by Faun Rice | Feb 19, 2018 | News
Image by MaxPixel: Trakai Castle Lithuania
On December 6, 2017, Swedbank published a report on the Baltic Sea Region entitled “Heart-warming growth is a poor excuse to postpone reforms.” The report includes a chapter on Universal Basic Income, wherein the bank models the current economic feasibility of UBI in the Baltics.
Swedbank is a bank based in Stolkholm, Sweden. Its research arm publishes annual economic assessments of Baltic Sea region countries, which include Germany, Denmark, Norway, Sweden, Finland, Russia, Estonia, Latvia, Lithuania, and Poland. The December 2017 report and executive summary focus primarily on Swedbank’s four main markets: Sweden, Estonia, Latvia, and Lithuania.
The report highlights a time when global economic growth has helped Baltic Sea region countries reach cyclical economic peaks. However, it states that geopolitics, and populism in particular, remain risks to further growth.
Swedbank suggests that rising income inequality, combined with fears about unemployment driven by automation and globalization, contribute to populism and need to be combatted in order to ensure sustainable economic growth. The report proposes that populism can be circumvented by socioeconomic policy that ensures that growth is inclusive (i.e., where prosperity is distributed equitably across all of a country’s economic classes).
As such, Swedbank’s report argues that this period of prosperity in the Baltic Region has created an ideal context for reform and investment in long-term economic wellbeing. The report delivers an in-depth analysis of the economies of Sweden, Estonia, Latvia, and Lithuania, commenting on GDP growth and the potential to create new socioeconomic policies. It also targets specific needs in each country, referencing indicators based partially on the UN’s sustainable development goals.
Sweden scores higher than the Baltics on most of Swedbank’s UN SDG-based indicators. However, the report comments on the need for all identified countries to take the opportunity to enact policy reform.
Swedbank addresses Universal Basic Income as one potential option for reform that will reduce income inequality and encourage sustainable growth. The report concludes that UBI is currently unaffordable for the Baltics, but that elements of a basic or guaranteed income, introduced carefully, could come with numerous social benefits.
Swedbank in Lithuania. Credit to: Delfi
UBI: Current feasibility for the Baltic Region
Swedbank identifies several arguments for UBI, including the idea that it will increase income security and thus reduce fears around unemployment and job loss, along with suggestion that UBI solves or mitigates problems with existing social security systems. The argument that UBI will minimize bureaucratic costs associated with social security systems is less relevant in the Baltics, where only 1.2 to 2.1% of total “social protection” expenditure is administrative.
The report provides a summary overview of some of the questions associated with UBI implementation, such as its impact on employment and the economy, or the concern that it would negatively impact assistance given to the disabled or elderly.
Using 2015 data on government spending on social protections in Estonia, Latvia, and Lithuania, Swedbank evaluates the feasibility of a budget-neutral UBI in these countries. The report tries two different models, one in which old-age pensions are retained by the elderly, and the other in which pensions are included in the money redirected towards UBI. For each of these two scenarios, the report presents two further options: one wherein all residents of a country receive UBI, and another wherein children up to the age of 16 receive only 50% of adult UBI payments. Swedbank does not make any changes to tax revenue in these examples.
The report finds that, given existing budgets, UBI monthly payments to individuals would only reach 48-55% of the at-risk-of-poverty threshold for each Baltic country, less if old-age pensions were retained for the elderly. A UBI at the poverty line, distributed to all residents equally, would require doubling social security budgets in Latvia and Estonia, or an 82% increase in Lithuania, becoming 20-25% of each country’s GDP.
While Swedbank concludes that a UBI is currently unaffordable in the Baltics, the report comments that some components of a “basic income model” might simplify and improve existing social security programs. The authors suggest that governments could improve their systems’ accessibility by eliminating means testing and other conditions currently in place for those trying to get support. They also propose that a gradual decrease in benefits, rather than a sharp removal once a person becomes employed, might help incentivize recipients to stay in the labour market.
Another alternative discussed is a “partial” guaranteed income delivered only to particular cohorts of people. For example, Lithuania has an existing program that provides lump-sum cash benefits to every child born, with no conditions placed upon family income.
More information at:
“Baltic Sea Report: Heart-warming growth is a poor excuse to postpone reforms,” Swedbank, December 6th 2017
“Sustainable Development Goals,” United Nations
“Swedbank Macro Research: Baltic Archive,” Swedbank, February 2018
Vlada Stankūnienė and Aušra Maslauskaitė, “Family Policies: Lithuania (2015),” Population Europe Resource Finder & Archive, 2015
by Karl Widerquist | Feb 14, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in October 2008.
In January 2008, a Basic Income Grant (BIG) pilot project began in the Otjivero-Omitara area in Namibia. All residents below the age of 60 years receive a Basic Income Grant of 100 Namibian dollars per person per month, without any conditions attached. According to BIEN, the grant is being given to every person registered as living there in July 2007, whatever their social and economic status. This BIG pilot project is designed and implemented by the Namibian Basic Income Grant Coalition (established in 2004) and is the first universal cash-transfer pilot project in the world. The BIG Coalition has just published its first assessment report on the project, which compares the results of a baseline study and a panel survey after the first six months of implementation.
1. The community itself responded to the introduction of the BIG by establishing its own 18-member committee to mobilize the community and advise residents on how they could improve their lives with the money. This suggests that the introduction of a BIG can effectively assist with community mobilisation and empowerment.
2. Since the introduction of the BIG child malnutrition in the settlement has dropped remarkably. Using a WHO measurement technique, the data shows that children’s weight-for-age has improved significantly in just six months from 42% of underweight children to only 17%.
3. Since the introduction of the BIG, the majority of people have been able to increase their work both for pay, profit or family gain as well as self-employment. This finding is contrary to critics’ claims that the BIG would lead to laziness and dependency.
4. Income has risen in the community since the introduction of the BIG by more than the amount of the grants. There is strong evidence that more people are now able to engage in more productive activities and that the BIG fosters local economic growth and development. Several small enterprises started in Otjivero, making use of the BIG money being spent in the community.
5. More than double the number of parents paid school fees and the parents prioritized the buying of school uniforms. More children are now attending school and the stronger financial situation has enabled the school to improve teaching material for the pupils (eg. buying paper and toner). The school principal reported that drop-out rates at her school were 30-40% before the introduction of the BIG. By July 2008, these rates were reduced to a mere 5%.
6. The BIG supports and strengthens Government’s efforts to provide ARV treatment to people suffering from HIV/AIDS by enabling them to access governments services and afford nutrition.
7. The residents have been using the settlement’s health clinic much more since the introduction of the BIG. Residents now pay the N$4 payment for each visit and the income of the clinic has increased fivefold.
8. The criticism that the grants are apparently leading to more alcoholism is not supported by evidence from the community. On the contrary, the introduction of the BIG has induced the community to set up a committee that is trying to curb alcoholism and that has worked with local shebeen [unlicensed tavern] owners not to sell alcohol on the day of the pay-out of the grants.
9. The introduction of the Basic Income Grant has helped young women recipients to take charge of their economic affairs. Several cases document that young women have been freed from having to engage in transactional sex.
10. Economic and poverty-related crime (illegal hunting, theft and trespassing) has fallen by over 20%.
11. The BIG has helped to achieve progress towards all eight Millenium Development Goals.
In brief, according to the report the initial results of this pilot project are very encouraging and by far exceed the expectations of the BIG Coalition. The local community has embraced the pilot project and is engaged in efforts to make it work well. According to BIEN, as commented by one of the community’s residents: “Generally, the BIG has brought life to our place. Everyone can afford food and one does not see any more people coming to beg for food as in the past. What I can say is that people have gained their human dignity and have become responsible.” (Jonas Damaseb, June 2008) Bishop Dr. Z. Kameeta, speaking at the report launch on October 2nd, said: “We, as a Nation, cannot wait to address poverty head on. We cannot wait to implement a universal Basic Income Grant nation wide. This is a challenge for the whole country.”
-Karl Widerquist, Oxford UK, October 2008
Further information about the project is available on www.bignam.org.
Including a video of the presentation of the report at https://www.bignam.org/page4.html.
An article on the report published by “The Namibian” (October 3, 2008) in online at https://allafrica.com/stories/200810030605.html
by Guest Contributor | Feb 7, 2018 | Opinion
Looking back to the past, looking forward to the way ahead
The 6th General Assembly (GA) of Basic Income Korea Network (BIKN) was held in Seoul last Saturday. The GA, the highest decision-making body, is held every January, in which we examine the activities of last year and decide what activities we should carry out in the following year.
2017 was a watershed year for BIKN as well as for the politics in Korea. Popular resistance to the abuse of power and corruption of the former president and her coterie led to a snap presidential election in which Mr. Moon from the Democratic Party won. We have the most democratic government in a decade.
Grievances about social and economic inequality and insecurity have flowed under the popular resistance, although it was certainly an expression of the aspiration for democracy. Under these circumstances, interest and support for the basic income idea could be strengthened and become more prolific prolific. One of the more influential candidates presented basic income policy as an electoral promise.
BIKN had two main achievements in the turbulent year of 2017. Above all, the basic income agenda entered into the center of the public sphere. During this period, BIKN has been recognized as a prestigious institution around the discussion of BI. Secondly, we saw the quantitative growth of our organization, including an increase in individual and group membership, as well as the growth of local networks (chapter of BIKN). Now we have around 500 individual members, seven group members and six local networks.
Upon the those self-assessments, BIKN decided the following activities for the next year: we will spread understanding of the basic income concept through online basic income courses; we will make efforts to form basic income coalitions during the local elections this June in order to implement basic income policy; we will participate in the project to design experimental models for basic income which the government will commission this year (see another article); we will change BIKN into a corporation in order to secure institutional status.
We expect this year will be another watershed to realize the basic income idea.
Hyosang Ahn Executive Director of BIKN
by Toru Yamamori | Jan 24, 2018 | News
During the World Economic Forum during 23rd-26th January in Davos, Switzerland, universal basic income (UBI) will be discussed at several sessions:
11:00 GMT 23 January: How Is Rentier Capitalism Aggravating Inequality?
For the summary, speakers and live streaming, please see here.
11:30 GMT 26 January: Guaranteed Income for Growth?
For the summary, speakers and live streaming, please see here.
Guy Standing, a Research Professor in Development Studies, University of London, and an honorary co-president of the Basic Income Earth Network, who will be on the panels of the above two sessions, will also speak for UBI in the following two sessions:
13:30 GMT 23 January: Social Safety Nets for the Fourth Industrial Revolution
16:30 GMT 23 January: Bringing Dignity with Basic Income
The details of these two sessions is not yet disclosed online. UBI was also discussed the World Economic Forum held in 2017.
More information at:
Toru Yamamori, “INTERNATIONAL: Christopher Pissarides, a Nobel Laureate, argues for UBI at the World Economic Forum at Davos”, Basic Income News, 6th February 2017
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
