to pay its unemployed citizens a basic monthly income, amounting to $587, in a unique social experiment that aims to cut government red tape, reduce poverty, and boost employment. Olli Kangas from KELA, the government agency responsible for social benefits, said Monday that the two-year trial with 2,000 randomly picked citizens who receive unemployment benefits kicked off Sunday. Those chosen will have no reporting requirements on how they spend it, reports the AP, and the amount will be deducted from any benefits they already receive. The average private sector income in Finland is $3,640 per month, per official data.

Kangas said the scheme's idea is to abolish the "disincentive problem" in which people fear "losing out (on) something" by getting a job, he said, adding that those selected would receive the $587 even after becoming employed. 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% in November with some 213,000 people without a job—unchanged from the previous year. (More Finland stories.)

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