Basic IncomeBasic Income

and the changing nature of work

Frances Coppola

“I fundamentally disagree with those who think that people must be forced to work with the threat of starvation. If people are intrinsically of value, then they have the right to survive with or without working.”

The Changing Nature of WorkCoppola Comment

Work is changing....

Skilled routine jobs disappearing due to automation

Relatively small number of highly-skilled, highly-paid jobs

Growth of low-skill, low-paid jobs, particularly in service industries

Britain is becoming a low-wage economy

How we work is also changing...

Flexible hours, zero-hours, part-time Casual, temporary, short-term contract Self-employment Multiple jobs – portfolio careers Mixture of paid and unpaid work

Work is becoming increasingly insecure.

Current welfare system

Piecemeal, inconsistent and regressive Minimum wage has become the “going rate” -

erosion of wage differentials Serious disincentives to seek higher paid jobs

due to benefits clawback Welfare reforms aimed at “making work pay”

actually depress wages Narrow utilitarian approach leads to cruelty

towards the vulnerable

Minimum wage effects

How to address this?

Two approaches:

Enforce living wage legislation and a job guarantee

Provide a basic income for all and allow people to choose not to work

Living wage and job guarantee

Living wage without a job guarantee increases unemployment.

With a job guarantee, may result in more people being employed by the state.

Fails to address the problems of self-employed, part-time and casual workers.

Assumes that all jobs are worth doing! Assumes that value to society is only in

paid work

Unconditional basic income

Equal support for everyone regardless of their employment status - ends poverty

Supports those doing unpaid work − Parents of young children− People caring for elderly & disabled relatives− Volunteers

Enables people to choose work to suit their inclinations and abilities

Encourages entrepreneurialism

The Scottish Campaign for a Fair SocietyThe Centre for Welfare Reform

Submission to the Expert Working Group on Welfare:

“An independent or more fiscally autonomous Scotland should design its welfare system to

achieve Basic Income Security as a constitutional right for all its citizens”

“Each citizen will be entitled to a basic income that is sufficient to avoid poverty, and each will

contribute to the community's capacity to provide for this income by paying a clear and fair level of

taxation on any income over and above this minimum”

Objections to basic income

Disincentive to work

Cost

Work disincentives

Manitoba experiment 1974-79 showed that only two groups reduced work effort:− Young mothers chose to stay at home with children− Adolescents chose to continue studies

Currently in UK, pensioners have a basic income, but an increasing number choose to work

Studies show that the majority of people want to work.

Cost

2013 Scottish paper proposed extending basic income support of £2,780 per year to entire population of UK. Cost £169bn is less than current cost of all benefits & pensions £185bn

We would probably want something more generous.....question is HOW generous. Supporters of Basic Income on right and left or political spectrum disagree on level.

Benefits

Significant savings from integrating tax and benefits systems, eliminating anomalies.

Manitoba experiment identified reduced healthcare expenditure due to fewer mental health problems and accidents at work

Restored wage differentials and higher earnings

More entrepreneurial activity

It's not a cure-all....

Would still need progressive tax system Would still need extra support for sick, disabled

and frail elderly Would still need extra support for families with

children unless children were also paid a basic income

Would still need reform of other taxes such as VAT and distortionary benefits for higher earners.