Germany is set to trial a Universal Basic Income scheme that will see citizens receive €1,200, about $1,430, every month for three years. The move comes as countries across the world seek to find ways to combat the economic fallout of the ongoing CoVid-19 pandemic.
Many nations are fearing a huge upsurge in unemployment as many sectors of the economy remain shut or highly curtailed by social distancing restrictions, particularly as furlough and welfare schemes begin to be wound down. Though in Germany itself the government announced last week that the nation's furlough scheme will continue for another 24 months in certain sectors. This is a stark contrast to the United Kingdom which is bringing an end to its furlough scheme in October.
The idea of a Universal Basic Income is now becoming widespread across the world, and many trials have already been carried out, some believing it is the only way to tackle both the surge in unemployment caused by the Covid-19 pandemic and by widespread automation in workplaces.
In the German trial, 120 volunteers will receive the payment each month and they will be free to spend it however they wish. The payment is slightly above what is regarded as the bare minimum to be above the poverty line in Germany. The outcomes from the test group will then be compared to those in a comparison group that does receive the payment. Researchers will see how the lives of each group compare and whether the payment affects job opportunities and personal advancement.
The current experiment is being funded by small donations from private individuals.
Among those who have previously spoken in favour of a UBI are Peter Thiel, co-founder of PayPal, and Jack Dorsey, CEO of Twitter.
While those that support UBI believe that it will reduce inequalities, save money by not being means-tested and allow individuals to pursue better employment opportunities, others believe that it will reduce the incentive to work, be highly costly and not overcome the structural issues within the economy causing unemployment and low-wages in the first-place.
Jürgen Schupp, who is leading the study, explained this debate to German newspaper Der Spiegel, saying:
"The debate about the basic income has so far been like a philosophical salon in good moments and a war of faith in bad times. It is — on both sides — shaped by clichés: Opponents claim that with a basic income people would stop working in order to dull on the couch with fast food and streaming services. Proponents argue that people will continue to do fulfilling work, become more creative and charitable, and save democracy. Incidentally, these stereotypes also flow into economic simulations as assumptions about the supposed costs and benefits of a basic income. We can improve this if we replace these stereotypes with empirically proven knowledge and can therefore lead a more appropriate debate."
Similar social experiments are now also being planned in Spain and Italy.
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