Free cash lifts the funk in Finland

● Finland’s experiment with a basic income scheme showed unemployed beneficiaries did not work more to supplement their earnings as hoped, but they did feel better, researchers said this week.

The two-year trial, which ended a month ago, let 2,000 Finns, chosen randomly from among the unemployed, become the first Europeans to be paid a regular monthly income by the state that was not reduced if they found work.

Finland, which will hold parliamentary elections in April, is exploring alternatives to its current social security model.

The project is being watched closely by other governments, which see a basic income as a way of encouraging the unemployed to take up low-paid or temporary work without fear of losing their benefits. That could help reduce dependence on the state and cut welfare costs, especially as greater automation leads to humans being replaced in the workforce.

Finland’s minister of health and social affairs Pirkko Mattila said the impact on employment of the monthly pay cheque of à560 (about R8,600) “seems to have been minor on the grounds of the first trial year”.

But those in the trial reported they were happier and healthier.

“The basic income recipients of the test group reported better wellbeing in every way in comparison with the [control] group,” chief researcher Olli Kangas said.

Sini Marttinen, 36, said that knowing her basic income was guaranteed had given her enough confidence to open a restaurant with two friends during the trial period.

“I think the effect was a lot psychological,” the former IT consultant said. She had been unemployed for nearly a year before “winning the lottery”, as she described the trial. “You kind of got this idea you have two years, you have the security of à560 per month … It gave me the security to start my own business,” she said.

Mira Jaskari, 36, who briefly found a job during the trial delivering newspapers but lost it due to poor health, said losing the basic income had left her feeling more insecure about money.

The centre-right government’s original plan was to expand the basic income scheme after two years as it tries to combat unemployment, which has been persistently high for years but reached a 10-year low of 6.6% in December.

The basic income has been controversial in Finland, with leaders of the main political parties wary of offering “money for nothing”. Prime Minister Juha Sipila said in December that he saw it as a means of simplifying Finland’s “screamingly complex” social security system.

The Organisation for Economic Co-operation and Development has warned that basic income schemes would need to be paid for with higher taxes.