Finland introduces basic income for unemployed

Jan 5, 2017 09:35 IST

Finland has become the first country in the world to pay a basic monthly income to its unemployed citizens.

The move is an effort on the part of the country’s government to reduce poverty and boost employment.  The basic monthly income will amount to about €560.

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Key Highlights

• The initiative has been introduced on a two-year trial and will benefit around 2000 randomly picked citizens.
• The trial began on 1 January 2017.
• The chosen citizens will receive an amount of €560 each month, which they can spend in any way they wish without being answerable to the authority.
• The amount will be deducted from any other benefits they already receive.
• The selected citizens will continue to receive the money even after getting a job.
• According to official data, average private sector income in Finland is €3,500 per month.

Purpose of the Trial

• The main aim of the scheme is to abolish the lack of encouragement faced by many of the unemployed.
• It aims to discourage people’s fear of losing out on something.
• Currently, a jobless person may refuse a low-salaried job fearing that it would massively reduce his financial benefits that are provided under Finland’s social security system.

According to Olli Kangas, an employee of KELA- a Finnish government agency responsible for the country’s social benefits-it will be interesting to see whether the scheme will make the chosen people take up different kinds of jobs and experiment or will it make them lazier, as they would be getting a basic income without doing anything anyway.

Kanga is of the opinion that this experiment may be later extended to other low-income groups like freelancers, part-time workers and small-scale entrepreneurs as well.

The unemployment rate in Finland stands at 8.1 per cent, as of November 2016 with around 213000 people being without a job for over a year. The total population of the country is 5.5 million.

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Read more Current Affairs on: Unemployment , Poverty , KELA , Jobs and Employment , Europe

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