Thirty lucky participants in England will be receiving free income monthly and unconditionally in this new trial of Universal Basic Income (UBI). In western Europe over the past few decades, UBI has regularly and enthusiastically talked about, but only occasionally followed through with. Currently, only 10 nations worldwide have implemented any sort of pilot scheme and only a handful more have even discussed it. The UK, however, is a significant forerunner in the field, announcing its second UBI trial earlier this month.
What is UBI?
UBI is a social welfare, government programme in which every adult citizen receives a regular and unconditional payment with the aim of alleviating poverty and replacing other, overly bureaucratic welfare schemes. The participants do not have to work for these payments but are encouraged to work alongside UBI for dual income. UBI is not an inherently modern idea, popular with enlightenment thinkers such as Thomas Paine, but it is starting to gain more traction since the industrial revolution - and particularly in the 21st century - due to the threat of automation to workers in many industries. The burgeoning AI storm is predicted to eject hundreds of millions of workers from their jobs and leave vast swathes of the workforce unemployed, causing problems for both the workers and the economy itself. UBI has been raised repeatedly as a solution to this problem as it would give citizens the safety blanket of an income during periods between work, or even the freedom not to work altogether.
The recently announced trial programme is not the UK’s first taste of UBI; last year, the devolved Welsh government began giving £1,600 a month for two years to hundreds of young people leaving the care system and comparing their mental, physical, and financial well-being to a control group not receiving the stipend. Unfortunately, the researchers say they will not report on the outcome of the pilot until it is finished, sometime in 2025.
The recently announced pilot is the first one from Westminster, however, and follows a very similar template. Thirty people across two locations - Jarrow in the North-East and East Finchley in London - will also receive £1,600 a month for two years and have their welfare compared to a control group. Unlike the Welsh scheme, this pilot is not designed exclusively for children leaving the care system, so will better reflect the universality in UBI.
What can we expect?
While a few other schemes have been conducted across the globe, unfortunately, as it is such a huge social undertaking, there is still comparatively little UBI quantitative research. Finland offers us one of the most rigorous and recent studies having offered a modest, though not insignificant, sum to 2,000 randomly picked unemployed individuals in Finland for two years. The stipend and welfare combined amounted to less than the median Finnish income, but nevertheless a helpful aid.
Unsurprisingly, the results boasted a huge boost in well-being with the mental and physical health of the participants vastly eclipsing the control group. In fact, the quality of life hike all but eliminated the 'the gap in life satisfaction between unemployed and employed people'. The researchers estimate that an equivalent lift in life satisfaction would require a €800-2,500 monthly raise in income, which dwarfs the €560 UBI stipend given. This implies that a safety net is more valuable than simply a raise, alleviating the postmodern pressures of the work-or-die conundrum.
More intriguing, however, is that the UBI trial had a statistically significant, albeit slight, effect on employment with participants receiving the allowance more likely to work than the control group. One of the central arguments against UBI is that it would erase the incentive to work, yet here the outcome is the reverse. It is unclear why exactly, but the safety net of UBI has a motivating influence on its recipients causing an increase in employment.
Despite promising results, the Finnish government decided not to continue the programme after it concluded in 2019 in perhaps the most surprising facet of this whole study. The Finnish finance minister claimed he 'was looking into trialling alternative welfare schemes' and that 'extensive conclusions' cannot be drawn from only two years of trialling - clearly if that is the case then the best move is to cease all promising research entirely.
UBI around the world
Luckily, there have been some longer running studies. The Alaskan Permanent Fund Dividend has provided every citizen with a share of the state’s oil and gas revenue since 1982. As of 2022, the dividend is worth $3,284. The fund has had virtually no impact on employment, mostly because it is far less than a living wage, but has drastically reduced extreme poverty in the state.
Likewise, Iran initiated a UBI scheme in 2011, paying 29% of the median household income to families reaching around 90% of the population until 2016. The scheme echoes the same results as Finland and Alaska: no effect on employment levels but a surge in life satisfaction. Many Iranian economists are calling for a return of the policy.
Brazil, however, has been arguably the most vocal supporter of UBI across the globe. It has implemented the world’s first “true” UBI system in the town of Santo Antônio do Pinhal and operates the UBI-esque “Bolsa Família” social programme that pays around a fifth of minimum wage to the poorest quartile of the country. On top of that, a charity-run UBI scheme has been ongoing in a region of Brazil since 2008. Brazil’s experiments with UBI have produced admirable results and have garnered widespread praise from economists across the world, including in 2005 when the then-President of the World Bank, Paul Wolfowitz, said: 'Bolsa Familia has already become a highly praised model of effective social policy. Countries around the world are drawing lessons from Brazil’s experience and are trying to produce the same results for their own people.'
Results from studies worldwide, from Finland to Namibia, are almost unanimously successful in their aims of boosting quality of life and reducing inequality without hindering the workforce. Hopefully, this bodes well for a similar outcome in the UK.
