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Finland has started its New Year with the rolling out of a new groundbreaking trial, which will give some citizens a basic income in an attempt to lower poverty levels and increase overall employment.
Just over one year after the government of Finland announced for the first time its plan to replace social insurance benefits that were earnings-based with what it called a basic income, the first monthly, unconditional payments of 560 euros equal to $587 started on January 1.
According to reports, 2,000 people, of which all are receiving unemployment benefits, were randomly chosen to participate in a trial of two years. The new basic income will be discounted from their existing unemployment benefits.
Authorities in Finland hope that this trial for basic income could provide them with insights into the streamlining of the complex social insurance system in the country along with how people will spend that free money.
One member of KELA the social benefits agency of Finland said that the new program of basic income has a goal of tackling the problem of disincentive amongst the unemployed, as the payment of $587 continues regardless if the person is employed or not.
The idea of paying each person just enough to pay for day to day needs has attracted a following that is unlikely in today’s business world. Bill Gross the bond investor and Elon Musk the CEO at Tesla have expressed their support of the program.
However, questions have been asked as to why in particular the tech world was embracing this approach with a great deal of enthusiasm.
Renowned startup Y Combinator in Silicon Valley announced in June of 2016 that is will launch its on pilot program of basic unconditional income in the city of Oakland, California.
Under the program of Universal Basic Income or UBI, people are given a flat rate of money that just keeps them alive.
If it is successful, the messy system of social security in Finland will be resolved. Residents of Finland could be in one of the 40 different systems of benefits with each benefit calculated differently as to if they are unemployed, sick, a student or something else. Once the status changes for the person, so must the method of calculation be changed.
That creates a burden for both KELA and customers to complete all the necessary status changes. Now basic income means people only apply for one particular status for an indefinite period, with no changes being required.