Zulfath Saheed weighs the available options to achieve a universal basic income

The universal basic income (UBI) model has been taken up for discussion and even trialled in certain parts of the world in recent times. What it essentially refers to is a state sponsored monthly stipend for citizens that would fully or partially cover their basic expenditure regardless of whether such individuals already receive an income through employment.

But as with many economic models, UBI has its supporters and detractors. Within the ranks of its staunch advocates, UBI is viewed as a panacea for societal ills that would help people come out of poverty and thereby guarantee satisfactory living conditions for all – especially in a scenario where automation is taking over virtually every aspect of life and replacing human labour in the process.

ALTERNATE VIEWS The critics – many of whom ascribe to the capitalist ideology – are of the view that the UBI model would only dissuade citizens from actively seeking employment and drive down economic momentum as a result. The dignity of labour is a key concern for those who sit in this camp. Some who belong to the more liberal school of thought also have their reservations about UBI. They feel that it could undermine existing welfare programmes targeted at the poor and disenfranchised.

Then there’s the issue of how an undertaking as significant as UBI would be financed. One strategy would be to increase the state’s debt ceiling, which those who are in favour have argued would not place an added burden on the people – as in the case of raising taxes on the rich to fund the system, which is a second option.

BROAD VARIETIES Partial basic income refers to an unconditional income transfer that is considered insufficient to meet a person’s basic needs (i.e. below the poverty line). Full basic income points to a level that meets or is greater than meeting an individual’s basic needs.

The ability of basic income to eliminate poverty is based on the assumption that an unconditional income above the poverty line will not change this threshold because of inflation or other effects.

TEST SUBJECTS In January, Finland launched a nationwide two year pilot scheme where 2,000 participants – randomly selected from those receiving unemployment benefits aged between 25 and 58 – were entitled to an unconditional income of EUR 560 a month regardless of whether they were in paid employment or not.

The experiment tested whether the implementation of UBI would help address issues caused by automation, long-term unemployment and lower wages. At the same time, entrepreneurs who feared not having financial security when starting a business were expected to be encouraged to engage in economic activity.

It was also anticipated that launching the programme nationwide would reduce bureaucratic costs associated with the present Finnish welfare system, which is considered complex and expensive to administer.

Closer to home, the basic income project of Madhya Pradesh in India, which commenced in 2010, involves 20 villages. While villagers in eight selected areas received a basic income, others served as control groups.

Initial results of the pilot project have proved to be positive: villages spent more on food and healthcare, children’s school performance improved in over two-thirds of families, time spent in school and personal savings almost tripled, and business startups doubled. The study also reported higher economic activity and savings; improved housing, sanitation and nutrition; lower food poverty; improved health and schooling; greater inclusion of the differently abled and a lack of ‘frivolous spending.’

EXPERT OPINION Recently, Forbes reported that some winners of the Nobel Memorial Prize in Economic Sciences had endorsed the UBI model. The magazine notes that Sir Christopher Pissarides advocated universal basic income as a solution to the inequality that arises from globalisation, and the rise of robots and AI.

“Universal basic income is an easy way of providing for the basic needs of life. Then you can perhaps provide social services such as health and education through the market. The state could subsidise wages in these industries or employ people directly on reasonable incomes who otherwise would be unemployed. Rather than providing people with state run services, you can trust people to decide for themselves how to spend their money,” Pissarides reportedly stated, in a recent panel discussion.

LOCAL CONTEXT In present-day Sri Lanka, the Samurdhi welfare programme looks to identify low income families and implement relief programmes for them – along with implementing social security programmes for beneficiaries with their contribution, providing facilities to educate children of Samurdhi recipient families and improving the nutrition level of mothers.

A more radical approach in the form of a universal basic income could test the state apparatus but will require further analysis on the part of policy makers both in the public and private sectors.