What is Universal Basic Income?

Researchers in Germany have announced a new trial of Universal Basic Income, the latest in a string of high-profile pilots of the policy.

Universal Basic Income (UBI) could sound too good to be true — the government gives you money with no strings attached.

The policy involves giving all citizens a regular cash payment and is meant to ensure a minimum standard of living for everyone in society. The payout is not means tested — meaning even the well-off get it — and not restricted, meaning people can spend it on anything. Some believe a UBI system could ultimately replace benefit and social security systems.

Proposals for UBI have been talked about for over a hundred years but calls for their adoption have started to gather pace in the years since the 2008 financial crisis. Swiss citizens gained enough support for the idea to force a referendum in 2016, although the proposal was ultimately rejected by a heavy margin.

Calls for UBI have been renewed this year in the wake of the COVID-19 pandemic. Over 500 academics backed a basic income in an open letter in March and British politicians have urged the UK chancellor to introduce UBI.

Advocates say the policy would help tackle growing inequality in society and help citizens deal with the growing disruption in the labour market caused by automation, digitisation, and globalisation.

Academics studying a Canadian UBI experiment said earlier this year that everyone involved benefited in some way. Improvements included better mental health and fewer visits to the hospital.

READ MORE: Germany to trial giving away £1,000 a month in universal basic income

However, critics worry that the cost of UBI will be prohibitive and fear secondary effects, such as inflation or inadvertently discouraging work.

Others argue that giving a basic income to everyone — including the well-off — is unfair.

The most high-profile experiment with UBI to date was in Finland, where the government paid 2,000 unemployed citizens €560 a month for two years. Those involved in the trial reported improvements in well-being, but UBI failed to encourage many back to work as researchers had hoped. The University of Finland ultimately concluded that the experiment had been “disappointing”.

For now, UBI remains an idea at the outskirts of public policy debates and economics but it continues to slowly gather support. Stanford, the prestigious US university, set up an interdisciplinary lab to study basic income in 2017 and a no-strings-attached “freedom dividend” of $1,000 a month was a key policy of Andrew Yang, the outsider candidate for Democratic presidential nominee in 2020.