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niversal Basic Income - The Finland Experiment

From January 2017, Finland has started an experimental welfare scheme which is being eagerly watched by the world. The impact of the scheme, if positive, has a potential to reduce poverty in the world.

The Universal basic income scheme experiment started by the government of Finland will provide €560 each month to 2000 unemployed people in that country. The experiment will continue for two years.

The argument behind the launch of the scheme was, as globlisation is changing, the nature of work is also changing. Old jobs are being replaced by new jobs which are more of self-employed and freelancing kind. Providing welfare benefits in the form of insurance and pensions to such short term employment and self-employed people will be difficult. A universal basic income that provides some amount of money to all people irrespective of them being rich, poor, employed or unemployed will give a safety net when things go wrong and start over again.

Even in India the concept of universal basic income was brought by the Economic Survey 2016-17 recently but was categorically rejected by our Finance Minister stating that it is politically not feasible.

Finland on its part is evaluating the scheme, collecting data regarding disease burden, drug consumption pattern etc. of the participating members.

One aspect that will keenly watched will be the labour behavior. It means if anyone in the scheme is taking up work or not.

If the number of people taking up jobs will increase, then it shows that the handing out of a set income is not a disincentive to employment.

The unemployment benefit paid by Finland will be for as many years till the person reaches the age of 63, when the payments of pensions begins in that country.

In 2016, Switzerland too went for a referendum on universal basic income for all its citizens, but was rejected by Swiss voters.

In Finland too political parties are divided over the move. While the Green party backs it, the Social Democrats oppose it, saying people will be distanced the from the State and the Left supports it.
 

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