Basic income test brings no more employment: research

The Finnish State Institute for Economic Research (VATT) has concluded that the basic income experience appears not to increase the employment level of its recipients, VATT said on Tuesday.

In the Finnish income test of 2017-2018, the test group of 2000 jobless persons were given a monthly incentive of 560 euros no matter if they found a job or not. If they would start working they were allowed to keep the 560-euro basic income on top of their possible salaries. A comparison cohort was dealt with the old system where they lost the unemployment compensation if they found a job.

Despite the concretely attractive vista of more money at their disposal, the new employment rate of basic income recipients did not exceed that of the comparison cohort who received normal unemployment benefits, said VATT in a media release.

VATT's researcher Jouko Verho believed that it would be impossible for any Finnish government in the future to afford such a lucrative basic income system.

Finland started to test the basic income for the unemployed at the beginning of 2017. The test was carried out on the basis of a public law enacted for the test. The final results will be completed by 2020.

Initial results from the first year of the test was published in a nationally televised press conference in February this year, drawing a similar conclusion.

Meanwhile, VATT found out the basic income recipients remained positive towards receiving the employment services offered by the public labor offices. They showed up for meetings and responded to contacts, even though they would not be punished for not doing such.

While those who do not receive the basic income are often reluctant to go for training, they are forced by the law to do so, or may lose the benefits. But the basic income recipients did so voluntarily and did not intend to avoid.

"They participated as the others, even though the basic income recipient status made it possible for them not to use the services," leading researcher of VATT, Kari Hamalainen said.

He noted that other researches have shown that personal meetings with labor office staffers are very effective in encouraging the people to work.

Researcher Verho praised the use of random selection in creating the test groups. He hoped the method would be used also in future tests in planning changes in the social security systems.

Besides Finland, countries such as Canada and Kenya have also experimented with the basic income system.