Back in 2016, we wrote about the emergence of Universal Basic Income (UBI) as a mainstream political idea just as Silicon Valley became one of its most vocal proponents. Since then, several pilot programmes were rolled out, most notably in Ontario and Finland, and Nicola Sturgeon has gone on record saying she would consider adopting the scheme in Scotland, providing every individual with a weekly cash payment for life regardless of whether they have a job or not.
Alaska has had a form of UBI, or citizens’ income, for decades, with its Permanent Oil Fund paying each citizen of the state an unconditional cash stipend every year. In Iran, a subsidies reform programme was implemented in 2010 to soften the impact of international sanctions by giving monthly cash payments to almost all of its citizens (the programme has since been significantly cut and is now more targeted).
The most recent, and the dominant argument advanced for UBI is the projected rate at which we will continue losing jobs due to automation. Variations on this theme have of course been publicly discussed since the Industrial Revolution, not to mention the advent of the personal computer, which some thought would destroy more jobs than would create. The more academic argument is that UBI has the potential to alleviate the gaps in the coverage provided by the existing welfare system and will help disentangle the survival and dignity of certain segments from unpredictable market forces.
Although globally there is a lot of interest in the idea of UBI, a lot of unanswered questions remain. For instance, could the agenda ever win significant popular support? According to Belgian Professor of Social Policy Wim van Oorschot, “for many people, a fundamental principle of welfare state provision is deservingness which, in turn, is tied to notions of contribution and reciprocity: a ‘something-for-something’ society.”
In addition, in post-recession Europe, slow economic growth and relatively high unemployment make it challenging for any political parties to propose projects that involve a large amount of spending, like the UBI programme. Although anti-austerity movements have managed to gain momentum at times, it hasn’t yet found its way into mainstream economic policy.
With current discourse around welfare being so culturally and politically charged, it is slightly surprising how popular the measure was in principle.
A 2017 IPSOS Mori poll found that just under half of Britons supported the idea of UBI. However, support quickly faded when respondents were presented with the reality of benefits cuts and/or tax rises (see the following chart).
The Swiss also very vehemently said no to the idea in a national referendum in 2016, fearing that UBI would have a negative effect on incentives to work and wealth creation.
Critics of UBI anticipate that a welfare programme that is not targeted could potentially cause current benefit recipients to lose out. This would be more likely to happen in countries where a more comprehensive welfare system already exists, such as Sweden or Finland. Similarly, older segments of the population who are still in employment, or single parents would also find themselves worse off if the right income level was not provided.
Even the most ardent supporters of UBI must evaluate whether the scheme would have a transformative impact on the problems they want the programme to solve. According to OECD calculations, the number of people whose income would be unaffected would be very low. While in Italy, the number of people whose income would grow is over 60%, in the UK, more than 1 in 5 citizens would lose 5% of their income or more.
With income polarisation and stagnant economic growth set to continue for the foreseeable future demands for more radical chance will grow. But before ideas like UBI can gain meaningful political support we need to be clear about what their purpose – and impact – should be.