by Micah Kaats | Jan 16, 2018 | News
As many as 375 million people may have to switch jobs as a result of automation by 2030. This is according to a new report published by the McKinsey Global Institute (MGI), a private sector think tank and the business and economics research arm of McKinsey & Company.
According to MGI researchers, “the transitions will be very challenging – matching or even exceeding the scale of shifts of agriculture and manufacturing we have seen in the past.” Such dramatic shifts in the global labor market will demand proportionately dramatic responses from governments, businesses, and individuals. Specifically, the MGI report emphasizes the importance of providing transition and income support to workers.
The report, entitled “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation”, builds on previous MGI research suggesting that 50% of global work activities could theoretically be automated by modifying existing technologies. While only 5% of jobs are at risk of disappearing entirely, 6 in 10 of jobs have 30% of constituent work activities that could be automated. According to MGI researchers, the question is not whether or not automation will alter the nature of work, but how long it will take.
Their analysis model potential net employment changes over 12 years for more than 800 occupations in 46 countries, focusing particularly on China, Germany, India, Japan, Mexico, and the USA. The report also accounts for several factors that could affect the pace of automation including technological and financial feasibility, demographic changes to labor markets, wage dynamics, regulatory responses, and social acceptance.
The report finds that 75 million to 375 million workers, or 3 – 14% of the global workforce, may be displaced by automation by 2030. These effects will be particularly felt in high income countries. In the most extreme scenario, 32% of American workers (166 million people), 33% of German workers (59 million people), and 46% of Japanese workers (37 million people) will be forced out of their jobs by 2030.
However, there may not be any shortage of new jobs available. MGI’s researchers note that new jobs will need to be created to care for aging societies, raise energy efficiency, address challenges posed by climate change, provide goods and services to the growing global middle class, and build new infrastructure.
Automation itself may also have the potential to create at least as many jobs as it destroys. Historically, transformative technological advancements have often led to significant jobs growth across industries.
The real challenge will be to ensure a smooth and stable transition between jobs. According to MGI research, automation is likely to disproportionately affect workers over 40, and sustained investments in retraining programs will be necessary to prepare midcareer workers for new employment opportunities. The report notes that this will require “an initiative on the scale of the Marshall Plan…involving collaboration between the public and private sectors.”
The MGI researchers also emphasize the need for increased financial support during transitions. Workers will need unemployment insurance to compensate for lost wages, as well as supplemental income to offset wage depressions typical in transitioning economies. A universal basic income (UBI) may be capable of satisfying both needs.
The report points to completed UBI trials in Canada and India, which showed no significant reduction in work hours and demonstrated increases in quality of life, healthcare, parental leave, entrepreneurialism, education, and female empowerment. The report also references ongoing and planned UBI experiments in the United States, Uganda, Kenya, Spain, the United Kingdom, and the Netherlands as programs to watch in the years to come.
The worldwide spread of automation may be inevitable, but according to researchers at the McKinsey Global Institute, the demise of human labor is not. Whether or not we can respond effectively to the needs of a changing economy will depend largely on our ability to ensure a secure and stable transition for displaced workers.
More information at:
James Manyika, Susan Lund, Michael Chui, Jacques Bughin, Jonathan Woetzel, Parul Batra, Ryan Ko, and Saurabh Sanghvi, “What the future of work will mean for jobs, skills, and wages”, McKinsey Global Institute, November 2017
by Aleksander Masternak | Jan 10, 2018 | Opinion
One of the most common objections to Universal Basic Income (UBI) states that the policy will disincentive individuals from working. There is an apparent fear that a UBI will bring widespread idleness. While we should be optimistic that basic income (or Negative Income Tax) experiments, which have recorded relatively low reductions in labour effort while decreasing poverty and increasing well-being, the devil’s in the details (and caveats) [1]. Instead, let’s take a step back and reflect on whether we should be working the long hours we still do and whether a hardline approach [2] to incentivising employment is necessary and effective.
Historical increases in productivity since the start of the 20th century developed predictions that citizens will not need to work as much as they had in the past. In the 1930s, Bertrand Russell remarked at the great productive capacities of the British economy during WW1 and detested the continued obsession with work for its own sake[3]. Nowadays, the need for basic products and services is adequately met and producing more does not mean working more. We need not be working the long hours we are required to for our societies to continue to grow. As economic historian Robert Skidelsky put it, “with our post-machine standard of living, we can afford to shed some of the Puritan guilt that has, for centuries, kept our noses to the grindstone” [4]. As such we should not worry about UBI earners enjoying more leisure time.
Increased leisure time allows individuals to pursue several goods in life, be it developing skills, learning something new, caring for the elderly or children, or just watching their favourite show. Shortening working days has been shown to increase productivity, promote well-being, reduce sick leave, and allow for a better work-life balance [5]. What should one do in their leisure time is up to them to decide. Long hours of work, however, seem to exhaust the worker as to prevent him from enjoying leisure time actively. Picture an “average Joe”, slumped in his armchair, watching a game of football with a beer in his hand. Admittedly, when a UBI is first introduced, the belief of many may be akin to that of “average Joe”. Long working days and passive evenings is what we’re used to after all.
Bertrand Russell thought, “…the wise use of leisure […] is a product of civilisation and education. A man who has worked long hours all his life will become bored if he is suddenly idle. But without a considerable amount of leisure a man is cut off from many of the best things.” [6]
If there are many slackers, we shouldn’t worry about them. With no requirement to work they should be able to pursue ends they would have attempted to do anyway. This may still be work, albeit in a different form, or training for a job for which you were previously thought unqualified. Many people may have waited for these activities or efforts until they had earned enough income. UBI reduces concerns of financial stability. We are not used to a society where individuals do not have (serious) personal financial concerns. It may take a generation or two for us to get used to it and be able to make wise use of our leisure time. A lot of people choose to spend their leisure time being productive, while others are happy to sit and play PC games all day long. In the meanwhile, many will be bored with the extra time they have on their hands and that might be a good thing.
Individuals work for reasons far exceeding the need to earn subsistence. Unfortunately, despite years of technological development and raised standards of living, individuals are still thought only capable of being motivated to work through the deprivation of their physiological needs. Empirical evidence suggests people care about their work for more than just earning a wage [7]. When the labour market does not offer a sufficient supply of meaningful work that a labourer can take on, earning subsistence seems to take precedence. Systematically denying individuals meaningful work, however, could be detrimental to the individual’s capacity of devising and pursuing their conception of the good life.
It is difficult to conceive of alternative ways to sustain oneself and pursue a good life. It is arguably easier to find meaning in the responsibilities placed upon you by virtue of employment rather than to find yourself bored, seeking meaning, deciding upon a pursuit, and motivating oneself to do it. A new field of psychological research, developed by Ryan and Deci, called Self-Determination Theory (SDT) should raise optimism.
SDT posits “human nature […] is deeply designed to be active and social and which, when afforded a good enough (i.e. basic-need-supportive) environment, will move toward thriving, wellness, and integrity” [8]. Humans achieve optimal functioning when managing their physiological needs, their psychological needs are often achieved as well. These needs include autonomy – when one’s behaviours are inline with one’s authentic interests, competence – feeling mastery in significant life contexts, and relatedness – when you feel cared for or significant in front of others. “People’s curiosity, creativity, productivity, and compassion are most robustly expressed” in social contexts in which their psychological needs have been taken into account.
If the current generation is afforded a UBI many who reduce their time at work will become bored. A well-implemented UBI policy guarantees one’s physiological needs are met and frees individuals to fulfill their psychological needs. When these same individuals recognise their boredom they will seek to alleviate it. Initially, this may take the form of passive entertainment (and some may stay here) while others will try and fulfil their psychological requirements through meaningful activities (congruent with their psychological needs). Those that never make an effort to improve themselves likely already have this inclination under the current social system, and this should be rare anyway. Figuring out one’s intrinsic interests is difficult and takes serious reflective deliberation. While instinct leads us to the fulfilment of psychological needs, we may not have these clearly defined ourselves or be properly aware of them. As such, in order to ease the existential burden of the first generation of basic income earners the public should be educated about their psychological needs and ways to pursue them.
About the author:
Aleksander Masternak is a freelance writer and web developer based in Berlin.
He holds an MSc in Political Theory from the University of Amsterdam and an MA in History and Economics from the University of Glasgow. In the past, he worked as an archival research assistant to the Great War Project in Glasgow, a TEDx conference event organiser, an English language teacher, a marketing manager for a start-up, and Centre Manager of a language school.
[1] Widerquist, Karl. (2017, November 28). The Basic Income Guarantee Experiments of the 1970s: A Quick Summary of Results. BIEN.
Weller, Chris. (2017, May 10). Finland’s Basic Income Experiment Is Already Lowering Stress Levels – and It’s Only 4 Months Old.
Widerquist, Karl. (2017, November 21). Basic Income Experiments-The Devil’s in the Caveats. BIEN.
[2] stick-approach: when one is incentivised to act through the threat of punishment and coercion rather than through the promise of reward (carrot-approach).
[3] Russell, Bertrand. (1932). In Praise of Idleness.
[4] Skidelsky, Robert. (2013). Rise of the Robots: What Will the Future of Work Look Like? The Guardian.
[5] Bernmar, Daniel. (2017, January 06). Ignore the Headlines: A Six-hour Working Day Is the Way Forward. The Guardian.
[6] Russell (1932).
[7] Gheaus, A., &; Herzog, L. (2016). The Goods of Work (Other Than Money!).
[8] Ryan, R. M., &; Deci, E. L. (2017). Self-determination theory basic psychological needs in motivation, development, and wellness. New York: Guilford Press.
by Guest Contributor | Dec 27, 2017 | Opinion
We know that basic income has risen dramatically in the public consciousness and also up the political agenda in the last two to three years. How has this been achieved? The academic literature offers theoretical explanations but no empirical evidence from any of the existing pilot projects. Therefore, I carried out research in four of the locations undertaking pilot studies, Finland, Scotland, the Netherlands and Ontario, to understand how basic income was legitimised as a policy, what problems they hope to address, and how the interpretation and implementation of basic income varies between them.
Through interviews with policymakers, experts and advocates involved in these pilots and in the promotion of basic income in these countries, I discovered a great deal of similarity in the factors which have allowed basic income onto policy agendas. Some have occurred by accident, some through long-term advocacy and political lobbying, and some through economic change. Importantly, these factors occurred at similar points in time, enabling them to interact and strengthen each other.
In all four of the pilot locations interviewees described how long-term support and advocacy for basic income has allowed public and political opinion about the idea to develop over time. Alongside this, long-standing problems such as unemployment and poverty have proved extremely difficult to address, and dissatisfaction with existing policies has grown. Interviewees explained how anxieties about the changing nature of work and the inability of social security systems to properly adapt to this new world have led increasing numbers of people to look to basic income as a radical alternative. Existing systems are seen as delivering poor outcomes, stigmatising those in poverty and being overly complex and bureaucratic. The assessment of basic income as a holistic and intersectional policy, capable of delivering multiple outcomes, was cited by several interviewees as reinforcing the desire to implement a pilot. Each pilot study aims for a range of positive impacts, both economic and social, pragmatic and ethical.
Interviewees in all four of the pilot locations reported high levels of public debate and engagement with the idea of basic income, and this appears to have been crucial in legitimising it as an idea . Public interest reached a critical mass, which, coupled with other factors, prompted political action. These pilot studies have not been developed solely by civil servants in a bureaucratic bubble but have been strongly influenced by campaigners, basic income advocates and experts from think tanks and academia. Evidence from the interviews shows that formal and informal coalitions and collaborations between these different groups has helped to shore up support and consolidate basic income as a legitimate policy.
Interviews in all of the pilot areas noted a context of growing interest in evidence-based social policy, and each pilot is framed as an experiment, not necessarily the precursor to a full roll-out of basic income. In Finland for example, both advocates and opponents of basic income supported setting up the pilot in order to evaluate if basic income can live up to its promises. The emphasis on experimentation was an important factor in enabling the Finnish pilot to take place but also meant that it does not necessarily signal deep political or social change.
It should be noted at this point that none of the pilot studies that are running (Finland, Netherlands, Ontario) are experimenting with a ‘full’ basic income: a universal, non means-tested payment with no obligations or conditions attached, paid regardless of other income.
Each study retains some element of conditionality, targeting or an earnings cap, above which the basic income payment is reduced. A clean break with existing policies and paradigms of social security has not been achieved or indeed attempted for the most part. Interviewees discussed political, bureaucratic, and experimental pressures that led to compromises in the scope and ambition of their pilots. These compromises appear to have been critical in allowing the pilots to take place, as they resulted in proposals that were deemed to be politically and experimentally acceptable. At a detailed level, each of the pilots look very different in how they were designed, whom they target, and how they operate; local influences proved powerful in translating the core concepts of basic income into operational models.
These compromises could be considered as a de-radicalisation of basic income, and have resulted in a curious situation in which pilots are not testing a ‘full’ basic income but have retained the basic income ‘brand’. This appears to be a presentational issue; many interviewees described a desire amongst politicians to demonstrate innovation, leadership and radical thinking, and basic income was seen as a way to do this. Retaining the basic income ‘brand’ even though the experiments deviate in important ways from the core ethical and economic values of basic income confers a positive light on those involved and attracts international attention.
When look at their specifics, each pilot in the study is different, influenced by myriad local factors. However, each pilot demonstrates striking similarities in the clustering of a number of factors that have allowed basic income onto the political agenda. Broad agreement on the importance of tackling poverty and unemployment, and the steady rise in public interest in basic income coupled with a desire for evidence-based policy and the hope that basic income could tackle multiple problems. As a small-scale, qualitative study, these findings cannot be considered a ‘how-to’ guide for other places hoping to develop their own pilot project but may prove useful in understanding how a radical idea such as basic income can find a place in mainstream policy.
Anna Dent is a consultant working in employment and skills policy and implementation for the public and non-profit sectors. She has particular interests in low-income workers, the changing nature of work, and welfare benefits. She holds an (Master of Science) in Public Policy from the University of Bristol, and is a fellow of the RSA (Royal Society for the Encouragement of Arts, Manufacturing and Commerce).
by Hilde Latour | Dec 23, 2017 | News
On October 30th 2017, the Canadian Association of Social Workers (CASW) released a position paper recommending a Universal Basic Income Guarantee (UBIG) of $20,000 for all individuals, regardless of income. CASW’s UBIG fulfils the definition of a Basic Income. CASW argues that a UBIG is superior to a Negative Income Tax, which is being tested in other experiments (1).
CASW argues that a universal demogrant model, or UBIG, is “a cost-effective and socially responsible mechanism through which Canada can ensure dignity for all”.
CASW states there have been many federal promises to end poverty in Canada over the past 30 years, in many different forms, including Canada’s support for the United Nations’ Sustainable Development Goals which specifies the need to “end poverty in all its forms everywhere”. Yet in 2016, 4 million Canadians (12.9%) were living in poverty and child poverty rates even increased between 1989 and 2013.
According to CASW, conditional and heavily monitored programs are insufficient and expensive. The combined income support-related expenditures of all federal, provincial, and municipal levels of the Canadian government cost just over $185 billion. Furthermore, their implementation causes a great deal of stress given their unreliable nature, with individuals reporting stress brought on by stigma, marginalization and feelings of disempowerment and hopelessness.
CASW claims that “current social assistance systems in Canada are inadequate and contribute to a cycle of poverty”.
Poverty is a well-known social determinant of physical and mental health. CASW illustrates this with several UBI-related examples from Canada:
- a difference of more than 20 years in life-expectancy between the high-income and low-income population in Hamilton, Ontario;
- a reduction of 8.5% on hospitalization during the Mincome basic income pilot project in Dauphin, Manitoba (2);
- people between 55 and 64 years of age are 50% more likely to experience food insecurity compared to seniors 65 years or older who receive the Old Age Security pension.
From CASW’s perspective, the strengthening of Old Age Security (OAS) and the introduction of the Canada Child Benefit were solid steps towards realizing a UBIG in Canada. Programs like the OAS, which are universal in nature and have few eligibility criteria, are quite inexpensive to operate. In 2013, the total cost of operating the OAS program was 0.3% of the total annual program cost. In contrast, the total administrative cost of Employment Insurance, a program with a high degree of gate-keeping and extensive eligibility criteria, was 8.1% of the total annual program cost.
According to CASW, this cost-saving potential is a fundamental strength of the UBIG which would operate under significantly fewer operational and administrative costs than, for example, a negative income tax model.
CASW further argues that the so-called “benefit trap”, that makes the adoption of part-time work unattractive and is often used to argue against a basic income guarantee, in fact only exists within the negative income tax model. Therefore, the true benefits of a basic income guarantee cannot be realized within the negative income tax model which has formed the basis of all of the pilot projects run so far in Canada.
In addition, a universal demogrant model involves significant benefits to the middle classes giving it a wider support base compared to a program that only targets low-income households. It will therefore have more likelihood of success.
CASW recommends a UBIG of $20,000 per year with the possibility of additional fully-remunerated casual, part-time, or full-time employment. Individuals with disabilities would receive an extra $6,000 tax free per year. The UBIG should replace only traditional welfare or social assistance programs – not all existing social programming. One’s net income will then be taxed according to progressive tax brackets. This model encourages participation in the labour market.
Notes
(1) – A Negative Income Tax does not pay an unconditional income to every individual. Instead, it tops up earnings below a threshold, and charges tax on earnings above the threshold. The administration of a Negative Income Tax poses more challenges than the administration of a Basic Income.
(2) – This is a significant amount considering the Canadian Institute for Health Information in 2014 put the total health expenditure in Canada as upwards of $200 billion.
More information at:
Colleen Kennelly, “Universal Basic Income Guarantee: The Next ‘BIG’ Thing in Canadian Social Policy”, Canadian Association of Social Workers (CASW), October 2017
Picture: Two sides of the same Loonie … (10/100), Jamie McCaffrey, CC BY-NC 2.0
by Faun Rice | Dec 21, 2017 | Research
“Wise Cities & the Universal Basic Income: Facing the Challenges of Inequality, the 4th Industrial Revolution and the New Socioeconomic Paradigm” by Josep M. Coll, was published by the Barcelona Centre for International Affairs (CIDOB) in November 2017. CIDOB is an independent think tank in Barcelona; its primary focus is the research and analysis of international issues.
The Wise Cities Model
CIDOB has published other works about a concept it calls “Wise Cities,” a term intended to holistically encompass words like “green city” or “smart city” in popular usage. Wise Cities, as defined by CIDOB and others in the Wise Cities think tank network, are characterized by a joint focus on research and people, using new technologies to improve lives, and creating useful and trusting partnerships between citizens, government, academia, and the private sector.
The 2017 report by Coll opens with a discussion of the future of global economies; it highlights mechanization of labour, potential increases in unemployment, and financial inequality. It next points to cities as centres of both population and economic innovation and experimentation. A Wise City, the paper states, will be a hub of innovation that uses economic predistribution—where assets are equally distributed prior to government taxation and redistribution—to maximize quality of life for its citizens.
Predistribution in Europe: Pilot Projects
Universal Basic Income (UBI) is one example of a predistribution policy. After touching on UBI’s history and current popularity, Coll summarizes European projects in Finland, Utrecht, and Barcelona in order to highlight city-based predistribution experiments. Coll adds that while basic income is defined as unconditional cash payments, none of these pilots fit that definition: they all target participants who are currently, or were at some time, unemployed or low-income.
Finland’s project began in January 2017, and reduces the bureaucracy involved in social security services. It delivers an unconditional (in the sense of non-means-tested and non-work-tested after the program begins) income of 560 €/month for 2,000 randomly selected unemployed persons for two years. Eventual analysis will consist of a comparison with a larger control group of 175,000 people, and the pilot is a public initiative.
The city of Utrecht and Utrecht University designed an experiment which would also last two years, and would provide basic income of 980 €/month to participants already receiving social assistance. The evaluation would assess any change in job seeking, social activity, health and wellness, and an estimate of how much such a program would cost to implement in full. The author comments that the program was suspended by the Netherlands Ministry of Social Affairs, and the pilot is currently under negotiation.
Barcelona has begun an experiment with 1,000 adult participants in a particularly poor region of the city, who must have been social services recipients in the past. “B-Mincome” offers a graduated 400-500 €/month income depending on the household. After two years, the pilot will be assessed by examining labour market reintegration, including self-employment and education, as well as food security, health, wellbeing, social networks, and community participation. Because the income is household-based, and not paid equally to each individual, it is not a Basic Income, but the results could still provide useful evidence for the possible effects of a future Basic Income.
The Implications
Coll identifies several key takeaways from a comparison of these projects. None of the experiments assess the potential behavioural change in rich or middle class basic income recipients. In addition, multi-level governance may cause problems for basic income pilots, but these issues may be mitigated as more evidence assessing the effectiveness of UBI builds from city-driven programs. Coll also acknowledges that all of the experiments listed in his paper are from affluent regions.
In conclusion, the author argues that UBI is a necessary step to alleviate economic inequality. While cities are experimenting with the best ways to implement UBI, they are often not real UBI trials (as they are not universal), and they do not always take an individual-based approach; however, they are nevertheless useful components of the Wise City model.
More information at:
Josep M. Coll, “Why Wise Cities? Conceptual Framework,” Colección Monografı́as CIDOB, October 2016
Josep M. Coll, “Wise Cities & the Universal Basic Income: Facing the Challenges of Inequality, the 4th Industrial Revolution and the New Socioeconomic Paradigm,” Notes internacionals CIDOB no. 183, November 2017
