Finland: Final results of Finland’s Basic Income Experiment released on May 6th

Finland: Final results of Finland’s Basic Income Experiment released on May 6th

Picture credit to: Business Insider

 

Finland’s Basic Income Experiment was the world’s first statutory, nationwide and randomized basic income experiment. That experiment, in which preliminary results have already been reported on, several research questions were asked: How did the Basic Income Experiment affect participants’ employment? What were the effects on health, livelihoods and experiences of government bureaucracy? In interviews, how do the participants perceive the significance of the experiment in their lives?

The final results of the basic income experiment will be released on Wednesday, May 6th 2020, online. In this webcast, researchers present findings of the basic income experiment on employment and well-being of the participants.

The results presented are based on an analysis register data from both pilot years as well as on face-to-face interviews with the participants in the experiment. In addition, survey data has been analyzed more comprehensively than before.

The webcast will be held, in Finnish, from 1 pm to 2:15 pm and, in English, from 2:20 pm to 3:00 pm (Finnish time, GMT+3). The webcast is open to anyone interested.

Kela Conference on Social Security 2019 – Equality and wellbeing through sustainable social security system

Kela Conference on Social Security 2019 – Equality and wellbeing through sustainable social security system

Kela Conference 2019 will occur on the 10th December 2019, between 9.00 and 16.30h, at Kela’s Main office building in Helsinki. It will be a gathering of experts on social protection, and will include four main themes – Investing in the future, Reforming social security, Customer services in the globalizing and diversifying world and Customer experience by digital transformation.

The main idea behind the Conference is to think about a social security system for Finland which can face the challenges of the present and future in a sustainable way. Issues with delivering wellbeing and usage of artificial intelligence to distributing benefits are important aspects to consider in an ever-increasing globalized and diverse social world.

Signing up for the event can be done here, up until the 3rd of December 2019. Keynotes can be watched online (streamed), without registration.

More information at:

Kela Conference 2019 webpage

FINLAND: further results from the famous Finnish UBI experiment published

FINLAND: further results from the famous Finnish UBI experiment published

Further preliminary results from Finland’s much publicised basic income experiment have been announced: firstly, the study’s basic income recipients reported increased trust; secondly, increased agency; and thirdly (perhaps unsurprisingly), they reported an improved financial situation.

The experiment ran for two years, starting on January 1st 2017. It was administered by the Social Insurance Institution of Finland (Kela). Its main objective was to find ways to reshape the Finnish social security system in response to a changing labour market. A total of 2000 unemployed persons between 25 and 58 years of age received a monthly payment of € 560, unconditionally (to be spent as recipient saw fit) and without means testing.

BIEN has already reported on how the the experimenters observed a positive impact on reported wellbeing and a non-significant impact on employment. These latest announcements, released on April 4th, add to this. The full set of preliminary results can be found in this report.

Regarding increased trust, respondents who received a basic income had more trust in other people and in societal institutions — i.e., politicians, political parties, police and the courts — than members of the control group. On a scale from 0 to 10, the average score for trust in other people increased from 6.3 in the control group, to 6.8 amongst basic income recipients. As for trust in politicians and political parties, the average score increased from 4.0 to 4.5. For the combined category of courts and the police, the average score increased from 6.9 to 7.2.

According to Minna Ylikännö of Kela, trust in other people and in institutions is essential both to individual well-being and to the functioning of society at large.

Regarding increased agency, recipients reported greater confidence in their ability to influence their own lives when it came to personal finance and finding employment. On a scale of 0 to 5, recipients reported a score of 3.2, whereas the control group reported an average score of only 2.9.

Regarding personal finances, recipients reported an increase in their ability to live comfortably. Participants in the experiment were asked to categorise their financial situation as either ‘living comfortably’, ‘coping’, ‘finding it difficult’, or ‘finding it very difficult’. The proportion of people describing themselves as living comfortably increased from 7% in the control group to 12% amongst basic income recipients. At the opposite end of the spectrum, the proportion of people who described themselves as ‘finding it very difficult’ decreased from 17% in the control to 13% amongst basic income recipients.

All of the above-mentioned differences persisted even after background factors were controlled for. The data was gathered through phone interviews conducted immediately before the experiment was concluded. Further results are expected soon.

Finnish basic income experiment reveals problems of conditional benefits

Finnish basic income experiment reveals problems of conditional benefits

Minna Ylikännö

Research team leader, Social Insurance Institution of Finland

(minna.ylikanno@kela,fi)

and

Olli Kangas

Professor of Practice, University of Turku

(olli.kangas@utu.fi)

 

The evaluation of the Finnish BI Experiment reveals the problems in the current conditional labour market policies

The first results of the Finnish Basic Income (BI) experiment were published at the beginning of February 2019. According to the results, the benefit mimicking basic income did not have any positive employment effects when compared to the control group, i.e. those not included in the experiment. There are several possible reasons for this result.

Firstly, we must keep in mind the specific characteristics of the target group of the experiment. Both the treatment group and the control group were drawn from the unemployed job seekers receiving unemployment benefits from the Social Insurance Institution of Finland (Kela) in November 2016. In order to understand the specificity of the group, we have to take a cursory look at the Finnish unemployment system.

An unemployed individual who is a member of a voluntary unemployment fund and meets the employment condition of 26 weeks during the previous 28 months is eligible for earnings-related unemployment benefits. At the average wage level, the benefit is about 65 percent of previous earnings. The benefit can be paid up to 300-500 weekdays depending on the work history and the age of the claimant.

An unemployed individual who is not entitled to the earnings-related unemployment benefit (the right to the benefit has expired due to long-term unemployment or the unemployed individual does not yet fulfill the employment condition) can qualify for unemployment benefits paid by Kela [1]. These Kela’s ‘basic security’ benefits (basic unemployment allowance and labour market subsidy) are not income-related. In principle, the labour market subsidy is income-tested and the duration is unlimited.

At the end of the year 2017, 369,058 people received unemployment benefits in Finland. Out of them, 196,452 (53.2%) received labour market subsidy and 31,460 (8.5%) basic unemployment benefits. Hence a minority, i.e. 138,949 (37.6%), were entitled to an earnings-related daily allowance from unemployment funds.

When consulting the above percentages, we can argue that the basic income experiment covered the population group that represents a majority of unemployed job seekers in Finland. However, despite this, the experiment was targeted to the long-term unemployed or those unemployed with a very short working history. Maybe the experiment would have yielded different results if it had included those unemployed individuals receiving earnings-related unemployment benefits, not to mention low-income earners, free-lancers and micro-entrepreneurs [2].

Secondly, at the beginning of 2018, the center-right government implemented a new labour market policy measure, namely ‘the activation model’. The aim of the reform was to increase labour market participation by sanctioning the unemployed by benefit cuts if specific activation criteria are not met [3]. While the activation model contaminated the control group, the results may be distorted.

A third possible explanation is that people do not react on monetary incentives as strongly as is usually supposed e.g. in the economic literature. But once again, we must keep in mind the specific characteristics of the target group. It may be that this group would react more strongly on services than on income transfers.

The fourth explanation to the “zero” result may relate to the possibility that the effects of a basic income counteract each other. In the treatment group, the strong monetary incentive to accept jobs (€560 net a month) might have increased employment, while the less stringent conditionality might have made the BI receivers ‘lazier’. Thus, these opposite effects may have repealed each other resulting in an overall zero outcome.

Too strong an emphasis on labour market behaviour?

The proponents of basic income disagree with the above view of laziness. On the contrary, they argue that by empowering people and giving them the freedom to choose for themselves the outcomes are more positive than what is achieved through sanctioning the unemployed. As desired outcomes of basic income, they emphasize not only the increased activity in the labour market but also increased the wellbeing of the citizens.

In fact, the proponents of basic income hardly consider the activation to employment as the main aim of BI, but rather the wellbeing of its receivers. For the supporters of BI, the economic activity e.g. in the labour markets is not a sin non qua for a functional society even if it was widely considered to be the prerequisite for it, at least if we aim to obtain the present welfare state model that is financed via income tax.

When the Finnish government decided to launch the basic income experiment, its main interest was in the employment effects of BI. The government obviously wanted to see if BI is good for employment. Thus, the government’s goal was rather limited and only when discussed in the parliamentary committees, the interest was laid in the wider wellbeing aspects of BI. However, the main interest still was – and still is – in the labour market behaviour of the BI recipients.

The preliminary results for the first year do not display any employment effects, making the opponents of the BI claim that the BI does not solve a low labour supply. However, we can turn the focus upside down. The zero result is an interesting one. According to the proponents of mainstream labour market policies in Finland, we should have witnessed a clear decrease in the labour supply among the basic income recipients compared to the control group. However, we did not observe anything like that. Neither was the employment rate better in the control group that remained in the current, conditional and punitive benefits system.

Hence, in regard to the long-term unemployed (which was the case for most of the recipients in Finland’s basic income experiment), the mechanism improving their labour market status is much more complex and perhaps more attention should be paid in the wellbeing effects of the experiment than on the employment effects. This is done in many other experiments outside Finland – in the evaluation of the experiments the focus in on the sine non qua for activity, namely wellbeing.

What should then the political decision makers do based on the results? Shall they abandon basic income, if it does not increase employment, even if it improves people’s well-being? Or shall they abandon basic income, while strengthening the conditionality of the existing system in order to more effectively “activate” labour, even if it decreases people’s wellbeing? Considering the recent developments in Finland’s labour market policies, one should perhaps bet on the latter option.

 

 

 

[1] If the unemployed person violates the Unemployment Security Act, he/she may lose the right to the unemployment benefits and he/she may to apply for last resort social assistance of in need for financial support.

[2] Explanations why the unemployed were the target group of the experiment are given at https://tutkimusblogi.kela.fi/arkisto/3316.

[3] The activity is monitored in periods of 65 days of payment. The activity requirement are met if an unemployed person, over the course of a single payment period, has been in salaried employment for at least 18 hours, or have earned an income of at least EUR 245.64 from self-employment, or if he/she has participated in five days of employment-promoting services or some other employment-promoting activity arranged by the Employment Services.

Finland: Going through a basic income experiment

Finland: Going through a basic income experiment

Picture credit: Leena Kela (“Walk this way”)

 

The Finnish basic income (BI) experiment proceeds as planned. According to Kela, the Finnish social security agency, results will only start being analysed at the beginning of 2019, and their publication at the end of that year, or early 2020.

 

As already known, the purpose of the experiment is to evaluate participants behaviour in terms of employment, particularly employment rates. An intention exists, in spite of that, to evaluate “the wellbeing of the participants and their experiences when communicating and conducting business with the authorities”. To this end, questionnaires and interviews are being contemplated, but only when the experiment is over. Here, Kela officials are more cautious, stating that “timing the data collection requires detailed planning and an evaluation of the factors to be measured as well as an assessment of the potential impact of the various stages of the experiment, such as its conclusion, on the measurements”.

 

Finland has no plans to further the experiment after 2018, although is already experimenting with participatory social security, beginning this year. In fact, according to Miska Simanainen, a Kela researcher, “right now, the government is making changes that are taking the system further away from a basic income”, referring to an ‘activation model’ which the government is pushing through. That model is designed to partially cut benefits to people receiving assistance from Kela, if they don’t succeed in working (in a formal job) for at least 18 hours in three months.

 

It seems that these changes are contrary to what the initial proposition was, within Kela’s framework, which involved the expansion of the experiment (in early 2018) to include also workers, allowing for capturing information on life options, such as entering training or education. That, according to Olli Kangas, Kela’s director of Community Relations, would mean “have been given additional time and more money to achieve reliable results”.

 

On a comparative basis with other basic income like experiments around the world, for instance in Ontario and in Barcelona, the goal of these experiments stands out as a fundamental difference: while in Canada and Spain the (basic income) trials are aimed at testing whether people’s life conditions are improved, for instance in health, education and economic security, in Finland the goal is only to check whether people get into formal employment or not.

 

 

More information at:

The Basic Income Experiment will continue for another year – Analysis of the effects will begin in 2019”, Kela, 25th January 2018

Basic Income experiment at halfway point”, Kela, 18th December 2017

Kate McFarland, “Finland: first results from pilot study? Not exactly”, Basic Income News, 10th May 2017

Karin Olli-Nilsson, “Finland is killing its world-famous basic income experiment”, Business Insider – Nordic, 20th April 2018