ILO paper on Citizen’s Basic Income and ILO social protection floors

Isabel Ortiz, Christina Behrendt, Andrés Acuña-Ulate, and Quynh Anh Nguyen, Universal Basic Income proposals in light of ILO standards:  Key issues and global costing, Social Protection Department, International Labour Organization, Geneva, 2018, ISSN 1020-9581 ; 1020-959X, free to download  

This long and detailed paper published by the International Labour Organization (ILO) is a useful attempt to connect two debates: one about the ‘social protection floors’ (an invitation by the ILO in 2011 to each country’s government to develop minimum levels for income security and the provision of healthcare, published as an ILO recommendation in 2012); and the other about Citizen’s Basic Income.

The first section of the paper provides good definitions of terms, discusses the many advantages that Citizen’s Basic Income would offer, and notes that while one Citizen’s Basic Income scheme might enhance social justice, another might cause net income losses for low income households and be accompanied by a reduction in public services and so might increase poverty.

The paper says that it will discuss Citizen’s Basic Income in the light of a number of requirements arising from the social protection floors, which it lists as follows:

adequacy and predictability of UBI benefits to ensure income security, set at least at the national poverty line; social inclusion, including of persons in the informal economy; social dialogue and consultation with stakeholders; enactment of national laws regulating UBI entitlements, including indexation of benefits; coherence with other social, economic and employment policies, and sustainable and equitable financing. (p. x).

While the paper does to some extent do that, most of the paper, starting with the second section, concentrates on the financial adequacy of Citizen’s Basic Income proposals.

The authors have done us a service by putting together a fairly comprehensive list of proposals, pilot projects, and experiments, and by calculating the proportions of national poverty lines that their Citizen’s Basic Incomes represent. The authors recognise that

the adequacy of a UBI depends not only on its level, but also on the other benefits and services which would be available alongside the UBI … These considerations point to the complexity of integrating a seemingly simple UBI into the existing system and call for further research on its impacts on the prospective recipients. Moreover, such considerations also raise serious concerns regarding UBI proposals that assume that all or most existing social protection benefits could be replaced by a UBI without significant welfare losses. (pp. 7-8)

Quite so: which is why it is rather odd that so much attention is then paid, both in the main text and in the mathematically expressed funding method in an appendix, to proposals and experiments that abolish all or most current benefits; and that so little attention is paid to schemes that retain and recalculate existing benefits. It is also somewhat strange that in the third section of the paper the authors research the gross costs of Citizen’s Basic Incomes set at national poverty line levels in terms of proportion of GDP. It might have been more useful to have specified a funding mechanism and then offered us net costs, because that’s what would matter in the real world.

But perhaps we are asking too much. What the researchers have done – along with OECD researchers who undertook a similar piece of work – is to have chosen the simplest possible type of Citizen’s Basic Income scheme that can be replicated across a wide variety of countries, which turns out to be a Citizen’s Basic Income paid at the level of the national poverty line, with funding methods being left to one side. And they have also chosen the easiest cost to calculate: the gross cost – which again enables the question of funding mechanisms to be sidestepped. The graphs are interesting, and the verdict predictable – ‘many UBI proposals do not come close to guaranteeing the minimum level of consumption set by national poverty lines’ (p. 8) – but unfortunately none of this tells us anything about the kinds of Citizen’s Basic Income schemes that would ever be implemented, or about their effects.

If ever a real Citizen’s Basic Income scheme were to be implemented, then the funding would have to come from somewhere, and the scheme would need to ensure that the combination of the Citizen’s Basic Income and the funding method did not cause net income losses for poorer families, did not increase poverty, and did not increase inequality. In more developed countries, this would be unlikely to be achieved with schemes that abolished current benefits systems. This means that existing benefits would need to be retained and recalculated. The only research method able to handle that eventuality is microsimulation: a computer programme containing the regulations of a particular tax and benefits system, along with financial survey data for a statistically significant sample of the population. The bibliography shows that the authors are aware of the method: but to undertake microsimulation research  exercise separately for every country in order to discover a Citizen’s Basic Income scheme that would fit the required list of criteria would be a massive piece of work, and it is perfectly understandable that the authors of this paper have decided not to embark on such a large task. However, such an exercise would be enormously valuable if they or other researchers could find the resources for it. To set a number of criteria for a successful Citizen’s Basic Income scheme (unconditional incomes of a meaningful but not necessarily poverty-line level; reductions in poverty and inequality; budget neutrality; fewer households on means-tested benefits; no net losses for low income households; only manageable losses for any household), and then to see if a Citizen’s Basic Income scheme (with levels of Citizen’s Basic Incomes specified for different age groups, and changes to existing tax and benefits systems specified) exists that meets the criteria, would be to do the international social policy world a huge favour. This exercise has already been done for the United Kingdom. It now needs to be done for every country in the authors’ extensive list.

As far as the paper in general is concerned: One or two details might have been more thoroughly researched. For instance: the figure of 2,500 Swiss francs was mentioned in an independently published book, and not by the promoters of the Swiss referendum. But on the whole this book is a most useful fund of accurate information. However, the majority of the paper is about the adequacy of particular Citizen’s Basic Income schemes, and it can only be said that the methods employed are understandable but disappointing. So perhaps the best use to be made of this paper is as a source of unanswered questions, particularly in relation to Citizen’s Basic Income schemes that retain and recalculate existing benefits, and as a spur to additional and perhaps more relevant research.