Several countries around the world are talking about the idea of introducing Universal Basic Income (UBI), not to be confused with Universal Credit which is being introduced in the UK to replace several means-tested welfare benefits.
Universal Basic Income is where the government pays everybody a set amount, whether they work or not, in place of means-tested benefits. Of course, the incentive to work is still said to exist as most people will want to have more money than paid by UBI.
On June 5, Switzerland is holding a referendum of its citizens that, if successful, means it will become the first country to provide universal basic income. They will be voting on a plan that could see all adults receive about 2,500 Swiss Francs (approximately £1,700; $2,460) a month, with children receiving 625 Francs (about £445; $615) for each child. There will be no additional disability benefits.
The Swiss federal government estimates that the proposal will cost around 208 billion francs a year and the Swiss parliament has called for voters to reject the proposal with all parties united against it. Only 14 MPs supported the basic income initiative. One MP described the initiative as “the most dangerous and harmful initiative that has ever been submitted,” mentioning the risks of immigration, disincentive to work, and that the basic income proposed would not be financially feasible.
The Federal Council, Switzerland’s executive branch, also recommended its rejection, noting that UBI would cause low-paid jobs to disappear or be transferred abroad and would send women back to house work or care work. They said that implementing the initiative would also raise taxes and weaken incentive to work.
To understand how this proposal has come so far despite opposition from the government, you need to know that Switzerland has a form of direct democracy alongside its Parliament. Citizens simply have to gather 100,000 signatures calling for a vote on a proposal, and a ballot must be held with its result binding.
There have been UBI-type policies and experiments in both India and Brazil that have suggested that, contrary to fears about ‘welfare sapping people’s initiative, a basic income might actually increase people’s appetite for work. It seems to increase their sense of stability.
In the Netherlands, in the city of Utrecht, there is a pilot UBI-ish scheme whereby people on benefits are paid unconditionally. Other Dutch towns and cities look set to follow Utrecht’s example. Finland has plans to pilot an even more ambitious kind of basic income.
UBI ideas have been suggested in other countries, including both the USA and UK. So far, however, no firm proposals have been put forward in either nation.