As the Covid-19 pandemic sinks economies around the world and leads to record rates of unemployment, some politicians and analysts are revisiting the idea of a universal income. Spain on Friday introduced a basic income for the poor – a version of a universal basic income that could see the concept gaining ground.
In the face of a global economic crisis induced by the novel coronavirus, the idea of a basic income paid to all citizens is rapidly gaining new traction.
With one of the highest poverty rates in Europe, Spain took the first tentative steps towards a universal basic income on Friday after the government approved a minimum income of €1,108 ($1,230) per month for about 2.5 million of its poorest citizens. It became the first country in southern Europe to launch such a scheme during the pandemic.
The issue of a basic income was at the heart of the coalition agreement reached between the Socialists and the left-wing party Podemos.
"Today, a new social right is born," said Pablo Iglesias, Spain’s deputy prime minister and leader of Podemos, on Friday, stressing that the crisis had "accelerated the entry into force" of this first step towards a universal income.
Advocates of a basic income argue that it protects the most vulnerable from economic uncertainty, particularly those outside the usual social safety nets, such as the self-employed, part-time workers and casual workers who make up the so-called gig economy.
"It could be really trendsetting for southern Europe if, for the first time, we are to maintain a more consistent approach to income assistance," said Louise Haagh, a politics professor at Britain's York University and a basic income advocate, in an interview with Reuters.
Gaining ground in Europe
An Oxford University study shows that 70 percent of Europeans support the concept of a basic universal income – among them, politicians from across the political divide.
"The time has come for a basic universal income," Scottish Prime Minister Nicola Sturgeon told a briefing on the coronavirus in Edinburgh, adding that she had engaged in "constructive discussions" with the UK government on the issue.
Before coming to power in 2018, Italy’s Five Star Movement campaigned hard for a substantial basic income for all Italians. It opted for a more modest “citizenship income”, an allowance to help the poorest, after realizing the country’s coffers were too depleted to support a universal scheme.
In France, the first rumblings in favor of a universal basic income could be heard during the presidential election of 2017, when Socialist candidate Benoît Hamon made it a key part of his campaign. Though he suffered a devastating blow at the polls that ended his presidential ambitions, his policy has continued to gain traction.
The Jean-Jaurès Foundation, a left-wing think tank, has revised Hamon’s initiative in the wake of the current health and economic crises and proposed an unconditional basic income of between €725 and €1,000 per month for France’s poorest households. Eighty of the country’s political and civic figures signed a petition on May 4 backing the foundation’s proposal.
The Finnish experiment
But it is Finland that has gone the furthest in testing the feasibility of a basic universal income. In 2017, it launched a government-run pilot program in which 2,000 unemployed people received an unconditional income of €560 per month for two years. The income could be combined with family allowances and wages if they found a job and returned to the workforce.
Even though 55 percent of beneficiaries reported feeling happier overall as a result of receiving the income, compared to 46 percent in the control group, in the end only 43.7 percent of beneficiaries found a job compared to 42.8 percent in the control group. The findings were widely panned as the income did not boost employment as hoped. It then led to the Finnish government pulling the plug on the initiative altogether, claiming it was too costly to keep going.
Researchers, for their part, argue they were hamstrung by insufficient government funding and reduced sample size.
Undermining labor protections?
Governments may feel they are already under too much financial pressure to fund a basic income plan.
"In the crisis, we’re in, I don't see how a government would embark on a universal income, with the pressure of financial markets, banks, and international financial organizations on countries' budgets," said Joan Cortinas-Munoz, a researcher at the Centre for Sociology of Organizations at Sciences Po Paris and a specialist in social policies in Spain, in an interview with FRANCE 24.
Supporters of neoliberalism are not the only ones skeptical of the viability of a universal basic income. Some on the left warn it could be something of a Trojan horse, leading to less protection in the labor market as employers seek to take advantage of the income already provided by governments to pay workers lower wages. Moreover, governments would need to ensure such a scheme could be fiscally sustainable over the long term.
"In its neo-liberal conception, the universal income is supposed to replace social welfare protections (health coverage, housing allowance...). But the latter is essential as a safety net to avoid falling into extreme poverty," notes ATD Fourth World, a social justice advocacy group based in France.
Advocates are convinced that a universal basic income can not only offer a lifeline to the most financially vulnerable but also an opportunity to rebuild economies now plunging into recession because of Covid-19.