The Ministry of Social Affairs and Health requests opinions on a bill regarding a basic income experiment. The objective of the legislative proposal is to carry out a basic income experiment in order to assess whether basic income can be used to reform social security, specifically to reduce incentive traps relating to working.

The Finnish social security legislation does not include regulations on basic income, and this kind of an experiment has never been carried out before. It is suggested in the legislative proposal that a basic income experiment will be carried out in Finland in 2017–2018. The Social Insurance Institution of Finland (Kela) would be responsible for carrying out the experiment.

The primary goal of the basic income experiment is related to promoting employment. The experiment including a follow-up research aims to find out whether basic income promotes employment.

Persons receiving Kela’s unemployment-related benefits, under certain limitations, would be included in the experiment. From the target group, a test group of 2 000 persons would be selected by means of random sampling. It would be mandatory to participate in the experiment, which would ensure that the results will not be biased. According to the proposal, the level of basic income would be EUR 560 per month. Since the experiment would be mandatory, the level of the lowest basic income to be tested should correspond to the level of labour market subsidy and basic daily allowance. Basic income would be tax free for the receivers. Basic income would be paid by Kela. An experiment means that, at this point, basic income will not be paid to the whole population.

When assessing the effects of basic income, the test group would be compared with a control group comprised of such persons from the target group who do not receive basic income.

The target group of the experiment would not include persons receiving old-age pension or students, for example, because improving their employment situation is not the objective of the basic income experiment. Students’ primary goal is to complete their degree.

The aim of the bill is to carry out the basic income experiment included in Prime Minister Juha Sipilä’s Government Programme. The basic income experiment is one of the activities aiming to reform social security so that it corresponds better to the changes of working life, to overhaul social security to encourage participation and employment, to reduce bureaucracy, and to simplify the complicated benefits system in a sustainable way regarding public finances.

The consultation period will continue till 9 September 2016. After that the Government will submit its proposal to Parliament. The government proposal is included in the budget proposal for 2017. The intention is that the acts would enter into force on 1 January 2017.

In a nutshell Basic income experiment in 2017–2018 Goal : To obtain information on the effects of basic income on the employment of persons participating in the experiment, and to survey other impacts of basic income.

: To obtain information on the effects of basic income on the employment of persons participating in the experiment, and to survey other impacts of basic income. Level of basic income : EUR 560 €/month, tax free benefit. According to calculations, this should produce an adequate incentive effect encouraging to accept temporary and part-time work.

: EUR 560 €/month, tax free benefit. According to calculations, this should produce an adequate incentive effect encouraging to accept temporary and part-time work. Target group : Persons between 25 and 58 years of age living in Finland who in November 2016 receive basic daily allowance or labour market support under the Unemployment Security Act.

: Persons between 25 and 58 years of age living in Finland who in November 2016 receive basic daily allowance or labour market support under the Unemployment Security Act. Target group: Persons between 25 and 58 years of age living in Finland who in November 2016 receive basic daily allowance or labour market support under the Unemployment Security Act.

Inquiries:

Timo A. Tanninen, Ministerial Counsellor for Finance, tel. +358 2951 63572, [email protected]

Liisa Siika-aho, Director, tel. +358 2951 63085, [email protected]

Basic income pilot study