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Is universal basic income the solution to technological unemployment?

12 Mar 2019

As the labour market changes rapidly, many laud solutions such as universal basic income as the way forward. What are the benefits – and the pitfalls – of implementing such a scheme?

The rise of automation and artificial intelligence (AI) has, and will continue to, cast a long shadow over the future of the labour market. These technologies promise to cause seismic shifts in the world of work, and so any prudent government is gearing up to implement changes to secure its economic future.

One proposed new direction for countries around the globe is to implement a universal basic income (UBI). UBI schemes pay every citizen a non-means-tested, automatic, regular payment that is enough to keep a person above the poverty line. Proponents of the scheme – such as Virgin boss Richard Branson, Facebook CEO Mark Zuckerberg and a plethora of other Silicon Valley moguls – argue that a guaranteed income makes people more creative and more likely to take entrepreneurial risks, which will stimulate the economy. Yet is it really so simple?

The Finland trial

In January 2017, Finland began a groundbreaking universal basic income trial, which saw it pay 2,000 unemployed citizens a monthly stipend of €560. This stipend replaced their unemployment payment, which was a similar sum. The core difference is that the UBI was unconditional; recipients were not obligated to seek or accept work. The scheme cost the Finnish centre-right government a grand total of €20m to implement.

The study found no significant difference in the likelihood that recipients would find employment when compared to a control group. Yet it did find that recipients reported significantly better overall wellbeing – the test group experienced significantly fewer problems with health, stress and the ability to concentrate than the control group. The test group were more likely to say they were confident in their own future, their employment prospects and their ability to influence societal issues.

This report on the findings is merely a preliminary one. Researchers are keen to stress this caveat, underlining that a full report into the trial will be released in 2020 and that observers should wait until more in-depth analysis is completed to draw conclusions.

Roll-out in other countries

Similar schemes have been trialled in other countries such as Namibia, India and Canada.

The latter’s basic income trial guaranteed a minimum annual income of C$17,000 for single people and $24,000 for married couples over the course of a three-year trial.

Many on the trial reported similar boosts to wellbeing. It provided people with the security to pursue their passions and spend more freely, and gave them a better quality of life. Yet similarly, the trial didn’t necessarily emerge as a panacea to how automation will affect the labour market.

UBI and its detractors

For all that tech CEOs may laud UBI as an excellent solution, it has its detractors. Reasons for disliking the scheme vary. The sheer cost of UBI is one of the central reasons it is often dismissed as unrealistic.

As Ian Goldin wrote for the Financial Times, the idea of a blanket solution that isn’t progressive or means-tested makes it non-viable and “financially irresponsible”. Resources will have to be pulled from other pockets of government to pay for it, and giving the already super-rich a basic wage pulls funds away from the most deprived.

Other opponents dislike the idea of giving people money with ‘no strings attached’. There are fears that it would exacerbate so-called “bad” behaviour. Others argue that it may disincentivise people from participating in the labour market if they could end up financially worse off by taking up work when considering the loss of benefits.

It goes without saying that a novel approach is needed to tackle the novel world we’re morphing into, and UBI could be the answer. Investigations into schemes like this and their viability reveal an inconvenient truth: nothing is so simple.

It’s easy for public figures and politicians alike to throw UBI around as an easy-to-comprehend and ostensibly radical solution to impending changes to the world of work. Yet the more you research the topic, the more you realise that the complexity of the world’s economy makes ensuring the safety and welfare of citizens a true Gordian knot.

UBI should probably be neither totally dismissed nor totally celebrated. It should unquestionably, however, not be poised as the sabre to cut through a problem as evolved as the future of work.

Eva Short
By Eva Short

Eva Short was a journalist at Silicon Republic, specialising in the areas of tech, data privacy, business, cybersecurity, AI, automation and future of work, among others.

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