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Reasons to
(Experimenting) Basic
Income in Finland
Olli Kangas (olli.kangas@kela.fi)
Professor, Director of Governmental R...
Content of the presentation
The Center-True Finns-Conservatives coalition cabinet
(nominated 28. May 2015) took basic inco...
THE FUTURE OF EMPLOYMENT
(Osborne & Frey 2013)
3
Automation and Independent Work in a
Digital Economy (OECD 2016)
4
Strong continuity: no destruction of standard
employment ?
Employees (% of employees) by the type of employment and gender...
But there is a flip-side: Self-employment (000,
left-hand panel) is increasing and structural
unemployment (right-hand pan...
Composition of income (left-hand panel) and effective
marginal tax rate (right-hand panel) for an unemployed
single parent...
To abolish incentive traps
• There is a number of income-tested ‘basic’ benefits paid on
top of each other create effectiv...
Bureaucratic traps
• Shifts in employment / social
security statuses may cause
problems and uncertainty
among the benefit ...
Something more
• https://helda.helsinki.fi/bitstream/handle/10138/167728/Workin
gPapers106.pdf?sequence=4
• http://blogi.k...
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Reasons to (Experimenting) Basic Income in Finland

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Olli Kangas: Reasons to (Experimenting) Basic Income in Finland. Presentation at the event ”Socially Innovative Finland - Spotlight on the basic income experiment and the Finnish maternity package”, Kela, Helsinki, 12.1.2017.

Published in: Government & Nonprofit
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Reasons to (Experimenting) Basic Income in Finland

  1. 1. Reasons to (Experimenting) Basic Income in Finland Olli Kangas (olli.kangas@kela.fi) Professor, Director of Governmental Relations Kela, Social Insurance Institution of Finland
  2. 2. Content of the presentation The Center-True Finns-Conservatives coalition cabinet (nominated 28. May 2015) took basic income (BI) experiment in its working program by referring to: • Changes in the labor markets • Does our social security system properly correspond to changes in labor markets? − Or are there any changes at all? • Elimination of incentive traps • Too many cases where work does not pay (enough) • Elimination of bureaucratic traps • Fear of bureaucracy • To create a more transparent system2
  3. 3. THE FUTURE OF EMPLOYMENT (Osborne & Frey 2013) 3
  4. 4. Automation and Independent Work in a Digital Economy (OECD 2016) 4
  5. 5. Strong continuity: no destruction of standard employment ? Employees (% of employees) by the type of employment and gender in Finland 1997-2015. (Statistics Finland 2016) 5
  6. 6. But there is a flip-side: Self-employment (000, left-hand panel) is increasing and structural unemployment (right-hand panel) is high 6
  7. 7. Composition of income (left-hand panel) and effective marginal tax rate (right-hand panel) for an unemployed single parent (two children in day care). 7
  8. 8. To abolish incentive traps • There is a number of income-tested ‘basic’ benefits paid on top of each other create effective marginal tax rates of 80- 100% or so • labor market subsidy + housing allowance + social assistance and income-related day care fees • Work does not pay (enough) − How the benefit receivers value their free-time? • How to make work pay? • Basic income as such is not enough and the implementation of BI does not solve the incentive problem unless the BI is very high − e.g. €1,000-1,500 a month − Problem then would be the too high levels of taxes collected on income coming on top of BI: 70% to 80% 8
  9. 9. Bureaucratic traps • Shifts in employment / social security statuses may cause problems and uncertainty among the benefit recipient • The vicious combination of income traps with bureaucratic traps − “If I accept the job for 6 months or so do I again qualify to that benefit I had?” • To simplify and tighten the basic security safety net so that • Nobody will fall through • Nobody needs to be afraid of losing the safety net − Encourage people to take risks • Ffö • Ff • NN is unemployed, gets sick, recovers, waits for unemployment benefit and gets social assistance until gets again unemployment benefit • All these benefits are paid by Kela • Then: Why not one single system??? 9
  10. 10. Something more • https://helda.helsinki.fi/bitstream/handle/10138/167728/Workin gPapers106.pdf?sequence=4 • http://blogi.kansanelakelaitos.fi/arkisto/3316 • https://www.youtube.com/watch?v=8xPAlEkT0kk&feature=yout u.be • https://helda.helsinki.fi/bitstream/handle/10138/167728/Workin gPapers106.pdf?sequence=4 • http://blogi.kansanelakelaitos.fi/arkisto/3491 • http://www.helsinkitimes.fi/finland/finland- news/domestic/14472-kela-s-researchers-voice-concerns- about-media-interest-in-basic-income-experiment.html • http://blogi.kansanelakelaitos.fi/arkisto/3648 10

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