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Final verdict on Finland's basic income trial: More happiness but little employment effect

The coronavirus crisis is renewing calls for basic income as economies struggle to cope with the financial fallout.

Nainen makaa nurmikolla
Basic income recipients described their wellbeing more positively than those in the control group. Image: AOP
Yle News

A two-year basic income experiment in Finland found that the no-strings-attached benefit improved recipients’ mental wellbeing but didn’t directly contribute to helping them find work. The final results echo preliminary results published last year.

Those receiving a basic income over the past two years reported feeling less mental strain, depression, sadness and loneliness compared to the control group, national benefits agency Kela said on Wednesday during the release of a final report (in Finnish) on the experiment.

Kela said the introduction of the previous government's activation model for the unemployed complicated the results. Launched in 2018, the Juha Sipilä government's deeply unpopular activation scheme essentially penalised jobseekers unable to find work.

"The effects of the second year of the experiment cannot be separated from the effects of the activation model, Kari Hämäläinen, chief researcher at the VATT Institute for Economic Research, was quoted as saying in a statement.

The experiment carried out by benefits agency Kela selected 2,000 unemployed people at random to receive 560 euros tax-free every month. Participants were able to work alongside receiving the money, or even start their own businesses. Selected participants could, however, not opt out of the trial.

"All in all, the employment effects were small. This indicates that for some persons who receive unemployment benefits from Kela, the problems related to finding employment are not related to bureaucracy or to financial incentives," Hämäläinen added.

Different starting points

Scientists also said some people were in a better position than others to take advantage of the opportunities afforded by basic income.

"For those who were in a challenging life situation before the experiment, basic income does not seem to have solved their problems," Helena Blomberg-Kroll, a professor at the University of Helsinki, explained.

Minister of Social Affairs and Health Aino-Kaisa Pekonen said the basic income experiment had, however, provided useful information for future social security system reform in Finland.

The basic income experiment, launched by then-prime minister Juha Sipilä’s administration, aimed to explore how Finland's welfare system could adapt to changes in working life. The trial began on 1 January 2017 and ended on 31 December 2018.

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The group did not specify how much security training should be extended, but noted that guards need more guidance about the legal prerequisites on the use of physical force.