Finland Set To End Free-Money Experiment After Two Years

Giving away 'free money' didn't work out as expected in Finland.
Giving away 'free money' didn't work out as expected in Finland. | © moritz320 / Pixabay
Photo of Jessica Wood
25 April 2018

Finland’s groundbreaking basic income experiment testing the tangibility of universal basic income (UBI) for all citizens met an unexpected early end after a request for extra funding was rejected by the Finnish government. The trial will continue to run until January 2019, but it is now clear that the failed experiment will not be running after this date.

What is UBI?

Universal basic income is an idea that all citizens should receive a bare minimum payment from the government to cover basic living expenses such as food and housing, whether they are employed or not. The main intentions are to provide a safety net for all citizens so that they still have necessities even when unemployed, prevent homelessness and poverty and reduce anxiety and stress caused by money worries. This is considered especially important in the post-recession ‘gig’ economy, in which more jobs are short-term and less stable. It is also believed that it encourages the unemployed to devote more time to their families or contribute to the community and could reduce the rich/poor divide. Supporters of UBI include Nobel Prize-winning economist Angus Deaton, Elon Musk, Mark Zuckerberg and Richard Branson.

A basic income demonstration in Bern, where UBI was later rejected. | © Stefan Bohrer / WikiCommons

UBI has received criticism as well, especially from the political right who are against the idea of giving away ‘free money’. A major criticism is that it does not require recipitants to actively seek out work while unemployed.

A Finnish Kela office, which ran the UBI experiment | Public domain / WikiCommons

Why did Finland test UBI?

Despite being considered the happiest country in the world, at the time the experiment began Finland still had the highest unemployment rate in the Nordic countries at 9.2%. The Finnish social security department, known as Kela, decided to test UBI as a possible method of reducing unemployment and poverty.

The experiment began in January 2017 with the intention of lasting two years until 2019. Two thousand Finnish citizens claiming unemployment benefits were chosen at random to test the scheme, each receiving a monthly payment of €560, even if they found work during that time. Their lifestyles and career progression were monitored during this time to see how they were affected by the UBI payments.

Why did the experiment fail?

Unemployment in Finland did drop to 8.4% in early 2018 according to Statistics Finland, but the unemployment rate does fluctuate greatly due to the large number of seasonal jobs in the country.

The results of the experiment will not be released until late 2019, so the real reasons for its failure will not be known until then. Considering that it came to an end after extra funding was rejected, it is most likely lack of money was the cause. It is estimated that rolling out UBI to the entire population would have increased taxes by 30%, in a country that already has a high tax rate.

The Finnish Parliament House, where extra UBI funding was rejected | © Alvesgaspar / WikiCommons

The government will be using alternative schemes to re-structure their social security system and hopefully reduce poverty. The unemployed citizens who took part in the experiment will continue to receive their payments until its official end in January 2019 and will continue to be supported by Kela afterwards to monitor the long-term effects of UBI.

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