What should the level of basic income be in 24 European & OECD countries?

by Guest Contributor | Jun 20, 2016 | Opinion

The level of Basic Income (BI) is a matter of heated debate in discussions of BI for national implementation, investigating the level at which BI would be ‘high enough’. There is also growing dispute regarding ‘partial’ vs. ’full’ BI. This was the central topic of investigation at this year’s BI conference in Maastricht in January. The following calculations, using a common formula and comparing BI levels for 24 European/OECD countries, aim to assist in the resolution of this debate.

We don’t want to make the system worse than it is. It’s logical, then, that the minimal level of BI should reach, at least, the level of current Social Assistance (SA): we could call this ‘partial’ BI. All BI proposals included in this analysis satisfy this condition.

It follows that implementation of a BI close to the level offered by the current social security system (e.g., the SA level) implies budget neutrality in countries with a more universal system.[1] This follows the argument “If we can afford our current welfare system, we can afford basic income” that Max Ghenis has well elaborated. These proposals might be socially more acceptable, given that the change would be ‘minimal’.

So, if the level of SA in a country indicates 1) the socially acceptable level of social aid and 2) the first estimation of the social welfare budget, BI at the same level would likely be the most financially and socially affordable solution, offering the shortest implementation time frame. Proposals for Slovenia[2], Hungary[3] and Finland[4] belong to this category.

On the other hand, the level of BI should be high enough to ensure a material existence and participation in society. We assume this when we argue that BI should be at least at the level of the current Poverty Threshold (PT): we could call this ’full’ BI. BI at such a level would probably fulfill the role of an emancipatory welfare system.[5] Proposals for Switzerland[6] and the Netherlands[7] fit into this second category.

The question is, how costly are lowered aspirations regarding a ‘partial’ BI level (e.g., in Slovenia, Finland and Hungary) in service of affordability and/or social acceptance in the foreseeable future? Will we achieve anything? As the microsimulation in Slovenia demonstrated, however, even a partial BI proposal (budget neutral, well below PT and above SA) proved to be: 1) better for the majority, 2) the same or better for the more vulnerable and 3) better for the lowest deciles. The Hungarian BI proposal seems to draw similar conclusions.

To serve discussion regarding the level of BI in different countries, a common formula (similar to that used for the Slovenian proposal) was used to calculate the levels of BI proposed in various countries. 

Formula: BI = an average of three components:

1. Social Assistance for a single person with no children: Indicates the currently acceptable minimal level of social aid (and the ‘budget’ of the current social security system).
2. 1/2 of the Poverty Threshold at the point of 60% of the median income: Takes into account income distribution and the risk of poverty.
3. 1/3 of average net wages: Takes into account the ‘value of work.’

A table with Basic Income calculations for 24 European and OECD countries allows us to draw comparisons across and within countries regarding: the social protection system (e.g., SA), the average wage (AW), the poverty threshold (PT), BI calculations using the same formula (both in national currencies and euro) and different BI proposals. It’s very important to note, however, that in countries where the level of SA is already higher than the BI calculation, the existing SA should be taken as a starting point. BI proposals for Finland and the Netherlands belong to this group.

Such BI calculations (that are above SA & ‘budget neutral’ & below PT) could serve BI discourse as the first benchmark:

1.  at which we could expect results that would be: a) better for the majority, b) the same or better for the more vulnerable and c) better for the lowest deciles;
2.  of the BI level calculation for countries that, as yet, have made no BI calculations;
3. to evaluate competing national proposals;
4. to evaluate proposals across countries;
5. to evaluate existing social security systems, investigating by how much they diverge from this preferable solution;
6. of common European social welfare solutions made by the people (of 99%) for the people and not from the EU elites.

Valerija Korošec: PhD in Postmodern Sociology, MSc in European Social Policy Analysis.  Author of (eng) UBI Proposal in Slovenia (2012) sl. Predlog UTD v Sloveniji: Zakaj in kako?(2010). Co-editor UBI in Slovenia (2011). Member of Sekcija za promocijo UTD. Member of UBIE. Slovenian representative in BIEN. Fields of expertise: poverty, inequality,  sastifaction with life, social policy anlaysis, gender equality, ‘beyond GDP’, paradigm shift, postmodernism, UTD, basic income. Slovenian. Born 1966 and raised in Maribor. Lives in Ljubljana. Employed at the Institue of Macroeconomic Analysis and Development (Government Office of Republic Slovenia). Views under my name are my own. @valerijaSlo

Footnotes:

[1] All included countries have a universal SA system, except: 1) Finland, Germany, Belgium, Estonia and Denmark, which have different levels of assistance based on employment status according to OECD statistic – in these cases it was the data for the ‘Employed’ SA level that were included; and 2) the United Kingdom, Greece and Italy, which have no scheme comparable to SA.

[2] https://basicincome.org/bien/pdf/munich2012/Korosec.pdf

[3] https://let.azurewebsites.net/upload/tanulmany.pdf (English version unavailable).

[4] https://basicincome.org/news/2015/12/finland-basic-income-experiment-what-we-know/

[5] https://basicincome-europe.org/ubie/charter-ubie/

[6] https://www.reuters.com/article/us-swiss-pay-idUSBRE9930O620131004

[7] Alexander de Roo, by mail.