OLLI KANGAS & VILLE-VEIKKO PULKKA - The Finnish Social Insurance Institution (Kela)

Olli Kangas received his doctorate in sociology from the University of Helsinki in 1991. In 1994, he became Professor and Chair of the Department of Social Policy at the University of Turku. Between 2004 and 2007, he taught at the Danish Institute of Social Research and from 2008 to 2015, was Head of Research at The Finnish Social Insurance Institution (Kela). In 2016, Olli Kangas was named Director of Govermental Relations at Kela. Among other notional and international research projects, he is currently heading the Finnish Basic Income trial, planned to start in early 2017.



Ville-Veikko Pulkka is a researcher at The Finnish Social Insurance Institution (Kela). He is a member of the research group charged with preparing the Finnish basic income experiment. In addition to basic income research, he is preparing a doctoral dissertation on digital working life at the University of Helsinki.




Q: Basic Income has been trialled in Canada with Mincome, in the United States, even in Iran and Namibia, so there exists a lot of data already out there. However, and quite surprisingly to me, a lot of people when arguing for or against do not use the data as much as their own feeling and ideology. Have you experienced this as well?

OK: I very much agree. Politicians in Parliament here with whom I discuss the idea of an experiment on Basic Income (UBI), react quite emotionally. Furthermore, most of them are not reacting to the idea of an experiment on Basic Income (UBI) but on the policy as a whole.

The Social Democrats Party leader has kept telling me that I couldn’t be serious about Basic Income and I kept answering, that no, but I was very serious about experimenting on the idea (laugh).

You should be interested in the experiment because if it shows that UBI is bullsh*t then, you have really strong arguments to back what you are claiming. I only believe the agenda of politicians who claim UBI doesn’t work and are willing to have an experiment. Or else, it is only dogma and usually is indicative of quite weak beliefs.

Similarly, on the other side of the spectrum, the Greens critise the experiment we are planning as not being a true experiment of UBI. They are afraid that the experiment could show that Basic Income doesn’t work. It is the same thing.

The only group that have a true position on this is the Employer Federation, who are convinced that it is all rubbish but that we should do a very thorough experimentation so we can prove this once and for all and move on to others things. This position, I respect.


Q: What is the position of the Unions?

VVP: Most of the Unions I would say are against UBI, or at least the leadership and their economists are. They believe the cost of UBI outweighs the benefits.

I believe that some of their members, in particular, those in precarious job positions may be of a different opinion.

I also believe though that such a reaction is to be expected from organisations that focus on offering better quality jobs (security, wages, etc.) to their members. They understandably have difficulty supporting a policy which may erode work itself or the need for it, or be needed because of this.

OK: This is an important point. I remember a conversation I had recently with two prominent Social Democrat MP who were telling me that nothing has changed in the labour market and nothing ever will. In the future, we will have employment, high wages, permanent contracts, etc. It is a very optimistic approach I find.

They are still using the traditional approach that with high wages, we will be competitive and secure jobs against cheap labour countries. They still believe that work is the best social security.

To get back to train Unions, there is a specificity to Finland which also explains why they do not support UBI. Income related unemployment benefits are given by unemployment funds, most of which are mostly owned by Unions. Same goes for pension funds. There exists a very strong incentive for workers to join Unions to have access to these funds. This explains why Finland has the highest Union membership in the world, over 70%. With UBI, Unions are afraid that those numbers would dwindle or that the fees payed into the Unions to finance these funds would virtually disappear.

To finish describing the current political climate in Finland – understanding the context is I believe important for our discussion – our present government is made up of a three-party coalition: The Centre Party which is our Prime Minister’s party, the Finns Party, a populist-nationalist party, and the National Coalition Party, which is Finland’s conservative party. The Centre Party is in favour of UBI. The other two parties are afraid of the immigration which may ensue. The fear that half the Middle East will come here. For the moment, the only people who have come to Finland because of the talk on UBI is the Western media.

In the conservative party, there are at least 4 factions in regards to UBI:

-       The Libertarians: they are in favour of UBI to reduce the size of public administration.

-       Another faction is in favour of a very rigorous means tested system. They are in favour of a universal credit for example

-       The third faction, led by the former Minister of Social Affairs, is in favour of participation income, a minimal amount at first and then more if the citizens take part in socially beneficial programs.

-       The fourth and probably largest faction is actually against UBI. Their argument is similar to the Social Democrats’ position: UBI erodes the work ethic and people will become lazy.

Interestingly on the Social Democrats’ side, as I mentioned, most are against but there is now a division starting with younger members who are in favour of UBI. It is very interesting.

The Christian Democrats are very much in favour of the British Universal Credit and against UBI.

The other three parties in the opposition (the Greens, the Left Alliance and the Swedish People’s Party) are relatively in favour of UBI. Actually, I don’t know the position of the Swedish People’s Party since they have very flexible positions, the only constant is the protection of Swedish speaking people.


Q: With such a divided political landscape on the issue, why has it been decided to experiment this policy? What is the objective of the trial?

VVP: Our main indicator is employment. I know your perspective is very different because I read your article. Here, the government’s starting point is very different from the notion of transition to a post-work society or this kind of logic. In all the political landscape, I think I have only heard the Minister of Economic Affairs mention the Digital Economy in respect to UBI.

The rational in the Government is to see if UBI could increase employment and incentivise people to work more. It is a very industrial mindset. They believe the benefits in Finland are so numerous and complex that people prefer to work less or not work more in case that at the end of the day, the increased income from work does not compensate the loss in benefits.

OK: Yes. The effective marginal tax rates are very high. In some cases, it can be higher than 100%. The reason for this is that we have a lot of income-tested basic security benefits in Finland: Unemployment benefits, housing allowance, etc. Furthermore, the administrative procedures can be quite long. Some people for that reason, may lack the incentive to work for short term contracts because the increased income could disqualify them for benefits but because of bureaucracy, the benefits will not start again at the end of the contract, if they do not secure another job in the meantime. It is a very complex issue.


Q: A lot of countries consider that only a low percentage of the benefits are really distributed because most people are not aware that they are eligible or prefer not to go through the sometimes-gruelling administrative process. UBI is imagined to possibly counter act the administrative coast and social stigma issues. Is that something you will consider?

VVP: That is an issue here in Finland like many other places as you say. Some estimates indicate that 50% of people eligible to some benefits do not apply for them. In my humble opinion I think it should be looked at in this study but it has recently been decided that Kela will not be doing the study’s evaluation. We are only in charge of the study’s design.

Though we are still not sure exactly because there are still a certain number of committees which need to validate the experiment, in particular, the Constitutional Committee. The experiment calls for compulsory participation from citizens (so as to counteract the bias that volunteering would have) and there is no precedent in Finnish law.

As Olli mentioned, there are many people against the experiment and this may influence these committee to block or minimize the scope of the study. On the other hand, there has been quite a lot of foreign media attention and there is now a question of prestige associated to the experiment which might secure it.


Q: I understand that the main focus of the “would-be” experiment is employment but are you looking at other social indicators: education, healthcare, criminality, etc.?

OK: Yes. The advantage of centralising the info within Kela – even if we won’t be the one analysing the data – is that we have a lot of other information including healthcare treatment. This will enable us to look at other social aspects.


Q: Besides the cultural aspect, what do you hoe this experiment will prove that other experiments in the past haven’t?

VVP: Most of these experiments are now quite old. Mincome that you mentioned if now 40 years old. So there is a question of simply updating the information to our global situation which is very different.

OK: We also have discussions with counterparts in the Netherlands and even if the design for what they are doing is different, I believe our societies are closer that to the United States or Canada. Furthermore, we should take into account legislation at the European level though at the moment, we are not doing so because it would make the whole experiment too complicated.

Social assistance benefits in Finland are non-exportable whereas employment-related benefits are and they are also subject to European legislation. If Finland implemented UBI then it would be subject to the European court. This also makes interesting because, this trial has larger implications for Europe.

I’ll give you an example. If someone from Poland comes to Finland and has left a wife and several children back home, Finland will be paying child benefits to Poland. If he loses his job, he will receive unemployment benefits from Finland and can continue to receive them even if he moves back to Poland. With UBI, it could be decided that if your permanent residence is in Finland, you could live from anywhere in the world and receive UBI from Finland.

The exportability of UBI is a big issue.

Whatever, happens in the experiment, I believe the government will start a discussion on concentrating all our benefits systems. At the moment, 300 people work on unemployment benefits in Kela, 250 or healthcare benefits, 600-700 handle social assistance claims, etc. If there was one centralised system, this would lighten the administration and that in itself is another reason for the experiment.


Q: There is a debate that low-income workers would benefit or lose out from UBI. Some argue that UBI would give them more negotiating power with their employers not to accept remedial jobs or badly paid positions. Others argue that UBI is virtually a gift to corporations who would then reduce their wages by the same amount. What do you believe?

VVP: This is a very interesting point, in particular in Finland which doesn’t have a minimum income law but we have collective agreements which cover most workers and assures them a minimum wage. This is another reason why Unions are against UBI. They are scared that the UBI would undermine this negotiating system.

I do not think UBI inherently puts an end to such a system but this is why we experiment. It is to find out such things.


Q: I was under the impression that the increase in interest for UBI at the moment is due to the fact that the way we work today is different to twenty years ago (shorter work contracts, multiple careers, less job stability and income stability, etc.). This in turn has an impact on our social security systems that are no longer flexible enough. This is not why Finland is experimenting with UBI, so am I wrong in my analysis?

VVP: My PhD research is on digital economies and market implications so I would agree with your analysis yes. My thesis is that labour markets will be less secure. Long term estimates are difficult to forecast but flexibility does seem important.

OK: Most politicians here do not really see things that way. They see digitalisation as just one more moment in the history of the industrial revolution where some jobs disappear to make room for new ones. This is a possibility but even if that is the case, I believe the characteristics of the new jobs will be very different and the social security system we have now will not work well with them. Something needs to change even if it is not moving to UBI.

This change in work will also change how we finance the social security system. In this country, the lion’s share of that financing comes from payroll taxes. If payroll shrinks then regardless of UBI, we have a problem because the tax base will no longer support the spending.

At least in Finland, there isn’t much serious research or discussion on the implications of a strongly reducing workforce and the implications for the social security system.

To give an interesting anecdote, last year in Sweden, the country’s largest export was music. A lot of this music was created by people who were unemployed and living off social assistance. In Finland, we have another good example of laziness leading to innovation with Linus Torvalds who created the Linux operating system.


Q: Basic Income is a difficult stand-alone policy because it is linked to so many parts of society (healthcare, education, employment, taxes, etc.), it is as much a technical issue as a psychological one. To function, it seems to me that it requires a quite complete vision of society and many other policies structured around it. The Finnish government is thinking of trialling 20 different policies, is there an overarching vision or will the vision come from the experimental results?

OK: The experiments I believe are not particularly coordinated. Even on the UBI trial, leadership and coordination between the various concerned ministries (Finance, Social Affairs, etc.) has been complicated. Diplomatically, I will say that the vision will come afterwards.

My experience is that most politicians are more interested by the media impact of the experiment than the experiment itself.

The best discussions I have had have been with the Social Democrats actually, in particular our former Minister of Labour who was also a Trade Union leader, who was critical but involved in the process and the result.

Next year’s experiment could lead to a larger more comprehensive one in 2018 depending on the next elections, but because of the political environment I have described a little to you, I am not sure I wish to be involved with it. At the moment, next year’s experiment isn’t even fully greenlighted as I said so it is quite challenging at the moment. The situation is to say the least quite complicated and not as streamlined and clear as advertised in foreign media.

VVP: I believe we need to see this first experiment as a first phase.