• The Basic Income Debate in Finland

  • Καϊσού Σουοπάνκι | 15 Nov 12 | Posted under: Φινλανδία
  • This article represents one point of view in the ongoing debate on the question of basic income.

    The basic income debate in Finland has been a lively one in recent years. Both the political and the economic crises have caused people to question whether the Scandinavian welfare system model is the best way to organise basic social security. Apart from some sporadic improvements, the system has become more bureaucratic, controlling, humiliating and inflexible. It is apparent that the welfare state no longer ensures against unemployment, but controls and “activates” the unemployed job seekers (who are claimed to be responsible for their own situation).

    Almost all the political parties and actors in Finland have criticised the current system for decades. Basic income has been one of the alternative proposals since the 1980s, mainly supported by the greens and the left. After the economic depression in the beginning of the 1990s the number of recipients of social assistance has tripled.The employment policy has become stricter: cuts have been made to subsistence support which is the last-resort subsidy for those without any other income, and job seekers are being forced to undergo largely ineffective vocational rehabilitation or unpaid internships in order to maintain their unemployment benefits.

    A survey made by economist Jan Otto Andersson and Olli Kangas in 2000 showed the majority of Finns were in favour of some kind of minimum-income guarantee, and basic income was approved by 63%.

    Basic income has been promoted with various arguments. It has often been seen as a tool to guarantee minimum income for all and as a way to fight against economic inequality by simplifying administration. It is claimed that basic income would decrease the poverty and unemployment gaps that are often typical of means-tested systems.

    It was especially the movement of the precariat and the new left that has wanted to oppose the commodification of labour. Basic income would make the labour market more flexible and equitable for job-seekers because people would not have to accept any job under any conditions just to earn their living. For the small entrepreneurs it would make taking risks easier since one’s personal income would not necessarily depend on the success of the business. All these arguments have been used by different left groups over the years.

    During the EuroMayDay protests in 2005 and 2006 the precariat movement raised the question of basic income again. Its message was that the rapid precarisation of the labour market and the crisis of wage labour as an institution required a quick solution: basic income. One of the new ideas at that time was that basic income would also be a way to finance autonomous production outside of traditional wage labour. The discussion around basic income continued on the grassroots level until the Greens unveiled their model for basic income whose effects on income distribution and taxation were calculated by using a micro-simulation model. It was part of their campaign for the 2007 parliamentary elections. With their proposal the Greens for several years became the voice of basic income in the public debate. The proposal included a 440 Euro basic income and a 600 Euro guaranteed minimum pension. Some needs-based and means-tested social benefits, like the housing allowance and discretionary subsistence subsidy, were left untouched. The (left) supporters of basic income criticised the Greens’ model pointing out that this level of basic income was too low for it effectively to prevent poverty. It has been argued that the low level would, instead, force people to work rather than provide a means of refusing work.

    The model was also criticised for its lack of income-distribution effect. Its funding comes from a two-tier income tax: for less than 60,000 Euros per year the flat tax is 39% and for income above this the flat tax is 49%. In addition, the capital tax would be raised from 29% to 32%, some tax exemptions would be removed and environmental taxes would be introduced.

    The Left Alliance has been in favour of unifying social security since its first party programme in 1990. It also demanded increasing the amount of social security and spoke of a transition towards citizen’s income. Despite this, discussion in the party around basic income has been tense throughout its existence. For a long time the official party line was neither for nor against basic income. The main opponents have been “the trade unionists”. They have been adamantly against basic income, arguing that it would lower the general wage level and destroy the earnings-based employment benefit system.

    The Left Alliance adopted a favourable position on basic income in its 2010 party congress. On this issue the “red-greens” or “the new left” gained ascendancy over the trade unionists.

    The programme stated: “A left-wing basic income improves the negotiating position of the workers in the labour market and increases the possibilities of voluntary labour and entrepreneurship. It also reduces the dependence of people on unfulfilling wage labour and social welfare structures. Basic income means a social change towards people’s greater independence, makes society less centred on wage labour, and it recognises that human activities are worth pursuing even outside the wage labour structure”.

    After the party congress the steering committee of Left Alliance created a working group on welfare and basic income, with the task of preparing a document on welfare and basic income for the party’s use. The working group’s discussion paper was accepted at the steering committee’s meeting in March 2011. The purpose of the discussion paper was to deepen the discussion on welfare and basic income. It also presented the party’s basic income model.

    The proposal consisted of improving basic security and gradually transferring the welfare system to a basic income system. In the Left Alliance’s model all adults are paid a monthly basic income of € 620, which is wage-indexed. In addition to this basic income it is possible to apply for a conditional grant of € 130 (the conditions being unemployment, sickness, study, parental leave and home childcare), totalling € 750. The universalised welfare system includes the unemployed, those receiving small pensions, those receiving illness benefits, maternal or paternal benefits or parental grants as well as those who are receiving student subsidies, home care subsidies or entrepreneur start-up grants. Basic income most benefits those living on welfare grants, performing irregular or part-time labour and those with low wages.

    The movement towards basic income occurs through harmonisation of the welfare system, raising minimum benefits and increasing positive feedback effects. Furthermore, the obstacles to taking salaried jobs are reduced, the welfare-reducing effects of earned income are reduced and the processing times of unemployment benefits are shortened. Pensioners receive an earnings-related pension, which is complemented with a state pension and a guaranteed pension of at least € 750. The earnings-related pension is paid on top of the € 620 basic income so that the level of the total stays the same.

    Basic income would cost the public economy an additional 1.2 billion Euros, and the raising of the taxable income lower limit to € 10,000 would cost 2.4 billion Euros. The € 620 basic income and the € 750 as welfare mean an income transfer of 3.6 billion Euros, which is done by changing the income tax structure so that income beyond the basic income is taxed at 30%-57%. The first income tax bracket is € 0-7,200 of yearly income.

    After the Left Alliance’s model was published, the discussion revolved mostly around the Greens’ and the Left Alliance’s models, although Left Alliance still has only circulated a discussion paper, not announced an official proposal of a model.

    In May 2011 the Basic Income Earth Network (BIEN) Finland was founded. It collected supporters of basic income scattered all over the political map. In the end of March 2012 Finland’s BIEN launched a campaign for a citizens’ initiative for a universal basic income. Citizens’ initiatives can be considered by parliament, if they are signed by 50,000 people. The citizens’ initiative proposes a basic income that corresponds to the minimum level of current basic social security benefits, to be granted on an individual basis to all adults permanently residing in Finland.

    The initiative was drafted by a working group of people from different political parties and NGOs. Due to this initiative and the Left Youth of Finland’s campaign for basic income, the topic became central again for the Finnish media and for political activism. It got even more attention after the publication of the book Perustulon aika (“Time for Basic Income”) edited by Johanna Perkiö and Kaisu Suopanki.

    The general public began to be more aware of the idea. In June 2012 the biggest daily newspaper in Finland wrote that the issue is now increasingly being discussed in the terms used by the supporters of basic income.

    Naturally, this forced the opponents to react. The common reaction has been that a basic income would result in a low-wage, low-skill society. The Central Organisation of Finnish Trade Unions’ (SAK) economist wrote about basic income under the title “Basic income: expensive, useless or awful”. Most of the arguments were quite arrogant, exhibited lack of familiarity with the different models that had been proposed or were based on a superficial absorption of them. Even though SAK doesn’t have an official position on basic income, after various public utterances it made it would seem that SAK’s statements on basic income are intentionally negative. This is despite the 37% of respondents in their own survey, who supported a citizen’s wage, which essentially amounts to basic income, in 2008.

    It is quite hard to say what the real “threat” is that motivates the union’s resistance to basic income. One of the threats is probably the possible effects on collective bargaining agreements. This is a real issue that deserves more discussion. Still, SAK is not even ready to assess different courses of actions on this matter. The main concern seems to be that basic income would increase low-wage jobs, though this could be easily fixed by enacting a minimum-wage law.

    The problem is that while supporters of basic income are developing their arguments and visions, the other side is not even willing to discuss the issue on a rational level. Most of them side-line the whole discussion with one-liners not always based on facts.

    As basic income is increasingly becoming feasible, opponents should either sharpen their counter-arguments or be ready finally to consider the idea. If the opponents are not willing to accept basic income, they should present their own alternative solutions to the problems of the current social welfare system. If basic income is becoming reality, the unions ought to participate in the process to avert undesirable consequences and ensure that the system is built on the left’s terms.

    In the fall of 2012 the debate no longer connects so much to the various models. This is progress. The discussion has migrated from the movements and is now being discussed by experts and parties. Still, the parliamentary left and the Left Alliance lack a future vision of the society they would like to build with basic income. Most are still afraid to talk about this basic question other than in terms of changes to the bureaucracy. Instead, it is necessary to concentrate on the concrete level and aspects. What can we achieve and what kind of society do we want to build? Is basic income one of the tools for this? What are the goals we want to achieve with basic income? What are the compromises we are willing to make in order to achieve this goal?

    The precariat and the “new left” seem to have the most developed ideas on the issue. A key point is that basic income can be viewed as a compensation for all the unpaid, but socially necessary, activities performed by citizens. What the left now should talk about is different ways of organising production and an alternative to capitalism. The left goal in promoting basic income should be a more equitable distribution of paid labour, the abolition of untenable patterns of consumption, the organisation of sustainable production and the redistribution of wealth.

    In reality, the left speaks humbly about the complexity of the social security system and not about refusing to work.

    One could raise again the precariat movement’s demand that one must be able to decline to work under unacceptable conditions. Basic income could make a significant change in the current institution of paid labour.

    The left’s basic income reform would offer a more democratic way to organise work. It builds on democratic governance, distribution of income based on actual work and an evaluation of the social impact of production. In addition, basic income would provide innovation incentives to small and middle-sized enterprises and function as a progressive economic policy.

    Subsistence that depends on paid labour is a central mechanism of control. If freedom is the word and the idea that the left in Finland (and in Europe) wants to promote, this point should not be ignored. Basic income could be the solution.

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