The Finnish social security system: Background to the Finnish basic income experiment

All basic income experiments so far have been planned and implemented in national or local contexts. Thus, the questions posed in the experiments and the answers achieved are bound to time and place. To understand the motivations behind the experiments and the results achieved, we need familiarity with the institutional frameworks in which they occur. This also applies to the Finnish basic income experiment. In this chapter, we shed light on the context in which the experiment was planned, implemented, and carried out. The Finnish social protection system is comprehensive, and because of its comprehensiveness, it is complicated and difficult to describe in a simple way. We shall try anyway. In its simplest form, the Finnish social security comprises three parts. The first part guarantees minimum income security for all Finnish residents (rather than citizens, as explained below). It includes ‘basic level’ social benefits paid either at a flat-rate or after means-testing based on personal or household income. The second part consists of income-related social insurance for those in employment. The third part of the system includes municipal social and health care services covering all residents from cradle to grave. (Kela, 2019). In large part due to this comprehensiveness, the Finnish welfare state ranks top in the world in many aspects of economic and non-economic well-being. In Finland, shares of people at risk of poverty or social exclusion are among the lowest in the EU, for the total population and among all age groups. The income transfer system effectively lifts low-income people above the poverty line and equalises income differences (for example, Olafsson et al., 2019; Eurostat, 2020). Free or affordable public services just as effectively promote social inclusion through good quality education, health and social services, and public employment services, among many others.