UNIVERSAL BASIC INCOME A New Tool for Development Policy? Johanna Perkiö International Solidarity Work, 2014 In recent years, social protection has risen high a determined sum of money, which is granted on the international policy agenda. It is becom- regardless of the recipient’s employment status, ing increasingly acknowledged that economic family relations or socio-economic position.5 In growth and conventional development policy most proposals, the basic income grant itself is measures alone are insufficient to combat pover- tax-free, but all earned income above it are taxed ty as far as the unjust economic structures remain either on progressive or flat-rate scale. Through in place. income taxation, the government can charge back Deepening inequality and slowly growing em- the equivalent of the given grant from higher ployment rates1 accompanying rapid economic earning individuals who do not need the income growth has led many countries in Africa, Asia supplement. Few pilot projects of basic income and Latin America to tackle poverty directly by with encouraging results in terms of reduction establishing social protection systems for their of poverty, improving health and nutrition and citizens. The remarkable progress in the social boosting economic activity have been carried out policy field has drawn enormous international at- in Namibia, India and Brazil. tention and brought about the new global policy approach of Social Protection Floor (SPF) which This report examines the potentials of basic in- was in 2012 endorsed by the ILO and other UN come to serve as a new tool for social and de- agencies, various NGOs, G20 and the World velopment policy, drawing from the recent ex- Bank. The Social Protection Floor initiative is an periences from the pilot projects. The structure integrated set of recommendations for countries of the report is as follows: Chapter two provides to guarantee income security and access to essen- a brief literature review of cash transfer policies 1. Introduction tial health care and social services for all their currently in place in many developing countries people across the life cycle. It emphasizes the and assesses the potential advantages of uni- need to implement comprehensive, coherent and versal and unconditional transfers over targeted coordinated social protection policies and seeks and conditional ones. Chapter three presents the 1 to re-establish the case for universalism within a three country cases where universal cash trans- Income and wealth inequal- 2 ities have increased in most development context. fer policies have been tested or gradually imple- countries, as have inequalities The Social Protection Floor is a broad policy mented. Chapter four concludes and explores the based on gender, ethnicity and framework that does not include recommenda- prospects of basic income as a part of the new region. Between 1990 and 2000 ”more than two-thirds of tions on any particular measures to achieve its development policy agenda. The empirical ma- the 85 countries for which data goals. Regarding income security, the measures terial regarding basic income experiments is col- are available experienced an currently in place vary from universal pensions lected from the projects’ own research reports increase in income inequality, as measured by the Gini index” or means-tested family and child assistance to and newsletters, as well as relevant academic and (ILO 2008, cited by UNRISD guaranteed employment programs. Many of the non-academic articles. 2010, 65). Though employ- new policies have taken the form of direct cash The cash transfer schemes piloted in Namibia ment is often treated as an au- tomatic by-product of growth, transfers, which have proved to be more cost-ef- and India correspond to the ‘standard’ definition in reality employment growth ficient and effective in reducing poverty than of basic income: the transfers were given to all res- has often lagged behind GDP conventional forms of aid such as food aid or idents of the selected area (in Namibia the recip- growth as a result of ortho- vouchers3. In addition, they avoid the harmful ients of the universal state pension were exclud- dox macroeconomic policies and technological develop- effects on local markets and agriculture. Most of ed) without any conditions regarding the recipi- ment, which has led re-search- the newly implemented cash transfer programs ents’ conduct, social status or use of the money. ers to talk about ”job poor” are targeted only at the poor and often are condi- In India the pilot scheme was called Uncondi- or ”jobless” growth. Even when employment is available, tioned on the recipient’s conduct. tional Cash Transfer and in Namibia the Basic the vast majority of wage earn- Some of the social policy experts have come to Income Grant (BIG). Brazil’s case differs from ers in poor countries do not argue that the social protection models based on India and Namibia in that there has been only a earn enough to lift themselves from poverty (UNRISD 2010). outdated economic and labour market structures minor NGO-run pilot project, in which the data are not the most relevant in the post-industrial has been collected less systematic, but Brazil as a 2 Deacon 2013; ILO/WHO 4 2011. era , when the forms of employment, as well as whole and some municipalities have taken steps 3 Hanlon et al. 2010; Standing lifestyles and family patterns, are becoming in- toward implementing a scheme called Citizen’s 2012b, 28–34. creasingly fluid and flexible. In this context, the Basic Income. 4 Most of the so-called devel- idea of universal basic income has been brought In this report, basic income is examined as an oping countries are classified up as a new alternative approach to social policy. alternative to conditional and targeted minimum as pre-industrial countries. Basic income as such is not a new idea, but it is income schemes. The contributory social insur- However, the problems of income insecurity are even becoming increasingly recognised as a promising ance systems (e.g. earnings-related unemploy- greater in those countries, and alternative to the highly bureaucratic and compli- ment benefits or pensions) still hold their place as it seems unlikely that their la- cated systems of targeted and conditional social an additional system to minimum income guar- bour market will ever become corresponding to the western security. The idea of basic income is to guaran- antee. Basic income is not regarded as an alter- industrial era. tee a certain minimum income to all members of native, but as a complement, to comprehensive 5 http://www.basicincome.org society as a right without means-test or condi- social and health care services, education and /bien/aboutbasicincome.html tions. It provides each individual regularly with employment generating policies. 2. The many faces of cash transfers Currently, at least 45 middle- and low-income The cash transfer programs have been suc- countries have introduced cash transfer policies6, cessful in many respects. However, being most but there is a wide diversity in their objectives often targeted12 and/or conditional, they can also and design ranging from pure income transfers be criticised for certain essential shortcomings. (social pensions, child grants, family allowances, Programs have different advantages and failures poverty reduction programs for severely poor) to depending on their actual design, but the follow- guaranteed employment programs for working ing shortcomings can generally be identified in age people7. The programs are most often target- most targeted and conditional programs:13 ed and use selective means-testing, and many of 1. Bureaucracy and high administrative costs: them contain conditions for the recipients8 (e.g. Income-based targeted programs require con- school and clinic attendance for families with tinuous assessment of the eligibility of recip- children, active job seeking or participation in ients, which makes their administration com- public employment programs). Among the best plicated and costly. In many countries there known examples of cash transfer schemes are are several overlapping schemes in place, all Brazil’s Bolsa Familia (a form of guaranteed with different eligibility criteria. Selective minimum income for poor families with a condi- means-testing becomes especially problematic tion that children go to school), Mexico’s Opor- when the recipient’s income fluctuate, or when tunidades (a cash transfer program for individu- a large part of it is undocumented. Countries als living in conditions of extreme poverty with have tried to solve these problems by using so- a special focus on the empowerment of women), called proxy indicators of social deprivation, 6 India’s National Rural Employment Guarantee This chapter addresses only such as quality of housing or type of economic non-contributory cash trans- (a public employment program) and South Afri- activity the households are engaged in. fers (social assistance and min- ca’s Old Age Pension and Child Support Grants imum income guarantees), not (large programs with universalistic character). 2. Erroneous exclusions and inclusions: Tar- social insurance, contributory pensions or private insurance. There is extensive empirical evidence that geting on the basis of income typically entail 7 cash transfers have successfully reduced poverty significant errors of inclusion and exclusion, Hanlon & al. 2010. over relatively short time frames, and that they which means that the programs may exclude 8 A scheme is universalistic if it is intended as a right for have done it in a cost-effective way, being rel- some of the people for whom the benefit is all the population on the basis atively cheaper than their alternatives9. At pres- supposedly intended, or include people for of citizenship, long-term resi- ent, countries with a similar level of national whom the benefit is not intended. Especially dence or belonging to a certain age group (e.g. social pensions income per capita spend highly varying shares in countries where the vast majority of popula- or child benefits).