In order to alleviate the increase in unemployment rates in the country, Finland will give its citizens a monthly payment of $860. This will effectively remove all other incomes from social payments or similar bonuses.
This proposal was drafted by Kela (the Finnish Social Insurance Institution) after it had previously conducted a survey in order to see if this type of income will be accepted by the public at large. The results of the survey in question were staggering, with over 70% of the population agreeing that a national basic income would be the best move to take at this time.
The monthly payment is tax-free and will be received by every adult, without taking into regard if they have another income source or not. By basically stripping away unemployment benefits which would make some people opt to remain jobless, a higher a number of unemployed people will be tempted to apply for jobs.
This temptation will be created due to the fact that most citizens are currently deciding to remain unemployed because of the fear that they will lose their social payments if they get a job. If their temporary workplace salary is lower than their current social payment, the option of staying at home is seen as more favorable.
The rate of unemployment in Finland is approximately 10% in adults and around 22.5% in the young adult demographic. But this type of social basic income poses a few problems as well. It might not actually boost the employment rates, thus making the government’s hopes null.
A similar decision was made back in 1970 in Dauphin, Canada, but only as an experiment in order to see both the social as well as the economic repercussions of a guaranteed monthly payment. The result in both areas were extremely favorable, therefore making the Finnish government opt for this solution.
In Uganda, there has been an increase in both working hours and monthly earnings as well after their monthly social income was boosted by 100%. Even if in Dauphin the work hours faced a drop, with people focusing more on their education instead of opting for a job as soon as they finished college or high school, earnings were still up.
The benefits of having a basic social income would urge people to take jobs they would enjoy practicing, without having the fear of running out of money or becoming essentially homeless. This payment would also help self-employed people or small business owners by creating a small safety net in case their monthly income dips too low for them to continue their work.
Finland will give its citizens a monthly payment of $860 (800 euros) starting next year’s November and it will cost the government around €46.7 billion yearly. Only time can tell if this move will help the country solve its current mess in the welfare department.