Incentivising Work

There are two forms of UBI that are often presented as potentially viable, work-unconditional and work- conditional. Van Parijs (2003:12) states that “a work-unconditional basic income endows the weakest with bargaining power in a way a work-conditional guaranteed income does not. Put differently, work

unconditionality is a key instrument to prevent means-unconditionality from leading to the expansion of lousy jobs.” This distinction is of considerable importance, as a work conditional form of basic income can lead to a replication of Workfare on a larger scale, a form of UBI that does not reflect the autonomous work forms desirous of many young people. It is the contention of Van Parijs (2003) that the focus of UBI should not solely be on economic output but on the benefits for human capital as well, a concept that lends itself well to the key concern of this research i.e. how do we bridge the gap between the educational stage and meaningful transitions.

The key contention of many of UBI’s critics is that it will lead to the disincentivisation of work, and in turn the dumbing down of skills based education (Battistoni, 2017). This conflict is at the heart of whether UBI is set to progress as a focus of reform or not, and indeed whether it is an operable alternative for youth unemployment. As such the element of expanding human capital is crucial to offset such a fear. One aspect of maximising human capital is facilitating this smooth transition between education, training,

employment, and voluntary work (Wright, 2006). Achieving clear and fulfilling transitions in this area will help to preserve and consolidate that element of human capital that is vital to developing meaning in our work activities. Further critics of the model have suggested that a basic income defined as a uniform benefit to replace many of the current targeted benefits that are prevalent in advanced economies, will not achieve the redistribution of a means tested system, where benefits are targeted to those who need them most (Pareliussen et al, 2018). This criticism is appropriate in an age where the introduction of UBI is continuously discussed only within the terms of reforming the current social security edifice, and is rarely presented as a reimagining of the very concept of social security. In order to bypass the contention that UBI is too theoretical there is a need for clear utilisable data on the effects of UBI within community settings.

64 The evidence researchers have gathered thus far is inconclusive. Many pilots that have been attempted have taken on a deliberately limited scope, with the sense prevalent among advocates of UBI that neoliberal governments have been hesitant to fully commit to them, yet such limitations are not unusual when pioneering such policies (Dwyer & Wright, 2014; Afonso & Papadopoulos, 2015). Furthermore, very little has been researched in regards how young people view such offers and wider alternative forms of work and remuneration. The paradox in this case is that the where UBI has been trialled in a serious manner it has often been under the auspices of national or local government that very much accept and embrace the neoliberal model (Hayes et al, 2012). There are currently proposed pilot cases in Scotland, pushed by councils in Glasgow, Edinburgh, Fife and North Ayrshire (Scottish Government, 2018a). A fund of £250,000 has been made available for the four local authorities to bid for, covering a two year period from April 2018 to March 2020 through the Scottish Government. The funding is to support feasibility work and will be made available on the basis of a short business case, setting out how the money will be spent. No provision has been made for additional funding over and above the £250,000, which when compared to other pilots is not a great deal. At the time of writing the initial funding is still being delivered and no commitment to focusing any of the funding on youth unemployment has been stated, as such no clear conclusions can be drawn.

During the 1970s the Canadian province of Manitoba conducted a high profile basic income experiment, referred to as Mincome (Forget, 2011; Calnitsky, 2016; Calnitsky & Latner, 2017). Utilising a randomised control trial in a major urban area (Winnipeg) and rural parts of the province, with one small town (Dauphin) where all citizens received the UBI, the experiment allocated members of lower-income households either with an income guarantee or a substantial cash benefit dependent on the size of their family unit, which was then decreased in relation to how many hours they spent in paid employment. The results suggested only a negligible disincentive to work among those who took part, yet there was some evidence that the UBI exacerbated marital dissolution (Hum & Simpson, 2001), a factor that may be of the era rather than something that would carry over to the contemporary day in a similar economy. A positive outcome of the experiment was the perception that UBI was treated as a benefit without stigma, thereby obscuring the distinction between deserving and underserving poor (Calnitsky, 2016; Forget, 2011). The Mincome experiment was eventually abandoned due to budgetary restraints, its ultimate cost was estimated to be in the region of $17 million (Canadian). This remains a rich source of data on UBI, yet it must be acknowledged that Mincome information dates from 40 years ago, and both labour markets and the broader socio-economic demographics have changed (Simpson et al, 2017)

Finland’s limited trial was refused further funding in April, 2018, by the same centre right national government that had started it. This was commented upon as being a result of budgetary pressures from above and a desire to reduce the country’s 8.5% unemployment rate via more traditional welfare to work

65 measures. Though not fully a UBI in the purest sense (as participants did not receive a minimum amount sufficient to live on and the subject group was restricted), it was considered the first national government led step in proving the viability of such a case, having been developed from examples set previously in the Netherlands (Groot & Van Der Veen, 2000). In the trial, which began in January 2017, a random sample of 2,000 unemployed people aged 25 to 58 were paid a monthly stipend of €560 (£475), with no requirement to seek or accept employment. In the event that a recipient took on a job they were still provided with the stipend. This experiment’s future was cut short before clear conclusions could be drawn, conclusions that hopefully will come once the trial finishes, but it is apparent that the relative benefit to claimants from the data available were not sufficiently greater than that drawn from traditional benefit reforms (Halmetoja et al, 2018). Remarkably Finland is now suggesting moves towards a Universal Credit model, and introducing expectations of voluntary work and training in order to claim benefits as an alternative to the UBI model (Bjon, 2018). This is something of a mirror image of the situation in the UK where Universal Credit is being heavily criticised and the Workfare scheme has been pushed back. This highlights a prevalent fear of the UBI experimentation phase, that if clear and fruitful results cannot be shown, it will be used as a

justification to revert to more directly hostile models of social security.

In the Canadian province of Ontario a basic income experiment began in October 2017, pushed once again, largely from a conservative perspective (Boyle, 2018). Participants commented on the effect the extra income had, including allowing for healthier eating, purchasing warmer clothes for the winter, and being able to consider visiting a dentist again (Hamilton & Mulvale, 2019). Many participants used the funds to return to education or invest in small businesses. The approach utilised in Ontario was generally cautious and suffered a great deal of scrutiny from the general public and the media at large (Stevens & Simpson, 2018). In an increasingly familiar tale this experiment was also cancelled in 2018, marking it perhaps the shortest high profile experiment on record.

Further experiments that have largely been equally inconclusive include the Madhya Pradesh pilots in India (Standing, 2013; Davala et al, 2015), attempts in Belgium to introduce pilots which met significant

institutional resistance (Vanderborght, 2006), and due to government incompetence in applying the necessary measures in Namibia (Klocke-Daffa, 2017; Haarmann & Haarmann, 2012). Though all of these experiments showed positive results in a variety of areas, there has been a lack of data which attests to a clear and evidenced UBI alternative that (a) shows cost effectiveness (a key concern of most democratic economies) (b) is able to replace means tested benefits in terms of efficiently targeting individuals of the greatest need, and (c) is able to successfully evidence and convince the public at large that these measures do not disincentivise work.

66 Of note in particular is that there is evidence aplenty to suggest that UBI does not adversely alter work incentives, yet the general perception that it does continues unabated. Perhaps the key surprise from these short lived experiments as a result, is as De Wispelaere et al (2018) conclude, that they were allowed to happen in the first place. Examples of radical approaches to the impending crisis of work are few and far between, and it is to the credit of researchers and policy makers who have contemplated these solutions., who by and large have had to struggle against misinformation on the topic consistently. There are

variations on the UBI models popular at this moment, which are in their most effective form an unqualified state payment for everyone. The most common alternative are state dividends – usually based on profits related to state run industries, in particular mineral wealth. These dividends are often highly reliable and produce a positive economic impact for the distributing state in the form of increased expenditure. It is notable however that many of the jurisdictions in which they exist have much diminished social welfare and educational maintenance models compared to that of advanced economies in Europe (Widerquist & Sheahen, 2012).

Since 1982, all residents of the US state of Alaska have been provided with a cash dividend from the Alaska Permanent Fund. In 2015 the pay-out was $2,072 per person, but on average the amount varies between $1000 and $2000 (State of Alaska, 2017). Jones & Marinescu (2018) found that this payment had no adverse effect on employment and may indeed have increased part-time work rates. These universal cash transfers do not appear to alter aggregate employment positively or negatively, with Alaska recording the highest unemployment rate in the United States in 2017 (Alaska Department of Labor and Workforce Development, 2018), a fact exacerbated by the heavy seasonality of Alaska’s economy – a factor also prominent in many Northern European economies. The Eastern Cherokee Native American tribe of North Carolina in the US provides a payment to members of its community drawn from the revenues derived from tribal casinos. These payments amount to around $4,000 (US) per person per year. There is evidence to suggest that the payments had a positive effect on children’s educational attainment and decreased criminal arrests (Akee et al, 2010). Researchers did not find a significant impact on labour force

participation however (ibid). These alternative forms of a UBI are also exampled in James Meade’s (1989, 1993, 1994, 1995) blueprint for a fair and efficient economy, which formulates a position on which a social dividend could be funded from the returns available on publicly owned productive assets.