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Thursday, 5 January 2017

NEWS: Finland introduces basic income for unemployed

Finland has become the first country in the world to pay a basic income to randomly picked citizens on a national level in an experiment aiming at dismissing poverty, motivate people to join work force and decrease unemployment.

The experiment is conducted with 2,000 randomly picked unemployed participants between the ages of 25 and 58. For two years, participants from different parts of the country will receive an unconditional monthly tax-free basic income of 560 euros ($586).

The plan aims to find ways to reshape the social security system in response to changes in the labour market, according to the website of the Social Insurance Institution or Kela, which manages the project. It also seeks to reduce the bureaucracy and simplify the complicated benefits system, Kela says.

The scheme, which was launched on January 1, hopes to create an incentive for more Finns to work, since the fear of losing welfare benefits make many citizens act picky about the job they would accept.

Many Finns stay out of the job market for years as they do not want to lose their welfare benefits.

Professor Olli Kangas from Kela says that there are many incentive traps in the present system that are caused by a number of income-tested benefits paid on top of each other.