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What would change if the government gave everyone in Ireland €200 a week?

It could empower Irish workers, but is it really the best solution for the country’s poorest and most vulnerable citizens?

Image: Shutterstock

“A SOCIETY OF empowered workers, learners, entrepreneurs, creators, parents and carers with improved quality of life for all.”

This is the vision Lúí Smyth of Basic Income Ireland says he has for this country.

The organisation he is part of promotes the idea of giving every citizen in the country a weekly ‘no strings attached’ payment so that everyone has enough to live on. There would be no requirement to work and anyone who was working would still get the €192 per week payment.

“The lowest you can fall within society should be a dignified existence, nobody should live in destitution, it’s not in your interest that you’re surrounded by people living in destitution. So it’s about lifting everyone up to above a certain level with an unconditional income,” Smyth told the latest episode of Ireland 2029

There have been more than 30 UBI experiments across the world in the last 50 years, and the most frequently cited now is the recent trial in Finland.

Over a two-year period the government paid a random sample of unemployed people aged 25 to 58 €560 a month with no requirement to seek or accept work. Anyone who took a job continued to received the money.

Participants in the trial reported their stress levels went down and because the welfare systems were less bureaucratic they had more trust in institutions, in other people and in their own future ability to work.

This experiment, however, was not exactly UBI as the monthly payment was not enough to live on in Finland and it was restricted to a specific group of unemployed people rather than being paid to an entire town or country regardless of income or employment status.

Nevertheless, the results from trials like this, should not be overlooked when it comes to welfare policies, according to Smyth. 

“There’s a few things that go wrong when you have a means-tested social welfare system; the first is the relationship between the recipient and the arbitrator is hostile one,” he explained. 

So the arbitrator comes in, whether it’s a welfare clerk or whoever it might be and they have to judge whether the person is honest and worthy and whether they’re really looking for a job or whether they’re lying.

Source: RollingNews.ie

“People in the welfare system often end up in a kind of Kafkaesque situation where they’re navigating a system which is faceless but determined to judge them at every turn.”

Smyth said most welfare systems make it difficult to maintain an incentive to work. 

“At the moment if you are on the dole you can earn €200 per week and if you’re offered a small part-time job for €100 a week and you took it, your dole would go down by €100 a week. Your net increase is zero,” he said.

Smyth said trials in other countries have shown that giving an unconditional basic income does not make people less likely to go out and work.

“People will always look for more money if there’s a way for them to get it,” he said.

He added that the safety net provided by UBI could help address precarious work arrangements and give workers the economic confidence to stand up for themselves and push for better conditions. Having a basic income could also allow workers to take time out to reskill or take a chance on a new job. 

“The best thing we can do is empower people economically. If you have a choice between working and not working then you’re in a much stronger position regardless of what legislation says,” Smyth said. 

‘Self worth through work’

On the other side of the argument, Oxford University professor Ian Goldin believes promoters of UBI are “trying to excuse unemployment”. 

“You are paying people through UBI to stay at home and all the evidence that you see from around Europe, certainly in Ireland but also from the US in the midwest and elsewhere is that people get meaning, they get status, they get income, they get networks, they get skills, they get self-worth through work,” he said. 

I think the objective should be to give everyone meaningful work. When you pay people to stay at home, when you pay them not to work effectively, you find very high rates of alcoholism, of drug abuse, of suicide, of divorce, of what Angus Deaton, the Nobel prize winner, calls the ‘diseases of despair’, and that’s what you get in many, many communities with very, very high levels of unemployment where people aren’t supported.

Goldin said State systems should be designed to “be a leg-up to work, not a payout to stay at home”. 

He also made one of the common arguments against the introduction of UBI – that it is a waste of State revenue to give rich people the same payment as those on the lowest incomes:

Universal means universal – that means everyone gets it. Billionaires get it, people that don’t need it get it, that’s what universal means and I believe that people, as a result, will get less.

Goldin said the only way this model becomes affordable is to give people “much lower levels of support” than they currently receive in the welfare system and this would “increase poverty and inequality”. 

‘Unrealistic’

In 2017 the OECD published a policy brief on basic income. It looked at what a ‘no questions asked’ government payment to everyone below retirement age could look like.

Herwig Immervoll, senior economist at the OECD, told TheJournal.ie that the study examined a policy scenario where governments would spend the same overall on social transfers as they currently do, but where UBI would replace welfare payments such as unemployment benefit.

“We did this exercise for four EU countries with very different social protection systems (Finland, France, Italy and UK) and on the basis of detailed household and income data,” he explained.

The main findings of this study were:

  • Setting basic income at a level that would prevent poverty is very expensive and difficult to finance
  • Even a modest basic income typically requires significant tax increases
  • Many financially vulnerable families would lose out as they receive more generous benefit support in the existing transfer system

Source: OECD

Immervoll said he believes UBI is “unrealistic as the main pillar of social protection systems”.

However, he said the debate “shines a useful spotlight” on the challenges facing existing welfare systems. One concern about these systems is that they can be poorly targeted. 

Source: OECD

He took Italy as an example, as the richest 20% in the country receive a much higher share of benefit spending than the poorest 20%.

Experiments

Immervoll acknowledged that a basic income could help break down the stigma attached to benefits and address the work disincentive that results from the withdrawal of welfare payments as people start employment or increase working hours. 

Parts of Ireland’s benefit system, according to Immervoll, are comparatively well-targeted to low income families.

A basic income does not target the poor and some vulnerable groups may therefore lose out significantly.

Examining the current support systems should be a priority, he said, as there are huge differences even across OECD countries when it comes to targeting mechanisms.

But there are “distinct benefits” to further policy experimentation when it comes to the basic income concept. 

Lúí Smyth has an idea for an experiment Ireland could try. 

“We could give a basic income to all the residents of an island on the western seaboard. And that would be a nice contained experiment and I think there would be value to trialing it within our cultural context,” he said.

Basic Income Ireland’s most recent model involves a payment of €192 per week to everyone which would replace other benefits like jobseeker and illness payments and the State pension. Child benefit would not be affected by the proposal but most tax credits and reliefs in the current system would be eliminated. 

The organisation claims this could be done by keeping existing income tax and PRSI rates, with changes to USC rates and bands. 

I think Ireland has form on trying out radical ideas – we introduced a smoking ban at a national level at a time when most people who had an informed view of it knew it was a good idea, but to take that step, actually running with it was a big one and it’s one that we took and it worked. And after we did it countries across the world did something similar.

“We did the plastic bag tax, the other one we’re very proud of,” Smyth said.

“Overall we can afford it, we would benefit from it and I think it’s something we could be really proud of as a country, to get the ball rolling globally.”

You can listen to the fifth episode of Ireland 2029: Shaping Our Future in full below:

Full list of providers here 

Is the introduction of a universal basic income a good idea for Ireland?

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