European Basic Income: A post-COVID recovery strategy

European Basic Income: A post-COVID recovery strategy

by | Mar 23, 2021 | Opinion

Valerija Korošec

The proposal for European universal basic income & European Social Pillar Action Plan & long-term post-COVID-19 recovery strategy

V. KORO EC, a social policy analyst from Slovenia, suggested that the European Commission examine the idea of a European Universal Basic Income. The UBI would be paid directly from the ECB’s “helicopter money.” The suggestion was made within the debate of the European Social Pillar Action Plan. The proposal stems from the observed shortcomings of the current social security systems related to the COVID-19 crisis, the efforts of the United States, India and many other countries made in this direction and the research done by OECD, IMF, ILO, UNICEF, European and Slovenian experts. This proposal is not the same as the European Citizens’ Initiative “Start Unconditional Basic Incomes (UBI) throughout the EU“, for which signatures were collected starting on 25 September 2020. However, this proposal does take a similar direction as the European Citizens’ Initiative. One day Europeans will receive a local, national, European and global basic income to safeguard and foster democracy and ecological-economic development.

The proposal for European UBI & European Social Pillar Action Plan & long-term post-COVID-19 recovery strategy. 

On 7th of September 2020 Mr Nicolas Schmit took part in a videoconference ‘roadshow’ to consult with Slovenian social partners and stakeholders on the upcoming Action Plan to further implement the European Pillar of Social Rights.  V. KORO EC, a social policy analyst from Slovenia suggested introduction of a European universal basic income, which would be paid directly from the ECB’s “helicopter money” as proposed by Mencinger (2017), because none of the 20 principles of the European Social Pillar address the COVID-19 crisis adequately. 

The current solutions in the European Social pillar, the 13th principle (unemployment benefits) and the 14th principle (minimum income), make the safety net conditional on incentives to reintegrate into the labour market. This is obviously not the right solution in the case of COVID-19, where work is not allowed. When people are not allowed to work (as in the case of COVID-19), it does not matter how educated they are, what the agreement on the minimum wage is, how good the social and economic dialogue is and so forth. In such a case is the most important social security system, a safety net that guarantees the minimum income as a kind of ‘universal insurance system’ that helps everyone, including people on the labour market, to be compensated for loss of earnings and to receive reimbursement for lost investment etc. 

On the other hand, the 12th principle (social protection) and 20th principle (access to essential services) are combined with the prerogative to satisfy the conditions “to be in need and not to be able to work”. To prove this is such a demanding administrative task that is obviously not suitable in times of emergency such as COVID-19 when there is no time or resources.  We have already seen in 2008 that the current system is not suitable in time of national emergency, but that is only good for ‘normal’ situations – which is exactly the opposite of what people expect from national social security systems. The COVID-19 situation also made it clear – again – that the current national social security system is good for some workers in ‘standard employment’ and not for workers in ‘non-standard’ jobs.

In the policy brief “Supporting livelihoods during the COVID-19 crisis: Closing the gaps in safety nets“, the OECD starts with a similar finding: the COVID-19 crisis has exposed the pre-existing gaps in social protection provisions (2020: p. 2). It continues with the recognition of the effectiveness of universal unconditional cash transfers (2002: pp. 13-17): “In a crisis situation, universal cash payments, made to everyone, can maximise coverage and, depending on the size of the payment, help the entire population to make ends meet. Universal transfers can be rolled out quickly as they do not depend upon the income, assets, or prior contributions of the recipient avoiding costly and time-consuming means tests. The appeal of this simplicity has led a number of OECD countries to announce plans for such schemes during the COVID-19 pandemic.” (OECD 2020: pp. 16-17, Box 4). 

The same applies to emerging and developing economies, where the development of universal social protection is supported and guided by several recent key international initiatives: ILO Recommendation 202 on Social Protection Floors, and the “Leave No One Behind” agenda as an integral part of the 2030 Agenda for Sustainable Development. SDG goal 1.3 calls for “implementing nationally appropriate social protection systems and measures for all, including floors, and substantially increasing coverage of the poor and vulnerable”, while goal 3.8 calls for universal health coverage including financial risk protection. Health coverage is an important part of living, people need to know that they are being protected in case they get ill. Covid has shown just how many people are vulnerable to what is out there, that is why there are Final expense insurance policies and policies similar that are available to those who want to be prepared in case they do get ill. Health coverage can only go so far, but life insurance can help after a loved one has died. 

In 2018, the High-Level Panel at the European Development Days discussed how to address inequalities and “Leave no one behind” agenda in the EU. As described in the report Addressing inequalities: A seminar of workshops (EC 2019) three experts out of four spoke about income inequality. Two of them, Fratzser (pp. 32-37) and Raitano (pp. 55) suggested that the EU should start thinking about a universal basic income, while the third, Callan, suggested that social policy should be based on facts and results of microsimulations (pp. 75). 

Prior to COVID-19, the OECD, IMF, ILO and UNICEF had already studied the idea of universal basic income (UBI) in detail. There is an important history of research on the sustainability of UBI funding and its implications for income distribution based on microsimulations, e.g. OECD (2017) and IMF (2018). The findings of the above-mentioned papers were also confirmed in a paper based on microsimulations (KORO EC 2019),  which was presented in 2019 at the International Conference on Universal Child Grants organised by ILO and UNICEF to explore the conditions and possibilities of introducing UBI for children.  The microsimulations proved that in developed countries UBI can be introduced at a level just above the current Guaranteed Minimum Income scheme (GMI) within the same fiscal envelope (i.e. budget-neutral). 

Some Europeans mistakenly assume that the idea of universal basic income is not the right solution for the EU. They think that the EU is the part of the most developed world with the best social security systems. They seem to have overlooked the fact that because of automatisation and digitalisation, the most developed countries have the biggest problem with ‘non-standard’ employment. It is no surprise that Japan and Korea were the two countries, besides the United States, that introduced ‘new universal transfers’ (OECD 2020: p. 4). They also seem to overlook the fact that the EU is heterogeneous. The EU Member States have different social security systems. There are also major divergences in the effectiveness of national administrations in the use of ‘EU money’. Different success in using the ‘Covid-19 money’ will only foster additional divergences in Member States, which can easily turn into political divergences. 

As stated at the Bled Strategic Forum (31 August 2020) by some Eastern EU countries, they are ready to follow their own path, as they do not wish to be the ‘second tier’ of the EU.  These are the political reasons for the proposal that the EU should distribute the ‘ECB helicopter money’ as a European universal unconditional cash transfer directly to EU citizens. There is also an economic reason: to effectively stimulate aggregate demand in Europe (EP 2016). This has been proposed a number of times since 2008. In Slovenia, we have two papers by an eminent economist on this subject (Mencinger 2015 and Mencinger 2017). 

This proposal is not the same as the European Citizens’ Initiative “Start Unconditional Basic Incomes (UBI) throughout the EU” although it goes in the same direction. 

EU citizens expect the EU Commission to take into consideration the facts about a universal uniform unconditional individual cash transfer that are based on data and microsimulations. It could be called a European UBI. This transfer should be financed by the ECB.  The same for all Europeans, to foster social convergence. This is the main difference with the current EU approach in the domain of the European Social Pillar and post-Covid-19 recovery plan with country specific measures that foster further divergence. Hopefully, the new European Citizens’ Initiative for UBI in the EU will be an additional, democratic sign for the European Commission and the European Parliament of what EU citizens want and expect from them in the area of social security: the Universal Basic Income. The European UBI could be the first step towards a world in which all people will eventually receive a local, national, European and global basic income in order to safeguard and foster democracy and ecological-economic development.

Sources: 

Bruegel (2020) The fiscal response to the economic fallout from the coronavirus Source: https://www.bruegel.org/publications/datasets/covid-national-dataset/

EC 2019. Addressing inequalities: A seminar of workshops. Source: https://op.europa.eu/en/publication-detail/-/publication/d10809c5-4478-11e9-a8ed-01aa75ed71a1 

EP 2016. Helicopter money: A cure for what ails the euro area? https://www.europarl.europa.eu/RegData/etudes/BRIE/2016/581970/EPRS_BRI(2016)581970_EN.pdf 

IMF 2018. Universal Basic Income: Debate and Impact Assessment. WP/18/273. Source: https://www.imf.org/en/Publications/WP/Issues/2018/12/10/Universal-Basic-Income-Debate-and-Impact-Assessment-46441 

KORO EC 2019. Unconditional Basic Individual Universal Child Grant for Belgium following the Slovenian approach.  Source: https://basicincome.org/wp-content/uploads/2020/01/Paper_SI_UBI_UCG_BE-KORO EC-2019-for-India.pdf 

Mencinger 2015. The Revenue Side of a Universal Basic Income in the EU and Euro Area. Source: https://www.eaco.eu/wp-content/uploads/2015/09/mencinger-2.pdf  

Mencinger 2017. Universal Basic Income and Helicopter Money. Basic Income Studies, Volume 12, Issue 2, 20160021, eISSN 1932-0183 Source: https://doi.org/10.1515/bis-2016-0021.

OECD 2017. Basic Income Policy Option. Background Technical Notes. Source: https://www.oecd.org/els/soc/Basic-Income-Policy-Option-2017-Brackground-Technical-Note.pdf

OECD 2020.  Supporting livelihoods during the COVID-19 crisis: Closing the gaps in safety nets. Source: http://cnt.be/DOSSIERS/Covid-19/OESO-OCDE-2020-05-20-Supporting-livelihoods-EN.pdf

UNICEF 2019. The International Conference on Universal Child Grants organised by ILO and UNICEF. Source: https://www.odi.org/events/4580-international-conference-universal-child-benefits

Europeans get it: Basic Income strengthens resilience

by | Jan 28, 2021 | Featured, News

Advocates for basic income have long argued that it is much more than just a poverty relief measure. It is a matter of common justice that would enhance freedom and provide basic security for all. A new survey across six major European countries shows that people understand its potential to improve their lives. Not only do large majorities in France, Germany, Italy, Poland, Portugal and Spain favour basic income pilots and basic income as a permanent policy. The survey also reveals the advantages people believe a basic income would bring for themselves.

The poll, conducted independently by YouGov, found that two-thirds or more of respondents in the six countries were in favour of pilots and a national basic income system. Excluding the few ‘don’t knows’, support ranged from 65% in France to 87% in Portugal. Women were generally more supportive, particularly in Germany, France, Italy and Spain.

Even before the pandemic, European citizens were suffering from insecurity, stress and precarity, linked to rising inequalities. The pandemic has made things worse. In an era of shocks, policies to strengthen individual and societal resilience are vital. Instead, governments have resorted to measures aimed chiefly at propping up businesses, including furlough schemes, that have worsened inequalities and eroded resilience.

Resilience means being able to handle and recover from shocks. It is about feeling in control, able to handle setbacks because we can envisage a better future. But it cannot be provided by today’s labour market, increasingly characterised by flexible labour relations, insecure jobs and fluctuating wages, or by existing welfare systems, or by better public services alone, even though those are needed.

The survey provides cogent support for arguments in favour of basic income. High proportions of respondents said a basic income would reduce anxiety – over half in Poland and Portugal, and more than 40% overall, especially among women and youth. It is now well established that chronic anxiety increases the risk of mental and physical illness. A basic income offers the prospect of reducing ill-health and demands on health services. It might almost pay for itself.

Respondents also believed a basic income would open up opportunities for a better way of living and working. A high proportion of youths and women said it would give them more financial independence – 50% of young Italians and 41% of young Germans, for instance. This would reduce their sense of precarity, the feeling of being a supplicant reliant on others for discretionary help.

One horror of the pandemic has been the surge in domestic violence. Experiments have shown that, once women have basic income security, domestic tensions decline and women are more likely to walk away from abusive relationships.

Many youths said a basic income would enable them to pursue further education or training, including 49% in Portugal, 53% in Spain and 27% in Germany. This reflects the current inability of the precariat to develop their capabilities in the way they choose, because they must take whatever job they can get and put in as many hours of labour as possible. Basic security is conducive to the development of skills and a more educated society.

A basic income would also improve the quality of living. Young people, in particular, said it would enable them to take part in leisure activities that they cannot afford to do now – about a third in Portugal and Spain, for example.

And a basic income would foster work beyond ‘jobs’. Men as well as women, among all age groups, said a basic income would enable them to devote more time to their family. This was the case for one in five in Germany and more than a quarter of both men and women in Poland. The coronavirus pandemic has highlighted the extent to which society suffers from a ‘care deficit’. And pilots have shown that a basic income encourages men to do more care work, helping to weaken the gender dualism that feminists rightly condemn.

Basic income would also foster a more entrepreneurial attitude. A significant proportion of respondents said it would encourage them to launch a small-scale business – 8% in Italy, 10% in France, 13% in Germany and 19% in Portugal. Entrepreneurial enthusiasm was even greater among youths – 14% in Italy, for instance. Many youths also said a basic income would enable them to devote more time to volunteering or social activism, including over a quarter of youths in Germany and 13% in France. Society surely wants more socially engaged and active youth.

One lesson surely learned during the pandemic is that most of us are vulnerable, not just to illness but also to shocks to our finances, relationships and lifestyles. In what was a cross-section of people in six relatively rich countries, only small minorities said a basic income would make little difference to their lives – 11% in Italy and 6% in Portugal, for example. Long-term basic security is still something most of us value.

We should implore European policymakers to launch basic income pilots in communities around Europe. Ideally, some courageous governments would move in the direction of a national system. But failing that, surely it is time for pilots to explore the transformative potential of basic income. According to this survey, over 70% of Europeans want them.

Guy Standing is Professorial Research Associate, SOAS University of London, and honorary co-president of the Basic Income Earth Network.

Editor: You can support basic income in Europe by adding your name to the European Citizen’s Initiative for Unconditional Basic Income and WeMove/UBIE’s petitions for pilots of basic income and for the EU to enable member states to implement an Emergency Basic Income during the crisis.

A translation into Chinese can be found here.

Spain may issue ‘permanent’ basic income to fight COVID-19

Spain may issue ‘permanent’ basic income to fight COVID-19

by | Apr 7, 2020 | Opinion

Reports are emerging that Spain is hoping to deploy a “permanent” basic income type program in the near future. The program comes as Spain aims to respond to the economic crisis from the global coronavirus pandemic.

Spain has one of the worst coronavirus outbreaks in the world with over 13,000 deaths.

Spain’s push for establishing basic income as a “permanent instrument” that “stays forever” will help reduce financial anxieties for many families worried about their jobs. Sending cash to families rather than corporations will better ensure economic security for the most vulnerable.

However, questions remain about the nature of the program and whether it will be truly universal and unconditional.

If Spain successfully implements basic income, it will become the first European country to implement the program on a national scale and one of the only places in the world to do so.

Finland famously experimented with a basic income pilot program. The experiment made recipients happier and healthier. Nonetheless, some government officials were upset the basic income pilot did not significantly affect employment status within a year for recipients.

Nadia Calviño, Spain’s minister for economic affairs, said the payments will be targeted to families and will differentiate based on their “circumstances.” In practice, differentiating based on circumstances will result in means tests that fall on the poor. If there are strict criteria, then some families who need assistance may be unnecessarily excluded or have their assistance delayed.

A better system is presuming each individual qualifies and allowing wealthier individuals to opt-out. If an individual who received basic income has a large income by the end of 2020, the government can phase out their basic income through the income tax system the following year.

Universality helps the poor, not the rich. It ensures all those who need assistance can receive it immediately. The true costs of universality are lower because it requires less administration and bureaucracy to implement the program.

Italy / Europe: Petitions for basic income, in the face of the Corona virus pandemic

Italy / Europe: Petitions for basic income, in the face of the Corona virus pandemic

by | Mar 26, 2020 | News

Two new petitions have been launched in Europe in response to the Coronavirus emergency.

One has been launched in Italy on Change.org platform and is addressed to Prime Minister Giuseppe Conte, asking for 10 €/day for all Italian citizens as the fastest and most effective way to secure them against loss of income

Another appears on the YouMove.eu website and is addressed to Ursula von der Leyen, Head of the European Commission, Christine Lagarde, Head of the European Central Bank, Mário Centeno, President of the Eurogroup and Finance ministers of all European Member States, asking for a “Quick introduction of an Unconditional Basic Income as an urgency measure [given the corona virus pandemic economic consequences]”.

Estonia: Governmental officials are convinced basic income is not even worth a feasibility study

Estonia: Governmental officials are convinced basic income is not even worth a feasibility study

by | Oct 9, 2019 | News

The Estonian Parliament (Riigikogu)

 

As reported before, an Estonian collective of basic income activists, led by Jaanus Nurmoja, delivered a petition to the Social Affairs Committee (SAC) of the Estonian Parliament (Riigikogu), calling for the investigation of a universal basic income (UBI) implementation in Estonia, on March 29th 2019. Five months later – three months passed from the excepted date of reply – the SAC decides not to study the issue, although that apparently contradicts the initiative expressed text, and Estonian Law. In the words of SAC’s spokesman (Tõnis Mölder), pronounced at the committee meeting on Tuesday, 17th of September 2019:  “At the moment, however, the implementation of such a system in Estonia does not seem reasonable, as there is no financial analysis and no assurance that the current social system could be replaced by something more efficient”.

 

According to the activists, this decision is not consistent with Estonian Law, since the Working Rules Act is not being observed. Abiding to these rules would imply only rejecting proposals submitted “less than two years earlier or obviously [violating] constitutional principles of Estonia and international agreements”. Also, these argue that the rejection is based on a self-referring (circular) argumentation: that the proposal of investigating UBI in Estonia cannot be accepted, because there has not been any investigation on UBI in Estonia. This led the activists to question if the proposal text had even been read in full by the SAC members.

 

Jannus Nurmonia and the other co-signatories of the “Investigating the Feasibility and Impact of Unconditional Basic Income (Civic Salary) in Estonia” petition are now calling for a withdrawal of this decision, postponing the actual discussion of the proposal for the next SAC meeting. They are convinced a UBI will eventually be unavoidable in Estonia, and so starting feasibility studies over it should start as soon as possible.

 

 

More information at:

“Committee: Universal basic income will not be introduced anytime soon”, ERR, September 18th 2019

“Public letter: the reason for rejecting a research initiative doesn’t correspond to the initiative’s content and laws, neither”, Kodanikupalga Teataja, October 2nd 2019

André Coelho, “Estonia: Estonian Parliament examines possibility of testing basic income in the country”, Basic Income News, June 28th 2019