Saturday 19 October 2019

Willie O'Dea: 'Universal income pilot could point to a fairer future'

Public support is growing for a new system of social protection, writes Willie O'Dea

(Stock photo)
(Stock photo)

Willie O'Dea

The last time I wrote about universal basic income (UBI), I mentioned that several countries, including Finland and Netherlands, were running pilot projects examining its impact.

These pilots are an important way of exploring whether UBI is effective in achieving its goals of lifting people out of poverty, promoting social cohesion, removing the stigma of welfare and giving people the opportunity to self-develop and get back into full- or part-time work.

The concept of UBI is far from new. A variation was suggested in the 18th Century by the social philosopher Thomas Paine, but the precarious nature of work today could make it an appropriate response to our modern needs.

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The idea of UBI, as I have said before, is simple and straightforward, which itself is a large part of its attraction.

Under UBI, every adult citizen is given a regular basic payment. It is unconditional, there are no means tests. The rate is set to cover basic needs.

It does away with the welfare trap deterrent to work. If you work more, you earn more - indeed it's designed to encourage you to do that - but if circumstances mean you can't work, then you have a guaranteed, dependable income.

Finland's two-year pilot project, which covered 2,000 unemployed people selected at random, came to an end last January.

Kela, Finland's social insurance institution, has published an initial assessment of the pilot, conducted by academics from Finnish universities. Note that this is an initial assessment, based on data from just the first year of the two-year pilot.

Opponents of UBI have been overjoyed that the initial assessment found no increase in employment levels among UBI recipients.

While this particular finding is disappointing, it is not unexpected. The pilot was for two years for a reason, so no one should be shocked that the first year did not see a change in employment prospects.

There are also other factors why they found no increase in employment levels in year one. The small sample size and the decision to only include unemployed and not those in low-paid work have hampered UBI's potential impact.

Another aspect was the way the Finns structured the scheme. Many UBI recipients could continue to get unemployment benefits if that was higher than their basic income.

Put another way, UBI recipients continued to receive 83.3pc of the conditional benefits of the control group. Only 17pc of their income was unconditional, non-means tested. This considerably muddied UBI's impact.

However, while the first-year assessment did not detect any increased levels of employment among the test group, it did find marked increases in both well-being and in health levels, including mental health.

UBI critics have been less eager to mention this second key finding.

Across a range of measures, people receiving UBI said they felt more secure, more confident and more positive about their prospects - 56pc of those receiving UBI felt confident they would find work in the following 12 months. This compares with a figure of 45pc for the large control group of people not receiving UBI.

These are positive initial findings. Promoting social well-being is, in itself, a good result. But it is more than just a good "soft" outcome. It has real and measurable tangible benefits, and the Finnish experiment offers hard data on this.

It found that UBI recipients claimed an average of €95 less, per person, in sickness payments than the control group, a significant saving in health expenditure when measured across a population.

That said, the Finnish findings are still just a half-time score. It is still a draw, with the full-time results not expected until spring 2020.

Automation, digitisation and short-term contracts are changing the nature of work. We need workable systems with flexible supports which acknowledge work other than paid employment.

UBI is one such option and it is gaining public support. The 2016 European Social Survey (round eight) found that 56pc of Irish respondents favoured UBI with 44pc against.

The current system of social protection is creaking under the weight of its own complexity and bureaucracy. I want to see an Irish UBI pilot scheme in place as soon as possible so that we can measure, for ourselves, the improvements it could bring here.

Willie O'Dea is the Fianna Fail TD for Limerick City and party spokesperson on social protection

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