Finland is gearing up to launch an experiment to find out whether or not basic income could be a means to eliminate inactivity traps.
The newly-published proposal to launch a basic income experiment has come under criticism from economists and policy-makers in Finland.
Osmo Soininvaara (Greens), a councillor for the City of Helsinki, estimates that the proposed basic income scheme would generate a budget deficit of up to 15 billion euros if it was implemented on a population-wide scale.
The proposed scheme, he writes, is “silly” and “outrageously expensive”.
“Socio-political experiments cannot be organised in a way that participants in the experiment are put at a disadvantage in relation to the rest of the population,” Soininvaara, a former chairperson of the Green League, writes in a blog entry.
“The experiment includes no changes to taxation,” he adds. “We cannot afford to raise the earnings of everyone by 560 euros.”
His concerns have been echoed by both Olli Kärkkäinen, a private economist at Nordea, and Joonas Rahkola, an economist at the Central Organisation of Finnish Trade Unions (SAK).
“It is purely an academic experiment on the behavioural effects of increasing the incentives to work, not a realistic proposal for a basic income system,” argues Kärkkäinen. “Taxation will not be changed, which is why the basic income system would generate a deficit of ten billion euros at the level of the entire population.”
Rahkola is similarly concerned that the proposed scheme would be impossible to implement nationwide.
The Social Insurance Institution of Finland (Kela), he points out, acknowledged in its preliminary report on the experiment that the basic income system would generate a budget deficit of roughly 11 billion euros unless taxation is adjusted accordingly. The introduction of any basic income scheme that guarantees income security comparable to that guaranteed by the social security benefits currently in place would consequently require an increase of 11 billion euros in tax revenues, the authors of the report reminded.
The incentives to work would thereby not necessarily increase.
The objective of the experiment is to determine whether or not basic income could be a means to reform the social security system in a way that tears down inactivity traps. The proposal is currently being circulated for comments.
Aleksi Teivainen – HT Photo: Mikko Stig – Lehtikuva Source: Uusi Suomi
