Earlier this year, Finland decided to promote a new tactic to tackle the growing unemployment rate his country was beginning to suffer. The Finnish government idea consisted in giving a benefit to those who were out of work at the moment. It might sound a regular benefit that could be found in other countries around the globe, but in this case it was a bit more special.
Even if those lucky ones sought to find a job and actually got it, they were still receiving the money. The idea, implemented for the first time in Europe, is called Universal Basic Income (UBI) and consisted on providing a regular and monthly income of a fixed €560 (£475) no matter what they spend the money for.
These recipients do not even have to demonstrate that they are seeking employment and they are not required to regularly report to authorities to prove they still need the payment. It is unconditional.
This Finnish trail was started up this year in January and it will be continuing for two more years as an experiment. Early conclusions has shown up few good results. Among them it can be found lower stress levels on those looking for a job and, on the other hand, a greater incentive to work in positions they will feel comfortable in and long-term based.
More countries are developing new UBI programs to be implemented in the near futureA worldwide solution
Another country seeking this project very close is the United States, or rather said, one particular State, Hawaii. According to the World Economic Forum, Hawaii may be the first U.S. state to pass any sort of UBI-positive legislation. Hawaii state representative Chris Lee, even said that the state is preparing “to analyze our state’s economy and find ways to ensure all families have basic financial security, including an evaluation of different forms of a full or partial universal basic income.”
Critics think that UBI would encourage a more lax attitude about work and argue that funding such a system would be difficult, if not impossible. Existing pilot programs, however, seem to indicate otherwise as proponents of UBI have highlighted how it would be an improvement on existing social welfare programs while mitigating the effects of the joblessness expected to follow automation.
But against all critics, the results shown in those countries who already have implemented Universal Basic Income are to be positve about it and the idea has been seen to not only aim those unemployed in ‘rich’ countries but to bring the financial system to those in developing.
Reaching the Financial Inclusion through the Universal Income
That is so because using financial services are much cheaper in overall than a traditional cash system. Also, current technology brings new ways to make payments agile and, at the same time, easier for the governments and citizens. So far, experts and National Authorities have seen UBI as a two-head pathway: one side, it would help tackling poverty and, secondly, will bring Financial Services to those who has no access yet.
Mongolia has shown impressive results joining UBI and Financial Inclusion programsAs an example of this, there is Mongolia. This north-eastern Asian country had in 2014, a 92 percent of adults had a bank account—by far the highest share in the developing world.
This is because the Mongolian Human Development Fund (HDF) distributes revenues from the mineral and mining sectors with the objective of redistributing wealth. A flagship program funded by the HDF is the Child Money Program (CMP), launched in 2012.
As part of CMP, the government makes monthly electronic deposits into savings accounts opened in children’s names, helping to ensure that all Mongolians will eventually be banked. The program pays about $10 a month to all children aged 0 to 17.
A similar story can be tell from Iran, where 92 percent of adults are banked (compared to 15 percent in the Middle East on average) and over 60 percent of adults receive a government payment into their account. In 2010, the government replaced energy price subsidies with household energy dividend transfers. Since money was paid exclusively into accounts, an estimated 16 million new accounts were opened to ensure every eligible family could receive benefits.
All these examples have shown the high-capacity digital UBI payments can bring people into the financial system and build their financial capability. Thanks to experiments in Finland, 2,000 unemployed citizens have seen their quality of life arose.
Same, and even a higher impact have been seen in developing countries as Mongolia or Iran, where Universal Income have brought Financial Inclusion to millions, growing their incomes and reaching new standards in financial literacy.
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Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.
