How would you like to receive a salary of $1200 a month for nothing?
Finland’s government is doing precisely this: to give everyone of its citizens a basic income of 800 euros a month and scrapping benefits altogether.
A basic income means simplifying the social security system. The Netherlands had already been trialling a similar proposal.
Previous experiments have shown that universal basic income can have a positive effect.
In small scale experiments in Canada, everyone in the Canadian town of Dauphin was given a stipend from 1974 to 1979. The experiment showed a drop in working hours, mainly because men spent more time in school and women took longer maternity leaves. This contributed to significant improvements in health, better performance at education and better family life.
In Uganda, when thousands of unemployed people in Uganda were given grants of twice their monthly income, working hours increased by 17% and earnings increased by 38%.
What started off as a crazy idea and far-fetched experiments are beginning to see actual implementation. Finland may or may not proceed, but polls show strong support – at 69%.
Is this idea too crazy for Singapore?
First off, we have to ask why. Why should the country even provide the basic salary? What problems are we trying to solve?
Finland’s program is meant to tackle unemployment. Their unemployment rate stands at 8.7% since October 2015. The basic income would allow people to take on low-paying jobs without personal cost. At the moment, if a Finn takes on a temporary job, he would get lower welfare benefits, which can lead to an overall drop in income.
So in a way, their welfare program discouraged people from getting work. That is the sort of scenario Singapore wants to avoid.
Our unemployment today hovers around the 2% mark. The country is at full employment. Whatever the effect of such a program, we have to ask if the country can afford it.
$1200 per Singaporean would cost us some $36b. That is a phenomenal amount. Already the country spends about $50b a year just to keep everything running.
In fact, it would be argued that we need to do a reverse of these liberal experiments. We need to develop policies that motivate the worker and as well as the businessman. The lack of an “iron rice bowl” keeps each individual on their toes and the threat of competition pushes workers to always keep their employability sharp.
Programs such as the Progressive Wage Model produce a dual effect of assuring the worker of a decent wage and simultaneously improves their skills for better wages. Both the employee and employer stand to gain.
Personally I am glad that we do not take such a lazy approach to welfare. Minimum wage…and now basic wage, these are old and blunt clubs that are used to whack a problem, but ends up hurting the host more. I’m glad that we develop precision tools to slice away the issue and in turn, healing the rest of society.