The Confederation of Finnish Industries (EK) has voiced its support for consolidating housing benefits and social assistance into a basic income that encourages its recipients to find employment.
The scheme would consist of two components: a basic component and a housing component. The basic component would be a last-resort form of financial aid comparable to the current basic social allowance, while the housing allowance would consolidate the current housing benefits and have a co-payment feature.
Ilkka Oksala, the director of working life at EK, argues in a press release that the basic income would increase the earnings of its recipients in all circumstances, as earned income would not have as big of an impact on the housing component as social security benefits.
The scheme, he says, could be adopted as part of the reform of the basic social allowance system launched by the government of Prime Minister Juha Sipilä (Centre).
“EK demands that key labour market organisations contribute to the preparatory work,” he adds.
Oksala is confident that the basic income scheme would not only clarify but also reduce red tape, increase the cost-efficiency and enhance the incentive effect of the social security system of Finland. He points out that the way in which benefit recipients are presently compensated for housing costs is arbitrary and ineffective in encouraging them to be proactive.
Disbursing housing benefits and last-resort financial assistance falls within the remit of municipalities and the Social Insurance Institution of Finland (Kela). Both the basis of assessment and definition of housing costs, as a result, vary according to which one is disbursing the benefits.
“The new scheme would be clearly better for those in need of benefits, employment, the sustainable financing of the state and benefit payers,” states Oksala.
He also estimates that the idea of paying all citizens a fixed basic income is utopian.
“A fixed basic income would have to replace many of the current social security benefits. Its costs would therefore be unreasonably high. The additional costs would be at least well over one billion euros a year. Such a benefit would also jeopardise the high employment rate required to maintain the welfare society,” he says.
“On the other hand, a low and reasonably costed basic income is impossible because it would increase poverty and inequality. It is no coincidence that a universal basic income has not been introduced in any country that is comparable to Finland,” tells Oksala.
The ongoing basic income experiment is one of the spearhead projects of the government of Prime Minister Sipilä.
A total of 2,000 25–58-year-old people were selected at random to participate in the experiment that started at the beginning of this year. The participants receive a fixed basic income of 560 euros a month for a period of two years. The primary objective of the experiment is to examine the effects of the 560-euro basic income on the employment and labour market behaviour of the target group.
Aleksi Teivainen – HT
Photo: Mikko Stig – Lehtikuva
Source: Uusi Suomi