Presentation at the event ”Socially Innovative Finland - Spotlight on the basic income experiment and the Finnish maternity package”, Kela, Helsinki, 12.1.2017.

1. How the basic income experiment works in
practice
Marjukka Turunen
Head of Legal Unit
Benefit services
12.1.2017

2. How the basic income experiment works in practice
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3. Basic income experiment is one of those actions which aim to
• Renewing social security to answer better to changes of working life
• Develop social security to more participating and incentive for work
• Reduce byrocracy
• Simplify the complexity of the social security system
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Basic income experiment in a nut shell – Why?

4. Why is the Finland´s experiment so unique?
• Experiment is compulsory, you cannot choose whether you want to be in it or
not  came as a surprise to the participants  results will be more genuine
and trustworthy
• Target group (2000 customers) chosen were randomly picked from the whole
group of of basic unemployment benefit receivers (175 000 persons)  no
exclusion of certain groups from the experiment
• Target group (2000) – control group (173 000)  can be comparised together
because the profile is the same
• Experiment is nationwide, participants are situated all over Finland
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5. Why is the Finland´s experiment so unique?
• Experiment is implemented by the main social insurance implementor in Finland
(Kela)
• Experiment has been planned and implemented by interdisciplinary group
(reseachers, legislation experts, benefit experts, ICT experts) inside one
organisation
• Experiment is based on legislation and the law on the experiment has been
proven by constitutional board in parliament
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6. 1. More incentives to take on work
• Earnings don´t reduce basic incomes amount, you get to keep it no matter
how much pay you get
• Basic unemployment benefit is coordinated with earnings so if you take on for
example a part time job, you´ll get less than the full amount of the
unemployment benefit (1 euro earnings reduces 50 cents of the benefit)
• In some situations it is not worthwhile to take on a part time job because the
amount of euros left in your hand is less than the full unemployment benefit
(taxes, child increases etc to be considered)
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Basic income experiment– Why?

7. 2. Financial security garantee (”Peace of mind”)
• Basic income is payed in advance every months second bank day
unconditionally without any application
• You can plan ahead and have certainty of the basic income
• Unemployment benefit is payed beforehand and it´s amount is reduced by
possible earnings – uncertainty how much does the benefit is especially
when doing part-time job and amount of earnings vary from month to month
 insecurity
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Basic income experiment– Why?

8. 3. Less burocracy
• To calculate the amount of the unemployment benefit, customer needs to bring all
the necessary information to Kela every 4 weeks. Pay checks, application form,
other clarifications what is needed to calculate the amount of the benefit  takes
time to get the information from the employer and also Kela has to process the
application with the information  administrational work and burocracy burden
for both customer and Kela  More energy to look for work and plan ahead
• Status changes: If person in experiment gets sick or has a baby, he or she will
stay on basic income and don´t have to apply for sickness benefit or parental
benefit
− Finnish basic social security system consist of 40 benefits or parts of benefits
and it is sometimes impossible to customers to know what they are entitled to.
Furthermore, benefits are calculated in different ways and so customer needs
to bring different application and other information for Kela to process
applications8
Basic income experiment– Why?

9. Target group 2000 persons
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NORTHERN
INSURANCE 12 %
DISTRICT
EASTERN
INSURANCE 17 %
DISTRICT
SOUTHERN
INSURANCE 40 %
DISTRICT
WESTERN
INSURANCE 17 %
DISTRICT
CENTRAL
INSURANCE 15 %
DISTRICT
Basic income receivers:
• 48 % female, 52 % male
• 30 % aged 25-34, 29 %
aged 35-44, 41 % aged
45-58
• 87 % received labour
market subsidy and 13 %
basic unemployment
allowance

10. Experiment in practice
• Decisions sent by post to the target group 28.12.2016  All of the benefit paying
days for the whole 2 years have been informed to the target group
• Kela is not allowed to give away information about the persons in this
experiment unless non-identifiable
• Individual privacy and not allowed by legislation
• The results of the experiment suffer  by disturbing the customers we can
alter their behavior and spoil the idea of a compulsory field trial
• The analysis of the experiment will be take place in the end of the trial via for
example interviewing target group or part of it and comparison with the
comparison group will be made.
• Analysis and information during the experiment will be made according to
Kela´s registers and other information from for example tax authority and
employment offices  we will not disturbe customers during the experiment
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11. How to customers act in practise?
• Customers don´t have to inform Kela about their earnings or whether
they have taken on a job or not
• Customers don´t have to inform their basic income to tax offices
• Other benefits act like they have before, so earnings might reduce
housing allowance, social assistance or other benefits
• Unemployment benefits is good to apply so customer don´t miss
anything during the experiment or after it
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12. Examples
• Person A is in basic income experiment
• Before experiment he received basin unemloyment allowance 522 euroa per
month and housing allowance 330 euros per month (calculated according to
expences in Eastern Finland/city of Joensuu)
• From the beginning of the experiment he receives basic income 560 euroa per
montha and housing allowance 330 euroa per month  incomes increase by 38
euros per month.
• Can stay on the experiment, no apply for a job for the whole two years
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13. Unemloyd person who has a part-time job
• Unemploymen benefit receiver
• Gets basic income 560 euros every month
• On top of that every earned euro increases
persons total incom
• Person has a right to unemployment benefit but in
practic basic income reduces the unemployment benefit
on to 0 euros unless person has child increasement or other
increasements.
In total income influences also housing allowance which
is being tested when income rise 400 euros per month.
If a person has before had right to social assistance, every
euro reduces that.
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Earning Earnings, netto Basic Income Euros in handm tax 20 %
0 0 560 560
50 40 560 600
100 80 560 640
150 120 560 680
200 160 560 720
250 200 560 760
300 240 560 800
350 280 560 840
400 320 560 880
450 360 560 920
500 400 560 960
550 440 560 1000
600 480 560 1040
650 520 560 1080
700 560 560 1120
750 600 560 1160
800 640 560 1200
850 680 560 1240
900 720 560 1280
950 760 560 1320
1000 800 560 1360
1200 960 560 1520
1400 1120 560 1680
1600 1280 560 1840

14. Customers comments and feedback
• It has been a positive surprise for many people that working and
earnings from working do not affect ore reduce basic income
• Many who have called to Kela are thinking of starting their own
businesses
• Those who have started studies, have selected basic income instead of
student benefits
• Single persons have also thinking about staying on basic income and
not apply for jobs but some of them have had a reason for this (for
example taking care of an elderly person)
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