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Europe
Published
Last Update July 6, 2017

Thousands of unemployed to get $587 monthly income in Europe first

By | Associated Press
FILE - In this Tuesday, Oct. 27, 2015, file photo, new 20 euro banknotes are arranged for display during a news conference at the branch office of the German Federal Bank in Erfurt, Germany. No one is lining up to join the 19-country currency, and the next memberships, if any, will only be years down the road, certainly not in this decade. It marks a shift from a recent boom in membership, with seven countries joining in the past nine years, and reflects in part a growing wariness of forging closer economic ties. (AP Photo/Jens Meyer, File)

FILE - In this Tuesday, Oct. 27, 2015, file photo, new 20 euro banknotes are arranged for display during a news conference at the branch office of the German Federal Bank in Erfurt, Germany. No one is lining up to join the 19-country currency, and the next memberships, if any, will only be years down the road, certainly not in this decade. It marks a shift from a recent boom in membership, with seven countries joining in the past nine years, and reflects in part a growing wariness of forging closer economic ties. (AP Photo/Jens Meyer, File) (The Associated Press)

Finland has become the first country in Europe to pay its unemployed citizens a basic monthly income, amounting to 560 euros ($587), in a unique social experiment which is hoped to cut government red tape, reduce poverty and boost employment.

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Olli Kangas from the Finnish government agency KELA, which is responsible for the country's social benefits, said Monday that the two-year trial with the 2,000 randomly picked citizens who receive unemployment benefits kicked off Jan. 1.

Those chosen will receive $587 every month, with no reporting requirements on how they spend it. The amount will be deducted from any benefits they already receive.

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The average private sector income in Finland is $3,600 per month, according to official data.

Kangas said the scheme's idea is to abolish the "disincentive problem" among the unemployed.

The trial aims to discourage people's fears "of losing out something", he said, adding that the selected persons would continue to receive the $587 even after receiving a job.

A jobless person may currently refuse a low-income or short-term job in the fear of having his financial benefits reduced drastically under Finland's generous but complex social security system.

"It's highly interesting to see how it makes people behave," Kangas said.  "Will this lead them to boldly experiment with different kinds of jobs? Or, as some critics claim, make them lazier with the knowledge of getting a basic income without doing anything?"

The unemployment rate of Finland, a nation of 5.5 million, stood at 8.1 percent in November with some 213,000 people without a job -- unchanged from the previous year.

The scheme is part of the measures by the center-right government of Prime Minister Juha Sipila to tackle Finland's joblessness problem.

Kangas said the basic income experiment may be expanded later to other low-income groups such as freelancers, small-scale entrepreneurs and part-time workers.