Basic income and employment

Abstract

In the Finnish basic income experiment, the main interest was in its employment effects. The centre-right government of Prime Minister Juha Sipilä (2015–19) wanted to know whether the provision of basic income would reduce bureaucracy, income traps, and other disincentives linked to the present social security system (see Kangas and Pulkka, 2016; De Wispelaere et al., 2019; Chapter 2 above), thus boosting labour supply and increasing employment. The target group of the experiment consisted only of unemployed jobseekers (see Chapter 3). This is not the first time that the unemployed are direct targets of measures to increase labour supply. Since the 1950s, elements of active labour market policies (ALMPs) have been gradually introduced in Finnish employment policies. Most social benefits given are intended to activate the benefit recipients in their job search. This policy paradigm culminated in the activation model implemented at the beginning of 2018. The same government that implemented the two-year basic income experiment introduced the activation model in the middle of the experiment. The activation model introduced a set of stricter criteria for all unemployed persons in Finland who were receiving unemployment benefits. Within a three-month surveillance period, unemployed jobseekers had to work for 18 days, take part in active labour market services for five days, or earn income from their own business to avoid a 4.65 percent cut in unemployment benefits during a three-month surveillance period. Owing to massive criticism from citizens and trade unions, the newly-elected centre-left government, the Social Democratic Party, with leader Antti Rinne as Prime Minister, abolished the activation model at the beginning of 2020.1 The emphasis of the government, now led by Prime Minister Sanna Marin, is more carrot than stick when promoting active citizenship. Considering the strong path dependence in policymaking, it is still unlikely that conditionality in the current unemployment benefit system would radically decrease.