As interest in UBI has exploded in recent years for many positive reasons, including the United Kingdom’s disastrous new “universal credit” policy, three major issues remain that are almost universally neglected. First, a modest ‘affordable’ UBI could not raise non-working individuals or households above poverty, even in addition to existing, means-tested benefits. Second, UBI alone would effectively subsidise low-wage and low-quality jobs, reducing pressure for improvement. Third, meaningful work is essential to well-being for most people, but unattainable for two million discouraged workers who want to work but have given up looking for work, as well as the officially unemployed (and those with inadequate jobs) – a major cause of unhappiness.
As we argue in Prospect, a public sector job offer (JO) at minimum wage, combined with a UBI of £3,000 to £4,000 per year could raise all households above poverty when combined with improved disability and housing benefits. Urgent and growing needs for care of an aging population and improvement of deteriorating infrastructure would ensure meaningful employment for all who took up JOs, with appropriate training when needed.
Such a modest UBI as proposed by Stewart Lansley and Howard Reed for Compass, and many others in the UK, could be partially funded by abolishing the regressive personal tax allowance. It would replace some means-tested welfare measures, though disability and housing benefits should remain and need augmenting. The additional cost of JOs is modest, only about £28 billion, which is around 11 percent of total welfare spending for 2 million full-time JO workers, less than total cuts in welfare spending under austerity measures since 2012. As a result of these cuts, child poverty has risen to 30 percent, and the UK holds the worst record in Western Europe. Child poverty has severe negative consequences for the entire life course of those affected.
By providing good working conditions and career advancement, our JO would set standards for minimum wage employment which could not be undermined by common current practices such as demanding unpaid overtime, since those affected could always credibly threaten to quit. Such a general improvement of working conditions would not greatly disrupt existing labour markets, in contrast to the high–wage job guarantee discussed in the US by prominent Democrats, promising to double the minimum wage. This would likely generate excessive uptake in public employment, causing substantial inflation, followed by restrictive government policies. Such a policy would not compensate for the unpaid work done mainly by women in the home as caretakers for children and the elderly.
JOs for all who want to work would be part of the framework of a Green New Deal (GND), now proposed by figures in America’s Democratic party, such as Alexandra Octavio-Cortez. This would involve greatly increased investment in the urgently needed transition to a carbon-free economy by 2050, which is essential to avoid catastrophic climate change. Such a GND could generate full employment similar to the mobilization in World War II but would require higher taxes on the rich for long-run funding. Though such tax increases would face strong political opposition, this would in turn help to reduce extreme inequality and all its negative effects.
About the authors:
FF – Emeritus Professor of Economics, and Research Fellow, IZA – Institute of Labor Economics, Bonn;
JJ – Reader in Economics, both in the School of Economics and Finance, University of St. Andrews
On 28th September 2018, the Elkarrekin Podemos party registered an initiative in the Basque Parliament to organise a parliamentary discussion in order to study the effects of robotisation and digitalization, distribution of employment, and Basic Income.
This initiative will soon be discussed in a Plenary Session of the Basque Parliament. However, before taking this step, the party requested two appearances on the “Employment, Social Policies and Youth Commission” of the Basque Parliament: Daniel Raventós, head of Red Renta Básica, BIEN’s Spanish affiliate, and Ángel Elías, Dean of the School of Labour Relations and Social Work at the University of the Basque Country.
In his appearance on the 5th of February 2019, Daniel Raventós explained why many meetings of international forums (e.g.: the WEF in Davos and the International Monetary Fund) are now talking about Basic Income. According to Professor Raventós, there are three main reasons for this. First, the vertiginous speed of automatisation of jobs and the potential destruction of employment in the not-too-distant future. Second, it is deterioration of the material conditions of the non-rich majority of the population. And third, Raventós mentioned the structural failures of minimum income schemes.
In the second appearance, on the 12th of February 2019, Ángel Elias explained that, in the present unfair distribution of wealth, fewer and fewer people are accumulating greater and greater fortunes, at the cost of diminishing the resources needed to guarantee people’s access to decent living conditions. He shared his views on transformations in the labour market, and analysed possible solutions. Elías stressed the need for a Basic Income that would guarantee the material existence of all citizens, together with a fairer distribution of employment for everyone.
Elkarrekin Podemos officials are convinced that the destruction of employment deriving from processes of digitisation and robotisation requires urgent analysis with a view to finding solutions. Furthermore, social protection models need to be rethought. In this framework, the universalisation of the right to an income should be seen as an alternative, in the face of a reality where the fusion of robotics, information technology, and artificial intelligence is unstoppable.
“(i) adequacy and predictability of Universal Basic Income (UBI) benefits to ensure income security, set at least at the national poverty line; (ii) social inclusion, including of persons in the informal economy; (iii) social dialogue and consultation with stakeholders; (iv) enactment of national laws regulating UBI entitlements, including indexation of benefits; (v) coherence with other social, economic and employment policies, and (vi) sustainable and equitable financing”,
the paper shows how some models of UBI can be in accordance with ILO standards, while others cannot.
The paper consists of five parts:
1) Universal Basic Income: A tool for social justice or a strategy to dismantle social security?
In the complex and variegated scenario of UBI proposals, the paper identifies two main currents, one which sees UBI as a tool for social justice which would grant social security to all, and the other, neo-liberal or right libertarian in its concoction, which seeks to substitute the welfare state with a minimalistic safety net.
The first is designed to reduce poverty and inequality, promoting individual rights and freedom, giving people the opportunity to engage in forms of work not recognized by the market (domestic work, volunteering). It would also reduce the administrative costs of existing social protection systems, and increase workers’ bargaining power providing an exit option. The second is a way to reduce the complexity of the modern welfare state and the degree of involvement it requires from governments. For UBI to be an instrument of social justice, the first current is the one to follow.
UBI impact on poverty and inequality, on growth, on work and employment, and on gender inequality varies depending on how the policy is designed, what its source of financing is, and on which level it set at. It is thus complex to generalize its effects, and even for specific contexts in which experiments have been done it would be an error to imply that local effects would be the same once replicated on a larger scale.
The positive effect attributed to UBI is that of tackling the issues of increased social and economic insecurity, growing inequalities and the existing gaps in social protection coverage. The growing debate surrounding it “reaffirms the necessity and importance to provide every member of the society with at least a minimum level of income security which is essential to the realisation of human dignity”, principles that are at the hearth of the ILO Constitution and the Recommendation No. 202. UBI would thus represent the income component of the recommended social protection floor.
Social protection floors should guarantee “effective access to essential health care and basic income security throughout the life course, to allow life in dignity.” This means that UBI can’t represent the entirety of social protection floor, as a nonmonetary component would nonetheless be required, and that UBI would need to be integrated in the institutional settings of the state.
2) Benefit levels, adequacy and coverage
For UBI to be a solution to inequality and poverty it needs to be set at a level sufficient to meet at least people basic needs, and needs to be financed in a sustainable and equitable way. With Recommendation No. 202 requiring social protection floors to be set at “a sufficiently high level to enable individuals to live in dignity and to ensure effective access to essential goods and services” a possible benchmark is represented by national poverty lines.
UBI proposals vary greatly in the suggested benefit levels, but given that in most of them it would supplant social assistance benefits, following the guidelines set by the aforementioned recommendation, the level should be enough to allow access to a set of necessary goods and services. Proposals built taking this into account are promising, whilst those with benefits level set below the poverty line are not able to fulfill the promises of poverty and inequality reduction.
The amount provided via UBI cannot be uniform through the populations, as it wouldn’t be able to account for those in special need, and if the amount was to be uniform UBI would be required to coexist with other forms of social security benefits safeguarding those with specific needs. UBI would thus need to be integrated in the existing systems, in order not to leave individuals worse off, the paper states.
The paper also recommends that, in order to ensure adequacy over time, attention should be given to adjustments to changes in purchasing power and overall standards of living, as to ensure the adequacy of benefits over time. For UBI to maintain its effects over time, it would need to be indexed to inflation and wages.
UBI, a cash benefit, would nonetheless need to be complemented by effective access to services (e.g.: health, education). If UBI was to be financed via the reallocation of the budget dedicated to such services, it would have detrimental effects.
Even with universalism being often presented as one of the key features of UBI, some proposals restrict its coverage in two ways: 1) depending on the age of the recipient (children wouldn’t receive benefits in some instances, whilst older persons would be subject to different rules); 2) depending on the requisite of nationality, or that of residency after a minimum duration, in order to prevent migration.
With ILO standards requiring states to provide “all members of society with adequate social protection” and with the principle of universality of protection being “at the core of the social protection floor concept, stipulating that everyone should enjoy at least a basic level of social security throughout their life course”, a UBI restricted to only nationals, or not granting sufficient benefits to meet children’s needs, would be insufficient to provide the required protection.
3) Costs, Affordability and Financing
The paper presents two scenarios for the cost estimates of UBI:
A basic income transfer at 100 per cent of the national poverty line for all adults and children;
A basic income transfer at 100 per cent of the national poverty line for adults and 50 per cent to children up to 15 years old.
Under scenario I. the global average cost as a percentage of GDP would be around 39.4%, with a cost of 79.1% of GDP for low income countries, 28% for lower middle-income countries, 22.8% for upper middle-income countries and 29.9% for high income countries.
Under Scenario II. the global average cost as a percentage of GDP would be 32.7%, with a cost of 62.3%of GDP for low income countries, 23.1% for lower middle-income countries, 19.8% for upper middle-income countries and 27.4% for high income countries.
One possible benchmark for adequacy of the benefit level supported by Recommendation No.202 is that of national poverty lines, but many UBI proposal are far below them. Even so, an UBI set at 25% of equivalent disposable income is nonetheless deemed unfeasible under the existing fiscal context. In order to provide benefit levels capable of reducing poverty and inequality, new financing sources need to be explored, among them the paper briefly explores:
The reallocation of public expenditures
Increasing tax revenues
Lobbying for aid and transfers
Eliminating illicit financial flows
Using fiscal and central bank foreign exchange reserves
Restructuring existing debt
A mix of the aforementioned would be needed, with an increase in tax revenues being central in order to assure progressivity to the policy. For low income countries, lobbying for aid and transfers may be a feasible method, as the estimate cost for the introduction of an UBI is just 0.68% of the global GDP, 3% of what has been spent by the G20 to rescue the financial sector in 2009.
Regressive proposals are not in line with ILO standards as they would further inequalities. Budget neutral proposals, which rely on cutting existing social benefits in order to provide a modest UBI coupled with social insurance, result in a social net loss which would exacerbate income and gender inequalities.
4) Who would benefit from UBI? Different implementation scenarios
The paper investigates three different scenarios for the implementation of an UBI, in order to find out which one could be beneficial to society to investigate winners and losers.
Only under scenario 1, which assumes the introduction of a UBI set at the level of the poverty line, the majority of the population is found to be net winner, thus reducing inequality.
Under scenario 2 a UBI is introduced in exchange for cuts in employers’ contributions to social security systems. This setting would reduce the capacity for social insurance to redistribute wealth across society. With net losers being among the lower and middle classes, and the net winners being corporations, this scenario is not in line with ILO standards.
Under scenario 3 UBI is introduced in exchange for the complete abolition of public social insurance:
“In this scenario virtually everybody is a net loser; the poorest will not receive anymore social assistance at the poverty line level; the low and middle classes, before covered by a better social protection system, now they will lose their accumulated social protection benefits. Eliminating public social insurance systems by a modest UBI, and promoting individual savings and private provision for those who can afford it, would reduce the potential for both vertical and horizontal redistribution, thereby exacerbating income inequality.”
5) Conclusion: Universal Basic Income in light of ILO standards
While UBI cannot be considered as a solution to all the problems of society, it can potentially act as a useful tool for closing coverage gaps and provide basic income security.
The benefit level should be set at a level sufficient to provide income security to everybody, particularly to those without other sources of income. The benefit should avoid discrimination towards those in special needs.
UBI by itself wouldn’t be enough to provide access to basic services, and it should be coupled with policies granting universal education, health care and social services. At the same time, contributory mechanism will have to remain in place, with public social insurance continuing to provide a level of social protection.
Progressive means of financing are essential in guaranteeing equity, sustainability and that UBI satisfies ILO standards. UBI implementation will need to follow a progressive realization, by setting standards and time frames: this calls for the creation of an ad hoc legal framework and effective governance and administration.
Moreover, “systematically assessing implications for the broader policy context is essential for a UBI to positively contribute to social justice and inclusive development”. UBI cannot be a stand-alone policy, but needs to work in concert with labour market institutions, and the potential interactions that could arise call for further studies.
“The momentum gathering behind the idea of a UBI can help to spur a discussion on how to respond to existing economic and social changes in a more effective and empowering way based on social solidarity and while ensuring social justice outcomes for all.”
Final remarks
The paper is clear in defining Basic Income and in discussing its potential advantages, clarifying that different UBI designs would bring very different end results.
The paper also provides a comprehensive list of experiments, proposals, and pilots, and does a service by calculating the proportions of national poverty lines that their Basic Incomes represent. This is done calculating the gross cost of UBI, which however says little about its net costs.
Much attention is devoted to proposals that eliminate current benefits, a practice that, as the authors of the paper themselves suggest, is not in line with ILO standards.
Rather than investigating a particular mean of financing and its potential effects, the paper follows a more general approach, and highlights that further studies are needed in order the understand the practical implications of UBI, nonetheless being clear about its potential to be a powerful instrument for the enhancement of social security and the reduction of poverty and inequality.
Rutger Bregman at Davos (2019). Picture credit to: World Economic Forum
Rutger Bregman has been hitting the numbers the past few weeks. After a controversial participation at Davos, at the end of January, he went on for a controversial interview on Fox News that never got aired – but got “aired” on Twitter, and watched by more than eleven thousand people, and retwitted over sixty thousand times – and is, most probably, getting the spotlight out of a simple fact: he’s saying out loud what most people are thinking.
At Davos, on a shared panel, Bregman decided to touch the open wound, a particularly sensitive issue for all the millionaires and billionaires that fly over to this global elite event once every year: taxes. According to him, no private philanthropy can solve the real issue of tax avoidance, and that high taxes on the wealthy are an urgency in these troubled days (as well as terminating with tax havens). And he is not alone on this quest: most Americans support this general trend in tax policy – higher marginal tax rates, wealth taxes, inherence taxes and so on – and, if that’s the situation in the USA, then most possibly in the rest of the world that tendency is also real.
As an example, also cited by Bregman, Alexandria Ocasio-Cortez has been pushing for taxes on the wealthy as high as 70%. He adds that this is no coincidence, but a part of what he sees as an uprising on a “new generation waking up”. He believes this generation, in which he includes himself (a young 30 years-old Dutch historian), simply doesn’t believe anymore that inequality is some kind of fatality, and that (ordinary) people just have to deal with it. Bregman also voiced at Davos’s shared panel what he called “a moral equivalent of a war”, particularly when in reference to inequality (and also on environmental protection). Although imbued of a strong potency, it remains to be seen if warfare – real or a moral equivalent of it – has actually brought anything else to the world than heartbreak, death and destruction.
On Fox News, Bregman was interviewed by Tucker Carlson, a prominent Fox News anchor who, somehow, felt the need to affront him with harsh words. Apparently, the reason for that was Bregman’s boldness in saying that (about Carlson) “You are a millionaire, funded by billionaires, that’s what you are (…) and that’s why you’re not talking about certain things”. One of those things being, in particular, tax avoidance. Naturally, this word exchange didn’t come to any meaningful conclusion, but it may just be that Bregman went over to Fox News to speak for millions of people, who already suspect the collusion between big money and big media.
An edited eight-minute segment of the famous never aired interview can be watched over the link below (from Now This).
Watch Fox News host Tucker Carlson call one of his guests a 'tiny brain…moron' during an interview. NowThis has obtained the full segment with historian Rutger Bregman that Fox News is refusing to air. pic.twitter.com/kERYPUaGLY
A popular 5-minute introductory video on Basic Income, in English, is now online.
The video was originally made in Spanish, produced by Atxe, a Spanish artist, as a project for Red Renta Basica, the Spanish affiliation of the Basic Income Earth Network (BIEN), 2 years ago. It gathered a great success reaching more than 5 million people. [1]
Carlos Arias, an activist of the Unconditional Basic Income Europe (UBIE), took the initiative to make an English version, which is now available online. Narration in English was done by Barb Jacobson, former chair of UBIE.
On this occasion, we had a short interview with Atxe to show our respect to the artist who made the probably most watched video on UBI:
– How you were involved in making the video?
Atxe: Basic income is something that has been of my interest for a long time. I had previously done this kind of videos – for instance, on the TTIP – and David Casassas, as a member of Red Renta Básica, suggested me to make one explaining the main ideas that association defends.
– How you do you think of great success of the video?
Atxe: I think basic income is a proposal that creates a lot of controversy and, either you like it or not, it shakes you up. The video deals with issues and problems that speak to a large number of people and that leave you everything but indifferent – especially in Spain, where we are intensely suffering the blow of the crisis. Also, I tried to make a fun and entertaining video, which, I suppose, helped too. I must add to all this that the dissemination campaign we did in social networks – many members of Red Renta Básica and other companions actively participated in it – ended up being really successful – the video became a trending topic fast and kept this position during almost two days.
– What do you think of the idea of UBI?
Atxe: In addition to all the benefits the video talks about and that every basic income supporter knows, basic income is today more relevant than ever because it can break the fear that permeates a large part of our societies. It is a fear that too many times is translated into fuel for the rise of the far-right, and basic income could put an end to this tendency.
[1] 5,423,641 visitors between 22 February 2017 and 30 January 2019 (data provided by Carlos Arias, a Facebook page administrator of Renta Básica Universal)
