Trained in Social Sciences and General Social Policy, Timo A. Tanninen has worked for the last 16 years at the Ministry of Social Affairs and Health in Finland. He currently holds the position of Ministerial Counsellor for Finance, Vice Head of Unit for Planning and Development. He is also Finland´s delegate in OECD´s ELSA Committee (Employment, Labour and Social Issues) and the Health Committee, as well as the Chair of NOSOCO (the Nordic Social Statistic Committee).
Prior to joining the Ministry, Tanninen was Professor in Social Policy and Social Work at the Swedish School of Local Administration, and a Visiting Professor at the Tallin Pedagogical University and the Bauhaus Foundation in Dessau, Germany. He has published over 80 titles in social and housing policy and comparative welfare studies.
Q: You are the civil servant at the Finnish Ministry of Social Affairs and Health in charge of the 2017 Basic Income experiment. What was the government’s thinking in bringing back this idea?
Finland currently has a centre-right wing government, which created a Strategic Government Program to run 26 new “key projects”. Basic Income is part of one of these projects, aiming to make governmental services more citizen-centric.
With the 2008 financial crisis, the Finnish economy suffered and is still doing so today, because of the European Union’s embargo on Russia. Finland traditionally has many financial interest with that neighbour, because Russia is one of our biggest foreign trade partners. So, the Finnish economy isn’t doing as well as its western neighbours’. For example, our employment rate is under 70% and the government wishes to increase it to 72% by the end of its term. One of the government’s major goals in job creation.
One of the issues in increasing employment in the country is finding people willing to fill short term or part time jobs. Half of these job offers go empty because nobody applies. This in part is because the Finnish State provides everyone with proper unemployment benefits. I wouldn’t say that one can live well on those benefits but one can live. There is for this reason no incentive to apply for these positions, because with the relatively small increase in income from the job you may lose a lot of benefits.
Basic Income appears as one solution to this problem because you would still receive it regardless of the added income. You now have an incentive to take the job.
Q: Compared to the average unemployment benefits, I believe the Basic Income is lower. Is that reduction of governmental expenses the only reason for the Government to push the experiment?
You are right it is lower but the Government is really interested in the dynamic effects of work. With increased employment and income, people consume more goods which brings in more VAT.
This first pilot is a very partial experiment focused on long term unemployed people. But already it is very complex to design because we already need to consider over 60 respectively different benefit schemes. Furthermore, since the trial is mandatory, it is important no person in the experiment loses out compared to their current situation. Even the mandatory aspect of the trial – which is there to erase the bias a voluntary program would have – is a constitutional issue we have to contend with. So you see, even if the scope of the study is small, it is already highly complex.
For this reason, though the thinking may have originally been broader, this experiment is only interested in looking at the increase or not of short term or part-time work among long term unemployed people.
We already know that we can’t generalise this Basic Income scheme as is, over the entire population, because it is too expensive. We would have to redesign the tax code to make that possible, which we decided not to touch for this already complex experiment. In 2019, Finland will have “real-time” data on people’s income and so it would be easier at that date to redesign the tax code to integrate a negative income tax as Basic Income-model for example, if it would get political support.
Other objectives of this experiment are to fight poverty and reduce bureaucracy.
Q: There is currently a debate in many countries not only on unemployment but on the “quality” of jobs that to increase employment through multiple insecure part-time and short term jobs is actually not such a good idea for the worker or the economy as a whole. What do you think?
To our government, the answer is clear: It is better to work than not to work. This is also because our social security and pension systems are designed in this way.
The government’s perspective on this issue is very practical. Maybe in 2018, there will be a second experiment with broader goals such as questioning our social security system and seeing if Basic Income could be a way forward, but for now, the goal is clear.
In any case – depending on the trial(s)’ results - the potential proposal for general and permanent Basic Income policy will not be taken before 2019 which will be a question for the next government since our elections will be held in April 2019.
Q: One of the main arguments usually raised in favour of Basic Income today is to say that our social security system is no longer adapted to the way we work (more flexible, less secure, shorter-term jobs) which will only increase with automation. This is not really the main reason for this experiment, is it?
No it isn’t. I would say that this idea is in the background but it is not the driving reason for this actual experiment. The idea is to increase the employment of residents of this country and not to let labour market and companies use cheap undocumented migrant labour to fill those positions.
Automation is more a question for the production side of the economy and for exported goods. The jobs we are discussing are more service jobs for the national market. Finland has an underdeveloped service market compared to countries at the same GDP level.
Q: It has been argued that Basic Income gives low-wage workers more negotiation power against employers and inversely, it has also been argued that Basic Income gives the upper hand to employers that can now lower their salaries by the amount of the Basic Income. Will you be looking at this debate through the experiment?
Following what I have said, up to now, I think our Government believes it should favour employment and not hinder it, so I don’t think it believes in the first argument. Finland doesn’t have a law on minimum wage but we have a regulation, which is decided by the labour market partners in “general agreements” in each sector of the economy. For this reason, Basic Income wouldn’t give low-wage workers leverage to increase their wages.
Q: Surprisingly, there doesn’t seem to be much support for Basic Income in the Government or the opposition. What is your opinion?
Kela has published a document referencing the various opinions for and against Basic Income in Finland and abroad. In Finland during the previous debate, the Green party and the left party in the opposition, and the main right-wing party in the country support the experiment. Officially, the right-wing coalition in power is united in its support.
The Social Democrat party and the Unions are sceptical.
But concerning this experiment and the pilot bill on partial Basic Income, when our Parliament approved the Bill in the mid of December, the government parties received support from the Social Democrat party but the Green party and the Left party voted against.
We will see what happens in 2019, in the next general elections. However, regardless of anyone’s opinion today, the results of the experiment will be the most important aspect in future debates.
On a side note, the international discussion about our experiment is I find, often overly-simplified. You really need to understand the economic and political climate as well as the complexity of our social security system to understand the trial.