ESRI report examines Universal Basic Income

A new ESRI report examined Universal Basic Income in Ireland, revealing a number of positives and negatives that could arise from the payment.

The idea of a Universal Basic Income (UBI) has been picking up steam in recent years. It is part of the Green Party’s party policy, is championed by Social Justice Ireland and most recently was given a trial run with 2000 artists earlier this year. 

At its core, UBI is an attempt to rework the existing social welfare system and narrow the income inequality gap. It would consist of a payment to every citizen of Ireland, regardless of employment status or income. 

The basic conditions are that the payments are regular, enough to live on, and do not carry a work requirement. However, there have been a number of iterations over the years with respect to amount paid, how universal the payment is and crucially how it would be funded. 

With the release of a new Economic and Social Research Institute (ESRI) report on the pros and cons of UBI in Ireland, we decided to take a deep dive into their findings. 

The feasibility of UBI

According to the ESRI, there were previous studies done on the feasibility of UBI in Ireland back in 1987, when it found that a weekly payment of £35 (the equivalent of the lowest welfare payment) would require a 60% basic tax rate to fund the programme. 

A 2002 government-commissioned study also had similar findings, revealing that a 50% basic tax rate, alongside the abolition of all tax credits and allowances, would be required to fund the payment. 

Numerous test pilots have been commissioned across the world, but most targeted a certain demographic group, namely low-earners. A limited truly universal pilot is currently underway in Germany, with 122 people receiving an unconditional €1200 payment throughout the project’s duration. 

The report estimated the potential cost for UBI in Ireland. If a payment was made to every adult in Ireland at 60% of the median annual income, it would come out to around €50 billion - which is just under €30 billion more than the annual total cost of the social welfare programme. 

Even a payment of €208, the current social welfare base rate, to every adult in Ireland would cost around €37 billion.

The positives 

The report finds that there could be a number of potential positives if the scheme was enrolled in Ireland. Namely: 

  • A reduction of the complexity of the social welfare system and the removal of the stigma in receiving a social welfare payment.
  • Would allow people back into the workforce who currently can’t work due to the fear of losing their payments. 
  • The financial freedom of the payment could enable people to leave insecure or exploitative work and find better opportunities
  • Those in unpaid and informal work, such as looking after children or elderly relatives, would have a monetary income

The negatives

However, there are a number of downsides to the scheme. 

  • As it would be a universal payment, it would also be paid to those in the higher income benefit, which could increase income inequality.
  • It could lead to a downsizing of the labour market as some may leave work altogether. 
  • The cost - at a potential cost €50 billion a year, the tax rate would have to be significantly increased. 
  • Some low-income families who rely on social welfare could be worse off, requiring even more social welfare payments. 

A potential pilot?

Although the ESRI report was simply to discuss the potential projected cost of the programme, its viability or how it would affect the recipients of the payment, it does leave a door open in the future for a potential pilot run of UBI. 

Dr Paul Redmond, one of the report’s authors, said: 

“The idea of a Universal Basic Income receives a lot of attention in the public debate. However, very little is known about the impacts of such a policy. In this work, we review the international evidence on universal basic income and highlight the main issues for consideration in the design of any future UBI pilot in Ireland.”

A viability report and a comparison of international pilots is the first step in leaving the door open in the future for a pilot. Already, we have seen the Basic Income for the Arts give €325 a week to 2000 artists, so maybe all of us are in for a weekly payment at some point in the future. 

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