Finland’s ‘free money’ scheme boosts well-being

The first nation in Europe to give citizens free cash has failed to encourage its participants to work more, but it is believed to have improved their well-being.

Under Finland’s two-year basic income trial, 2,000 randomly selected unemployed 25- to 58-year-olds were given €560 per month, with no requirement to look for work.

Recipients who started work received the same amount.

The trial is due to end in 2020 in Finland where the official unemployment rate was 5.4 per cent last year.

Proponents of a “universal income” call for a monthly payment or “citizens’ wage” to be given to all adults, regardless of wealth, family or employment status.

The scheme hoped to see if a guaranteed income encouraged those out of work to take low-paid or temporary work by removing concerns about lost benefits. The sum was not enough to live on.

It is designed to empower unemployed Finns to start businesses, knowing that they would receive a monthly income if their ventures failed.

Helsinki also wanted to test if it could simplify a complex social security system amid a changing, insecure labour market.

Finnish researchers say the findings provide important insights for welfare reforms.

“The recipients of a basic income had fewer stress symptoms as well as fewer difficulties to concentrate and fewer health problems than the control group,” said Minna Ylikanno of Finland’s welfare authority, Kela. “They were also more confident in their future and in their ability to influence societal issues.”

But the results from the pilot were not totally encouraging. Finland’s social affairs minister Pirkko Mattila said the first year’s data suggested the impact “seems to have been minor”.

The project’s chief researcher, Olli Kangas, said participants were happier and healthier than the control group. “The basic income recipients of the test group reported better well-being in every way [compared to] the comparison group,” the minister said.

Some participants in the project said they had been encouraged to take on short-term work.

“Earlier, I didn’t accept all small jobs out of fear of losing my benefits and having to reapply for them,” said writer Tuomas Muraja. “I feel much more secure now that short-term jobs no longer reduce my benefits or delay their payment.”

Economist Ohto Kanniainen said the limited effect on joblessness was to be expected as many unemployed Finns had few skills or health concerns. “With unemployed people, financial incentives don’t work quite the way some people would expect them to,” he told the Guardian.

 

The cost of living in Finland is particularly high. Picture credit: Wikimedia