Scenario tool
Would basic income work in Finland?
Four models. Numbers from Kela's 2017-2018 experiment and VATT cost simulations. We ask three things: does the budget hold, do work incentives survive, does poverty fall?
What the Kela experiment showed
2,000 unemployed people, €560/mo tax-free, 2 years
Employment effect
+6 d
+6 days in experiment's year 2 vs. control
Wellbeing
↑
Significant improvement
Mental health
↑
Clearly better
Trust in institutions
↑
Increased
Reading: basic income improved wellbeing and trust but barely moved employment. If the policy goal is "get people into work," basic income is not the strongest lever. If the goal is "reduce poverty and bureaucracy," it is promising.
Four scenarios
How different basic income models would land in Finland against the current budget (state budget revenue ≈ €77B in 2024, €82.5B 2025 proposal, Ministry of Finance).
| Scenario | Amount | Recipients | Gross cost | Replaces benefits | Net added cost | Tax impact |
|---|---|---|---|---|---|---|
Partial basic income Same level as Kela's 2017 experiment | €560/mo | Age 16-64 ≈ 3.3M | ≈ €22B/yr | Basic unemployment, labour market subsidy, part of income support, ≈ €4B total | ≈ €18B/yr | Requires ~8-10pp tax rise or equivalent structural reform |
Light UBI Near the single-person poverty line | €1,000/mo | 18+ ≈ 4.4M | ≈ €53B/yr | Almost all basic security except housing allowance, ≈ €12B total | ≈ €41B/yr | Would require a major flat-tax rise or equivalent structural reform, clearly above current tax level |
Full UBI Above the poverty line | €1,500/mo | 18+ ≈ 4.4M | ≈ €79B/yr | Essentially all current basic security, ≈ €22B total | ≈ €57B/yr | Not financeable in current structure without a productivity leap |
Negative income tax Paid only below a threshold | Up to €800/mo, phased out by €1,800 | Low earners ≈ 1.2M | ≈ €12B/yr | Income support, labour market subsidy, part of housing allowance, ≈ €4B total | ≈ €8B/yr | No major upward pressure. Fits within current social security reform cost envelope |
Verdict on three axes
Green = works. Yellow = problems. Red = doesn't work in current structure.
Partial basic income
€560/moSame level as Kela's 2017 experiment
Budget
≈ 22% of state budget revenue. Requires major reform but not arithmetically impossible.
Work incentives
No claw-back, every euro earned grows income. Removes incentive traps.
Poverty reduction
€560 alone isn't enough to live in a city. Needs housing allowance alongside.
The most realistic universal model. Works combined with housing and supplementary support.
Light UBI
€1,000/moNear the single-person poverty line
Budget
≈ 50% of state budget revenue. Tax rises would shatter competitiveness.
Work incentives
No claw-back. Higher marginal tax mildly reduces labour supply.
Poverty reduction
Near Finland's official poverty line (~€1,400/mo for a single-person household). Lifts most poor.
Arithmetically possible but politically extremely hard.
Full UBI
€1,500/moAbove the poverty line
Budget
≈ 70% of state budget revenue. Would require doubling the public sector.
Work incentives
Enough to live on, some would exit the labour force. Effect uncertain.
Poverty reduction
Clearly above poverty line. Would end official poverty.
Doesn't work at current productivity. Belongs to a longer horizon (AI productivity, automation).
Negative income tax
Up to €800/mo, phased out by €1,800Paid only below a threshold
Budget
≈ 10% of state budget revenue. Comparable to current social security reform costs.
Work incentives
Phase-out creates marginal tax cliffs, the very problem full UBI tries to solve.
Poverty reduction
Targets those below the poverty line directly. Efficient per euro.
The most likely route. Close to what the social security reform already aims at.
Bottom line
Of the four models, only partial basic income (€560) and negative income tax are arithmetically realistic within today's budget. The €1,000 and €1,500 versions require exceptional tax increases or structural reforms.
Kela's 2017-18 experiment showed basic income improved wellbeing but barely affected employment. Implication: if the goal is raising employment, basic income is a weak tool. If the goal is reducing poverty and bureaucracy, partial BI or NIT both work.
The current social security reform (committee 2020-2027) is in practice heading toward something close to negative income tax: merging benefits and cutting bureaucracy without a full basic income.
Sources
- · Kela: Evaluation of the Finnish basic income experiment, final report (2020)
- · Kangas et al. (2016): From idea to experiment. Kela Working Papers 106
- · Statistics Finland: Population structure
- · Ministry of Finance: State budget
What is reliable: gross costs are direct arithmetic (amount × months × population), and Kela's experiment results are documented in the 2020 final report. What is estimated: the welfare-replaced totals, tax-impact figures and especially the negative income tax numbers are our own order-of-magnitude estimates, not exact figures lifted from a single publication. Exact values depend on assumptions (recipient count, tax treatment, benefits replaced). This page is a basis for discussion, not a political programme.