You are here: Home - Household Bills - News -

‘Universal Basic Income’ is the solution to jobs lost to automation

Written by:
Welfare systems need wholesale change to adapt to automation, the gig economy and changing global trade, says the Adam Smith Institute ahead of the World Economic Forum meeting in Davos.

Policymakers may need to consider a ‘Universal Basic Income’ (UBI), whereby citizens are paid a regular, liveable and unconditional sum of money from the government. Payments under the scheme would not require recipients to look for work, and would be paid regardless of other income.

There are currently trials for this type of scheme in countries such as Canada, Finland, Uganda and Kenya, although Switzerland overwhelmingly rejected the idea in a recent referendum.

The Institute said automation, the gig economy and global trade have the potential to deliver massive improvements in living standards, but also risk a populist backlash from those hit by creative destruction. Researchers at Oxford University found that jobs such as library technicians, telemarketers or accounts clerks had a 99% chance of being automated in future.

The group argued that protectionist policies were not the answer and implementing UBI could deliver popular consent for globalisation and technological change. It urged more governments to conduct experiments on UBI to ensure that ‘capitalism and efficient redistribution can be vindicated in equal measure’.

In Ontario, Canada, the local government is trialling payments to 2,500 people that ensure a minimum income level of at least C$1,320 a month, regardless of employment status. In Finland, 2,000 unemployed people across the country are being trialled with UBI of €560 a month for two years, with expansion to a further 1,000 for two to three years if initial results suggest success. In Silicon Valley, Y Combinator (early backers of AirBnb and Dropbox) are funding a long-term study of two to three years which will ultimately include up to 3,000 individuals.

Sam Dumitriu, head of research at the Adam Smith Institute, said: “New developments in machine learning, from driverless cars to AI medical diagnostics, will change the way we live, work, and play for the better. But they also risk disrupting traditional professions and career paths, from lorry drivers to lawyers. To avoid a populist backlash, we need to design policies for those left-behind by creative destruction. Attempts to protect jobs through luddite regulation will backfire and mass retraining schemes have a shaky track record. Cash transfers are our best bet at ensuring the benefits from coming technological change are felt by everyone.

“We now need to experiment with different ways of doing it – should we tweak the tax credits system, should we introduce a ‘Negative Income Tax’, or is a Universal Basic Income the best approach? And, if we’ve decided on the best way of doing things, what should things like the withdrawal rate be? This paper is a welcome contribution to the debate around welfare reform in the UK and puts evidence at the front and centre of improving policy, just as it should be.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
buying a house
Stamp duty cut ‘will hike house prices for first-time buyers’

First-time buyers are set to pay more for house prices after last year’s stamp duty cut – cancelling out the...