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Basic income

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Presentation on basic income delivered by Frances Coppola to STUC Decent Work, Dignified Lives conference on 15 October.

Published in: Economy & Finance
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Basic income

  1. 1. BBaassiicc IInnccoommee and the changing nature of work Frances Coppola
  2. 2. “I fundamentally disagree with those who think that people must be forced to work with the threat of starvation. If people are intrinsically of value, then they have the right to survive with or without working.” The Changing Nature of Work Coppola Comment
  3. 3. Work is changing....  Skilled routine jobs disappearing due to automation  Relatively small number of highly-skilled, highly-paid jobs  Growth of low-skill, low-paid jobs, particularly in service industries Britain is becoming a low-wage economy
  4. 4. How we work is also changing...  Flexible hours, zero-hours, part-time  Casual, temporary, short-term contract  Self-employment  Multiple jobs – portfolio careers  Mixture of paid and unpaid work Work is becoming increasingly insecure.
  5. 5. Current welfare system  Piecemeal, inconsistent and regressive  Minimum wage has become the “going rate” - erosion of wage differentials  Serious disincentives to seek higher paid jobs due to benefits clawback  Welfare reforms aimed at “making work pay” actually depress wages  Narrow utilitarian approach leads to cruelty towards the vulnerable
  6. 6. Minimum wage effects
  7. 7. How to address this? Two approaches:  Enforce living wage legislation and a job guarantee  Provide a basic income for all and allow people to choose not to work
  8. 8. Living wage and job guarantee  Living wage without a job guarantee increases unemployment. With a job guarantee, may result in more people being employed by the state.  Fails to address the problems of self-employed, part-time and casual workers.  Assumes that all jobs are worth doing!  Assumes that value to society is only in paid work
  9. 9. Unconditional basic income  Equal support for everyone regardless of their employment status - ends poverty  Supports those doing unpaid work - Parents of young children - People caring for elderly & disabled relatives - Volunteers  Enables people to choose work to suit their inclinations and abilities  Encourages entrepreneurialism
  10. 10. The Scottish Campaign for a Fair Society The Centre for Welfare Reform Submission to the Expert Working Group on Welfare: “An independent or more fiscally autonomous Scotland should design its welfare system to achieve Basic Income Security as a constitutional right for all its citizens”
  11. 11. “Each citizen will be entitled to a basic income that is sufficient to avoid poverty, and each will contribute to the community's capacity to provide for this income by paying a clear and fair level of taxation on any income over and above this minimum”
  12. 12. Objections to basic income  Disincentive to work  Cost
  13. 13. Work disincentives  Manitoba experiment 1974-79 showed that only two groups reduced work effort: - Young mothers chose to stay at home with children - Adolescents chose to continue studies  Currently in UK, pensioners have a basic income, but an increasing number choose to work  Studies show that the majority of people want to work.
  14. 14. Cost  2013 Scottish paper proposed extending basic income support of £2,780 per year to entire population of UK. Cost £169bn is less than current cost of all benefits & pensions £185bn  We would probably want something more generous.....question is HOW generous. Supporters of Basic Income on right and left or political spectrum disagree on level.
  15. 15. Benefits  Significant savings from integrating tax and benefits systems, eliminating anomalies.  Manitoba experiment identified reduced healthcare expenditure due to fewer mental health problems and accidents at work  Restored wage differentials and higher earnings  More entrepreneurial activity
  16. 16. It's not a cure-all....  Would still need progressive tax system  Would still need extra support for sick, disabled and frail elderly  Would still need extra support for families with children unless children were also paid a basic income  Would still need reform of other taxes such as VAT and distortionary benefits for higher earners.

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