6 Things We Can Learn From Finland’s Universal Basic Income Experiment

The Universal Basic Income is a concept that has been around for decades, yet it is only now that the conversation is moving to action. The threat of automation on middle-income jobs and the rise of mass unemployment has prompted Governments globally to look at new social welfare models.

The reality is, global Governments cannot sustain the level of social welfare required as we face these growing issues. This is a topic I have been interested in for a long time and have followed the Universal Basic Income debate with great interest.

Finland is known for their progressive approach to policy development and this directly impacts the quality of life for citizens. They were recently named the world’s happiest nation by a UN report so it is clear they are doing something right!
It was an absolute honour to meet two amazing and passionate people who have been involved in the social experiment:

Miska Simanainen, a Researcher at Kela who was part of the team who conducted the basic income experiment in Finland.

Miska Simanainen, a Researcher at Kela

Markus Kanerva, a behavioural insights specialist at the Finnish Government and started Tänk, a think tank designed to collectively create a pragmatic, fact-based approach to solving societal challenges.

Markus Kanerva, a behavioural insights specialist

We discussed the initial insights from the experiment as well as why this experiment was so monumental on a Finnish and global scale.
The interesting aspect of the experiment is not just what they tested but how they tested it. This is one of the first times a large scale social experiment has informed social policy. They used a series of methods including scientific experimentation, agile delivery and design thinking to create a dynamic new approach. This allowed them to rapidly test and learn so social policy is developed in a way that is fit for citizens from day one.

It seems the approach to driving social change through new experimentation methods in Government can be directly applied in the business world. I was fascinated to learn more about the experiment insights as well as how they approached their work in a more innovative and agile way.

Firstly, what is Universal Basic Income?

It is a term used to describe a policy that provides all citizens with a periodic sum of money that does not need to be means tested. There are a range of perceived benefits including:

  • Decreased Government bureaucracy, as people don’t have to prove their need or job seeking activity.
  • Creates a stronger financial foundation for people who may have been on the fringes of society, allowing them to be more entrepreneurial and start new businesses.
  • Helps to grow local economies as people have more disposable income.
  • Increases health and wellbeing as it reduces financial hardship and freedom to pursue passions/career paths.

However, there are some challenges that are debated at length. These range from the sheer cost of the income model, the role of taxation and the obligation on the business community to step into this space.

The debate is ongoing and the likes of Elon Musk, Sam Harris, Ray Dalio and others have all expressed their thoughts on the matter. I believe the most important thing is that these conversations are beginning to turn to action. There are risks involved with trying new approaches, however in all areas of innovation, it is important to focus on improved ways of working and new models to solve social and business issues.
With it, new approaches to deploying capital into the social system are being used and it is exciting to see countries like Finland lead the way.

What did Finland do?

There are many versions of the Universal Basic Income and the initial experiment was to look at control and test groups that reflected the general population. However, the final experiment ended up having control and test groups who were receiving employment benefits from the Government. It is a 2-year experiment (which is a ‘fast’ experiment for Government standards!) with interim results (at the end of year 1) and final recommendations to be developed at the conclusion of the experiment.
The two test groups were:

1. Control group: A group of job seekers who had to engage in the existing system for receiving benefits. They represented the current experience and were interviewed to provide a comparison.
2. Test group: A group of job seekers who were able to access a basic income with no need to provide proof of job seeking activity and weren’t required to take jobs the Government offered.
‘Two thousand people aged 25-58 years who received an unemployment benefit from Kela, the Finnish Social Security Institution, in November 2016, were selected as the treatment group for a Randomised Control Trial. They received a partial basic income of €560 per month, the equivalent to the basic unemployment allowance and the labour market subsidy usually provided in Finland.’ – Bruegel report

What were the results?

Results from the interim results showed a surprising result that there was no dramatic change in behaviours regarding employment between the two groups. Moreover, people in the test group (who did not have to prove their job seeking activity) were still actively using social services including employment training and courses. However, there was an increase in financial wellbeing for people in the test group, which makes sense as they had more freedom in their lives as a result of ‘no strings attached’ money.

The final results will not come out until Spring 2020 when the evaluation project concludes. The preliminary report is published online and can be accessed here in English.

6 things the experiment can teach businesses about social innovation

Beyond the initial insights, there are insights businesses and Government can learn from Finland’s Basic Income experiment. In many respects, Government departments are like big businesses- often slow-moving and bureaucratic.

Combining scientific methods, agile delivery and design thinking can create a great environment to understand the intersection of social issues in the business world. The way the Finnish Government combined these methods and conducted the experiment provides 6 insights into how businesses can drive social innovation in the workplace.

1. Timing is everything

Finland had been part of the global conversation for decades and they decided to launch the experiment when there was enough momentum and interest. Other countries including Canada, India, Namibia and Switzerland had a referendum about it in 2016 (which voters rejected) have been active in experimenting or discussing the topic. The opportunity to provide action in a global conversation was compelling and it also created a level of accountability. Often in politics, parties change and objectives shift, however having a global spotlight on the initiative meant a level of accountability to see it through.

Business insight: 

Spending time to understand global trends, public opinion and how poised other regions/industries are to act can give a good indication of when and how to start. Also, aligning to global objectives like the Sustainable Development Goals can help provide accountability and new opportunities for global partnerships.

2. Challenge the norms to pave the way for the future

The interesting aspect of this social experiment is that it is the first of its kind at this scale. It was not just the scale that made it unique. For the first time, if chosen for the experiment, citizen participation was compulsory. This was done in order to gain insights that more genuinely reflected the population, using scientific methods to create public policy.

To launch it, it not only had to pass through Parliament, it also had to pass through the constitutional law committee. The Finnish Government needed to prove that it did not breach Finland’s constitutional right that everyone should be treated equally. Once the grounds of the experiment proved that no one will be worse off by participating in the experiment, they had the green light to move forward.

This has now opened up a whole new conversation about building a pipeline of social experiments that can be tested within the boundaries of the constitution.

Business insight: 

Often the systems and policies that govern norms in business can deter people to drive change. Leaders need to think about how they can enable people to work in new ways rather than upholding a system that stifles innovation. New approaches like agile, design sprints and working with academic researchers can unlock new growth opportunities but need new funds, operating rhythms and advocacy between business units. These require a proactive mindset from leaders who can push through change and rapidly manage issues.

3. A range of views increase the opportunity for impact

In the pre-evaluation work, a range of stakeholders from Research Institutes, Think Tanks, Government Departments and Not For Profits were all engaged to understand the research to date. This created a powerful foundation for experiment and helped to narrow down the problem to test and ultimately create the parameters of the final experiment.

Business insight: 

Involving research partners including Universities, Not For Profits and Independent Think Tanks in the early stages of experiment design can provide new insights that can help circumvent duplication and increase the ability to test the most important aspect of the problem. Often times, looking outside the four walls of your business in the early stage of a project or experiment can lead to better long term outcomes!

4. Narrow down the problem to solve

The pre-evaluation work with partners helped to narrow down the area of focus. However, there can be problems when kicking off an experiment or project. Often leaders want to narrow down the focus so much due to budget or time constraints that they lose the focus of the whole objective. Conversely, other leaders can want to test everything and in the process dilute the ability to provide insights and outcomes. Having a project/research team who are aligned on the core problem to test is critical. Kela had great leaders who ensured the team and other departments were aligned with the core problem to solve.

Business insight: 

It is important that the core team and leaders are aligned with the parameters of the project including their willingness to compromise or change scope. Know what the problem is you’re solving, what you stand for and have a facilitated session that unpacks the core objectives, research and desired outcomes. This will help to create alignment and a framework for making decisions.

5. The power of individual stories

When developing recommendations and solutions, it is important to understand the impact on people and how it will affect the lives of the broader society. Often quantitative data can provide the information about ‘what’ happened, however qualitative data shows behavioural insights and can lead to ‘why’ it happened. Using these data sets to help understand the ‘what’ and ‘why’ can lead to new and important insights. These must be used together to paint a holistic view of the potential impact. Miska warned that often individual stories can misrepresent the overall issues and they must be validated with other data before being used.

Business insight: 

When stories are being developed in projects or experiments, it is important to ensure they are validated against quantitative sources. Leaders need to ask if a qualitative story represents broader data and how it highlights a behavioural insight, rather than just an interesting story.

6. Desirability must be tempered with feasibility

Further, in design thinking, often desirability and the power of individual stories reign supreme. However, Miska reminded me that the feasibility and the viability of the policy should be evaluated in a reliable way especially in terms of its financial impacts. Ultimately if it is a great idea (who doesn’t love free money!) but cannot scale or reach the people who need it most, then it really is not desirable.

Business insight: 

When building an experiment or project team, ensure they are stacked with people with backgrounds in design as well as feasibility and viability. Data scientists and economists can provide unique and diverse perspectives which, when paired with designers can create dynamic teams that provide new insights and outcomes.

Overall

The pace of change happening globally means Governments and business need to adapt their ways of working. With researchers like Miska and the team from Finland, they are proving that it is possible to drive innovative social policy by experimenting in new ways to help create scalable outcomes.

What can you do tomorrow to develop new ways of working that unlock social and business value? Are there new business models we can experiment on that address the changing labour market?

Enjoying our insights? Sign up here to our newsletter to get the latest news and exclusive content!

Leave a Reply

%d bloggers like this: