Finland’s biggest trade union says a universal basic income is ‘useless’

Helsinki, FinlandOleksiy Mark/Shutterstock

LONDON — Finland’s experiment with a universal basic income is unworkable and unaffordable, according to the country’s biggest trade union.

Since January, Finland’s government has paid a group of 2,000 unemployed Finns aged between 25 and 58 with a monthly stipend of £480 ($600), as it considers a radical new welfare system.

“We think it takes social policy in the wrong direction,” Ilkka Kaukoranta, chief economist of trade union group SAK told Bloomberg. The group has one million members in a country of 5.4 million people.

Advocates say rolling out the system would provide a vital safety net for all citizens and remove inefficient benefit systems currently in place, but the SAK objects to a basic income on two principal grounds:

1. Kaukoranta said it would be “impossibly expensive” to roll out “since it would increase the government deficit by about 5%” of GDP.

2. The group believes that UBI would remove the incentive for citizens to work and would shrink the labour force by encouraging people to take more time off, as well as making less attractive jobs easier to refuse.

Advocates of the scheme disagree on both points, including Guy Standing, a leading economist and vocal supporter of a UBI. He believes that the current system of means-tested benefits in many European countries disincentives work, because the withdrawal of benefits that comes with entering low-paid work causes there to be little increase in a worker’s overall income.

He told BI in January: “If you had a basic income, it would mean that everybody would have a base, on top of which their earned income would be taxed at the standard rate of tax. That would increase the incentive to take low-wage jobs. The claims that it would act as a disincentive is the actual opposite.”

He also believes a UBI could be funded through a combination of sovereign wealth funds, hiked taxes, and funnelling money from existing welfare schemes.

Whether or not the scheme is a success is a long way off: the pilot runs until December 2018.