An ‘unconditional’ basic income for Utrecht’s unemployed

Signal of change / An ‘unconditional’ basic income for Utrecht’s unemployed

By Benjamin Irvine / 17 Nov 2015

The Dutch city of Utrecht plans to trial an unconditional payment to the unemployed, with no requirement to find work. The move is part of an attempt to simplify complex welfare rules and ascertain the best way to support people without jobs to find employment.

Some see it as a step towards a Universal Basic Income (UBI): a guaranteed minimum income, above the poverty line,  provided by the state to all citizens regardless of whether they are in work or not. Thirty municipalities in Holland are interested in trialling such a measure, as is the Finnish Prime Minister and a referendum on the issue is due in Switzerland in 2016.

The researchers aim to see whether a social safety net provided by default would better support outcomes for those who find themselves unemployed. Conditional unemployment benefits have been criticised for being overly complex and producing disincentives to take on irregular employment as well as pushing people into unsuitable jobs.

A spokesperson for the municipality, Ingrid van der Aa, told Equal Times that the trial will provide important information on the behavioural response and economic effect of an unconditional income: whether people take mini-jobs, pursue training, do voluntary work, take longer to find more suitable full time employment, or don’t attempt to find work at all.

Loek Groot, Associate Professor at Utrecht University who is helping to develop the experiment, told the Equal Times, “economic science does not yet know what will happen with a UBI” and although the trial won’t reveal the effect on the behaviour of those currently in jobs it will provide important insights to address “the radical uncertainty” around such a proposal.

Trials of a Universal Basic Income or unconditional payments in developing countries have produced surprising results.

A government trial in Uganda resulted in recipients investing in skills, being 65% more likely to practice a skilled trade afterwards and working 17% more hours than those in a control group.

In Kenya, similar investments in skills and income generating activities were observed – and interestingly, “no increase in expenditures on temptation goods, such as alcohol and tobacco”.

In India the outcomes were particularly improved for women: there was an overall increase in work performed and a shift from casual wage-labour to self-employed farming and small business activity.

The Utrecht experiment could be the first in a western industrialised country since the ‘Mincom’ programme in Manitoba Canada which ran from 1974 to ‘79. The programme was not properly evaluated until 2011 when it was found to have produced significant improvements in health. Reductions in work occurred, but mainly where young men chose to stay in education longer and mothers took longer maternity leaves.

Utrecht hopes to begin the experiment in 2016.

So what?

Futurists of various stripes see a UBI as a vehicle for a post-scarcity society, where poverty is eliminated, ‘toil’ is unnecessary and there is universal access to automatically produced goods. Economists, including Joseph Stiglitz, have endorsed the need for a UBI to reconcile and adapt to technological unemployment and a labour market increasingly characterized by self-employment and job insecurity.

Could a guaranteed income help to reduce psychological anxiety around irregular work? Would people choose to pursue self-employment – following their personal dreams or callings – or might they work less intensively, reducing the health burden of high-pressure lifestyles?

Whilst the lessons from developing countries show promising results in raising incomes and poverty alleviation, in these contexts the payments provided “liquidity with which to respond to shocks and hazards” and to invest with big paybacks. How different could the outcomes be in long-industrialised countries, where financial inclusion and welfare programmes are more established and markets heavily saturated? Will self-employment be as fruitful? Might it support the rise of arts, social purpose and social-entrepreneurship instead?

Proponents see a UBI as a solution to inequality. Barb Jacobson, the coordinator of the European Citizen’s Initiative for an Unconditional Basic Income, suggests the current distribution of work – with a small section of skilled professionals working long hours and a ‘precariat’ of low paid workers providing services to them – is leading us “back to a master/servant society”. She argues the choice is between “complete neo-feudalism, or Universal Basic Income”.

Is there a danger that, even under a UBI, well-paid work remains coveted and hoarded? What complementary changes in the economy, culture and society could prevent the UBI from becoming a way to pay off those who are no longer necessary for production: creating a right to an income but depriving them of the right to work or to participate meaningfully in society?

Image Credit: rUssEll shAw hIggs/Flickr

Sources

De Stad Utrecht (16th June 2015) ‘Utrecht to start experiment with basic income’

Quartz (30th June 2015) ‘A Dutch city is giving money away for free to test the “basic income” theory’

Equal Times (2nd September 2015) ‘Dutch divided over basic income pilot’

What might the implications of this be? What related signals of change have you seen?

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