This is the sixth of an eight-part series on changes to labour employment in the future, causes of this upheaval, and some possible measures to mitigate their disruptive effects. Most of what is described in the foregoing is applicable to western developed countries but middle-income countries such as Guyana are in the crosshairs. The difference is timing. Further, Guyana does not possess the skills-set to prolong the onset of these changes. The country has received some service outsourcing jobs but these are low-skilled positions. It is therefore shared with the public to help focus attention on the decision-making needed to avert the imminent calamity.
In past series, I described the nationalist fervour sweeping the western developed countries of America and England characterized by the emergence of Donald Trump and Brexit. The increase in income inequality is causing the stagnation workers are reacting to, and overpopulation leading to climate change along with automation displacing overpriced labour, will have future ramifications. One short-term solution is to allow the labour market to function without restrictions and for governments to subsidize wages below a certain living standard with transfer payments. In the long-run, the ‘invisible hand’ will synchronize labour and living costs. Here I describe an alternative nascent proposal which got its start in Switzerland.
Earlier in the series, I had noted that no one of consequence was addressing the imminent disruptions to the lives of workers of the world. The exception is what’s transpiring in Switzerland where a group of progressives are pushing its government to adopt a universal basic income programme. This grassroots committee has seen the future and it’s not pleasant. Proponents of the universal income say Switzerland is a rich country that can afford it. They say that hundreds of thousands of Swiss people are at risk of losing their jobs because of advances in technology, and the introduction of a basic income would give them greater security.
In Switzerland, a proposal can be voted in a referendum if supported by at least 100,000 signatures. So in 2013, a proposal appeared, supported by the requisite number of signatures, to pay every adult, unconditional and untaxed, an income of about 2,500 Swiss francs (US$2,800) per month with the objective of providing a financial safety net for the Swiss people and at the same time, addressing income inequality. This programme would replace all other social programmes including food vouchers and housing subsidies. Children were to receive a small allocation of about one-quarter of the adult payment.
The proposal was opposed by the Swiss government on the basis of cost. It would cost 220 billion francs annually and although offset by the elimination of other programmes, such as the 75 billion francs saved from its welfare programme, would still result in a 25 billion francs shortfall. The government felt that new taxes or spending cuts to meet the shortfall would damage the economy.
The vote finally came on June 5, 2016. Although it was soundly defeated with only a 23% vote in favour, this is still sizable support despite all the powers that opposed it. The proponents knew it was an uphill battle and winning was a low probability. They felt that a 20% to 25% support would be a sensational start and that within seven to fifteen years it would be a reality in Switzerland. But while this referendum was defeated as expected, the Swiss basic income movement sparked an international dialogue on how a basic income can help fix issues related to poverty, social policy, and technology, precisely the topics the world would have to grapple with in the future. This movement has created interest in a host of countries including in Europe (Finland, Holland, UK), Asia (India), Africa (Kenya, Namibia, Uganda) and America (Canada). What was missing in the Swiss movement was experimentation instead of postulation, and which deficiency is now in the process of being rectified by the Finns. As reported by Peter Goodman in the New York Times, December 17, 2016, Finland has initiated an experiment and will randomly select 2,000 unemployed persons for a universal basic income programme. Over this two-year trial, the government hopes to get answers as to how workers use their ‘freedom’ from employment: do they pursue higher studies and new careers, start small businesses, take part-time employment, volunteer time to worthy causes, or just slack-off? The results could shape labour and social welfare policy far beyond the boundaries of this Nordic nation.
Although universal basic income is not the preferred solution, it is what economists refer to as a second-best one. It allows for the provision of basic needs such as food, clothing and housing, which, when faced with masses of unemployed labour, will at least provide a subsistence level. It also provides spending power creating demand for goods and services. This is essential to prevent the economy from collapsing. Its weakness, which makes it only a transitional solution, is that it does nothing to thwart the replacement of labour by technology. In the long-run, it subsumes workers in benefits that normally accrue to capitalist, as surpluses from automated-driven production would have to be shared by unemployed humans as well as the owners of the factors of production. These surpluses would not be large enough to support a large non-productive sector of humans.
But having caught the attention of the world, the genie cannot be put back in the bottle. Even in defeat, the basic income concept is poised to engage future political campaigns worldwide as a solution to effects from increasing the application of technology in our production processes. There is a good possibility that it will soon gain greater acceptance, especially if the Finnish experiment produces desirable results. Credit to the efforts of the Swiss basic income advocates who triggered this momentous referendum