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.
Written by David Lindh; translated and edited by Karsten Lieberkind
All over the world we are witnessing a growing interest in basic income – an unconditional basic allowance for all citizens. A number of experiments have been scheduled for next year, and on September 22-23, representatives for the Nordic basic income movements as well as researchers and politicians met at a conference in Copenhagen to discuss the upcoming pilot projects.
The conference took place in Christiansborg Palace, which is the seat of the Danish Parliament, situated in central Copenhagen. Organizers of the conference were the Danish branch of BIEN (Basic Income Earth Network) in collaboration with the political party the Alternative.
Among the speakers were Guy Standing, Professor at SOAS, University of London and author of a number of books on the precariat, Thomas P. Boje, Professor of Social Sciences at Roskilde University and Annika Lillemets, MP for the Green Party of Sweden.
The conference was met with much anticipation and was fully booked. Journalists and other members of the press were present, and not only the invited speakers but even quite a few members of the audience were active, one way or the other, within the basic income movements in the Nordic countries, Europe and USA.
The first day of the conference focused on the pilot projects with basic income that are planned for Finland, the Netherlands and France. Nicole Teke, representing the French basic income movement, talked about the experiments that are to be carried out in the Aquitaine region. Sjir Hoeijmakers explained why, in recent years, ideas about basic income are spreading in the Netherlands, and Olli Kangs, Professor at Kela, the Social Insurance Institution of Finland, outlined the Finnish basic income pilots that are scheduled to begin in early 2017.
On the second day of the conference, there was an in-depth discussion on how the various basic income models could be implemented in the so-called Nordic Model, the social welfare and economic systems adopted by Nordic countries. Dorte Kolding, spokesperson for BIEN Denmark, in her opening speech of this day of the conference, explained how basic income might contribute to a development in society in which fear and control will be replaced by a sense of security, freedom and happiness.
A key element in the discussion during the second day was about the future relation between the basic income movement, which seems to be growing stronger each day, and the labour unions with their often quite critical or even negative view on basic income. Finn Sørensen, MP for the Red-Green Alliance and spokesperson for labour market affairs, took part in this discussion and was to be counted among the critics of a basic income society as, in his view, it would weaken the position of the labour unions relative to the employers.
During lunch, I asked Guy Standing whether the basic income movement and the labour organizations are likely to approach each other sometime in the future.
I am in favour of strong labour unions, but the labour movement must realize that we have witnessed dramatic changes in society, and we are now facing other conditions and challenges than in the 1970s and 80s. The labour unions are deeply concerned about the fact that they are losing members, but they are themselves partly responsible for the situation.
I also talked to Göran Hansson, active in the Malmö Basic Income Group, about the doubts that the labour unions have about basic income as a future model.
Many labour unions are critical towards basic income because they are afraid that they will have less power and influence. While this is true, it is also a fact that basic income would enjoy greater support from the population if the labour unions were to change their views on this issue.
Annika Lillemets, is a Member of Parliament for the Green Party, but also a member of BIEN. She talked about how political parties in the Swedish Parliament, no matter their political orientation, in recent years have been almost obsessed with wage labour because they want to position themselves in relation to the increasing unemployment.
She thinks it is an indication of fear and to break this fixation we should question the very nature of work, what counts as work and what not. Annika Lillemets also criticized the Swedish culture of consensus.
Thomas P. Boje, Professor of Social Sciences at Roskilde University, pointed out that basic income reforms might have a positive effect on the democratic participation in society and contribute to the strengthening of democracy in the Nordic countries.
Safety and security encourage participation in society and a sense of wanting to contribute. Today, insecurity in jobs and economic inequality breed suspicion towards the democratic institutions and society as a whole.
Karl Widerquist, Associate Professor at Georgetown University, has been attached to BIEN for a long time and is the author or editor of several books and articles on the subject of basic income.
He talked about how the basic income movement is growing fast in the USA, and I asked him why this is happening just now.
One reason is that both civil rights movements, political parties and businesses are beginning to realize the advantages of a basic income reform. Also, the fact that the subject is not linked to any particular political party or system helps spread the idea.
The Alternative — a green political party that currently holds nine seats in the Danish Parliament — was the official host of the conference. BIEN’s Danish affiliate, BIEN Danmark, organized the event.
All 148 seats in the conference hall were filled for the two-day series of lectures on basic income pilots, which sold out in the preceding week.
BIEN co-chairs Karl Widerquist and Louise Haagh were among the presenters. Louise, who wrote a Basic Income News feature on the conference, opines that, overall, “the Nordic conference went some way to create a new platform for a more positive debate about BI in the wider society.”
Karl describes the conference as “exhilarating”: “People were there from all the Nordic countries, each of which has a very active movement for basic income. The idea is getting very close to the centers of power in several Nordic countries.”
In addition to the series of lectures and debates, a special dinner was held at the end of the first day–featuring entertainment by the 14-member swing orchestra Zirkus. Zirkus was also responsible to creating a special trailer that was publicized in the week before the conference:
Commenting on Zirkus’s live performance, conference organizer Karsten Lieberkind (BIEN-Danmark) says, “This band is something special, both in terms of visual performance and music. I think everyone was in a state of amazement.”
In addition to presenting a general summary of conference, the Syre review focused on participants’ views about the relationship between basic income and organized labor, soliciting opinions from Guy Standing and Malmö basic income activist Göran Hansson. The author also speaks to Thomas Boje about basic income and democracy, and Karl Widerquist about the rise of the recent basic income movement in the US.
Torsten Gejl, MP for the Alternative and an enthusiastic supporter of the conference, has shared these words from Karsten (read Torsten’s full post here):
“To me, this conference is the culmination of not only the preparations for the conference itself but of a process, a gradual but inevitable change in the mindset of many people. maybe in society as a whole, a change in our conceptions of work and labour, that work is not synonymous with labour and that people contribute to society in all sorts of ways. It is about time that we recognize this as a fact.
“Also, it is the realization that people have a right to life, as stated in the the Universal Declaration of Human Rights. In a civilized society, this must, at all times, be an unconditional, non-negotiable fact. And nobody, no individual, no group, no organisation, no society or state should ever be allowed to come between a person and his or her basic needs for survival. Thanks, Karl, for those words.
“And a final word about the Alternative. We may have slightly different views on how to approach the idea and implementation of an Unconditional Basic Income (Ubetinget Basisindkomst), but we most certainly agree on one point: that by trusting people you get so much more in return than you could ever get by exercising power and control.”
Karsten Lieberkind with Louise Haagh Credit: Michael Husen, BIEN Danmark
As Karsten relates in communication with Basic Income News, the conference has resulted in new connections and correspondence between BIEN-Danmark and the Alternative.
Additionally, the event helped to inspire BIEN-Danmark to pursue efforts to engage labor unions:
“We have long enough been in the defensive about our cause when it comes to labour unions, so now is the time to be in the offensive as we have a program that will actually prepare labour unions for the future.”
Dansk Magisterforening (DM), the Danish Association of Masters and PhDs, is one national labor union that is open to the idea of basic income. As Bjarke Friborg, the co-chair of DM, explained in his talk at the conference, the union does not endorse basic income; however, DM has a positive attitude toward pilot projects and perceives a “shared agenda” between DM and the basic income movement.
Summarizing the upshot of the Nordic Conference on Basic Income Pilots, Karsten says, “I think the most important thing that came out of this conference is that we have established very good and friendly connections with both DM and the Alternative, based on mutual respect and recognition. Also, it has strengthened the ties between the Nordic basic income movements to the benefit of future cooperation.”
Thanks to Karsten Lieberkind for information and input for this article.
The conference will include general discussion of the design, implementation, and analysis of basic income experiments — with its website containing useful background information about past basic income experiments — as well as the application of these ideas to the Nordic Model.
Registration to attend either or both days of the event, and (optionally) the dinner and concert, is currently open.
The event is being hosted by BIEN Denmark, the Danish branch of the Basic Income Earth Network, in collaboration with the political party The Alternative (“an international political party for those who want to work for a sustainable, democratic, socially just and entrepreneurial world”), and in association with Unconditional Basic Income Europe.