The research project against all odds: Olli Kangas on Finland’s universal basic income

Olli Kangas, head of research at Kela, the Social Insurance Institution of Finland, was given a project which took both light summer nights and long, dark winter days to carry out.

“We were given 20 million euro do this experiment, and we were extremely pressed for time. We only had one year in which to plan the experiment, decide which selection of people we should use, and to design the platform which would pay out the benefit. The whole thing was a nightmare to execute,” he says.

Olli Kangas fought Finnish bureaucrats who wanted to close the research project down, convinced sceptical government ministers and played tug of war with an EU that was worried about the consequences for other countries. 

“It would have been easier to introduce universal basic income in Norway or in Iceland,” Olli Kangas told the Nordic Work Life Conference 2018 in Oslo.

The universal basic income has supporters and opponents, but they do not fit the usual political patterns. Among supporters you find for instance both parties to the right, who see it as a scaling back of the welfare state, and parties to the left, who see it as an expansion. 

The idea behind the universal basic income is that all citizens in a country should have the right to receive a certain minimum income, unconditionally. The proponents of the idea point to the fact that today’s benefit systems are complicated and that it is easy to end up being lost in all the red tape. Since many benefits are means tested, those who receive them risk losing their benefits by accepting a new job. 

“Although the contribution a person gets is low, it is permanent and secure,” said Olli Kangas.

The opponents of the universal basic income argue it is too expensive, that it reduces the incentive to work and that it could impact negatively on gender equality since it could influence women to stay at home rather than go out and work.

Overrun by refugees?

Juha Sipilä’s centre-right coalition launched the idea of carrying out a universal basic income experiment in 2015. The government comprises three political parties. The Finns Party was the most sceptical, arguing such an experiment would lead to Finland getting a reputation for being a haven for refugees.

“There was one government minister in particular who was worried that Finland would be overrun by refugees who believed they would receive manna from heaven if they came here. She also insisted that we study what the EU says about which social benefits are transferable between member states.”

In March 2016, the research group proposed to make the experiment a national one. A representative selection of people would be divided into different groups with different levels of benefits, and different tax levels, in order to better study the effects. 

“We quickly realised that the level we initially had envisaged for the universal basic income, around 1,000 euro a month, was far too high, since this would mean the marginal tax rate on revenue outside of the benefit would be 70 to 80 percent.”

As a result, the level was set to 560 euro a month. This also meant they would not go beyond one important limit in relation to the EU.

Wrote new laws

“In order to carry out the experiment we were forced to write new legislation to cover the  universal basic income’s impact on other types of benefit. But the finance minister did not want taxes to be part of any experiment.”

When the research group was appointed and met the prime minister, he proposed that the project could be financed by redistributing parts of the annual 15 million euro total benefit budget, since the idea with the universal basic income was to reduce other, means tested benefits.

“This made us feel like ‘masters of the universe’, planning an experiment with 100,000 participants. But we soon came back down to earth, since the bureaucrats turned out to be stronger than the politicians,” said Olli Kangas.

In the end, the experiment was far more modest. 2,000 unemployment beneficiaries aged 25 to 58 were chosen. They received 560 euro a month with no strings attached for two years, in 2017 and 2018. There was also an equally sized control group where no one received universal basic income. The budget was 20 million euro in the end. 

“We chose not to carry out local experiments in a few selected municipalities. Experiences from similar experiments in the USA show the chosen municipalities were influenced in a way that changed the local labour market, leading the entire experiment to fail.”

The constitution nearly torpedoed the project

The aim of this experiment was to see what happens when the participants no longer needed to spend time applying for financial support. Would the recaptured time be used for other activities, or for finding jobs? 

The Finnish constitution proved to be an obstacle, since it bans the unequal treatment of citizens. Olli Kangas’ research group wanted the experiment to be obligatory, so that the chosen ones got the universal basic income whether they wanted to or not. This is a type of ‘human experiment’ which has not been done previously in Finland. As a result, they ditched the plan for different levels of universal basic income. 

“The legal team involved in this gave us the thumbs up only at the end of December 2016, two weeks before the experiment was due to start.” 

When Olli Kangas himself tries to answer whether the experiment was a success or not, he almost sounds like the artist Christo, who is known for wrapping up bridges and buildings in fabric. The artwork is as much about overcoming bureaucratic obstacles as the wrapping itself.

“We managed to overcome the constitutional obstacles to the execution of such an experiment, and I could talk for hours about the political process and what happened backstage. We now know far more about what can be done, and how it should be done.”

Better than a Canadian research project?

“You could compare our experiment with the Canadian experiment with a basic income model, which has been running in parallel to ours. It varies more when it comes to which groups are part of the project, then pay out a larger sum of money – around 800 euro – and it is a three year long project. But they have a big disadvantage in that they only have voluntary participants. They have had major problems getting people to sign up.”

The research experiment will be evaluated.

“But it has been extremely difficult to secure funding for this. Politicians were willing to provide 20 million euro for the experiment, but just 700,000 euro to evaluate it.”

Thanks to Finnish registries it will be possible to follow up what happens with the group that received universal basic pay for many years to come. But register data lags behind with one year, so data from 2017 will not be available until the end of 2018. 

“That’s why we won’t be presenting our end results until the end of 2020,” says Olli Kangas, who doesn’t believe a universal basic income will be introduced in Finland.

“The experiment will be ended one year earlier than planned for starters, and the government has gone the opposite way by introducing demands for activation. If a universal basic pay were to be introduced, it would be through the back door – by merging and simplifying some types of benefit.”