Do you really need to work?

haydn.thompson Friday February 23, 2018

Many predictions are suggesting that the adoption of AI and automation will place many of us out of work in the future. On the plus side this will in theory free us to live a life of leisure, on the negative side how are you going to pay for food, entertainment, holidays, etc.?

In 1797 Thomas Paine, an 18th-century radical, proposed paying all 21-year-olds a £15 grant funded through a tax on landowners. This was the first time the idea of a Universal Basic Income (UBI) was proposed. More recently with the rise of AI and increased automation the concept of a Universal Basic Income is now being seriously considered with a number of trials taking place in the Netherlands, Italy and Finland. Even in the UK, the Scottish government is planning pilot schemes in Glasgow and Fife. It is also notable that political leaders in France and South Korea have campaigned for the idea and even Elon Musk has advocated the need for UBI.

So what is a universal income? In a nutshell it is an unconditional income paid by the government to all citizens, whether or not they are in work. In Finland 2,000 unemployed people between the ages of 25 and 58 will receive a guaranteed income of €560 a month. It is hoped that this will encourage individuals to start their own businesses but also make it easier for them to take short term jobs which otherwise may affect their benefits. In the UK a figure of around £4,000 a year is being mooted which would cost the government £18bn annually. It should be noted that the aim of providing funding is not to take someone out of poverty, but to give them the flexibility to retrain or the breathing room to wait to take a job that has prospects rather than being forced into taking the first vacancy that comes along. Much larger sums of money would be required to support a workforce that had been replaced by automation.

So is UBI a magic bullet for a struggling welfare state? On the one hand welfare systems are designed as a contributory system of unemployment insurance, in which workers put in during the good times, and take out during temporary periods of unemployment. The reality, however, is that a large portion of welfare spending currently goes on permanently supporting people in jobs that do not pay enough to support their families. This leads to highly complex systems which are expensive to manage. So UBI offers the opportunity to simplify things in the shorter term. The problem is that the labour market is getting more precarious with less full-time employment and more low-paid, low-skilled work. With more automation some predictions are that around half the current workforce will not have employment at all in the future.

So can we afford UBI? It is not cheap to pay every citizen an unconditional income. Polls show that 64% of people in Europe are supportive of a UBI but they were not asked the question would they pay much higher taxes to support this? Notably in Switzerland where the idea of higher taxation was proposed to cover UBI the population voted 78% against the idea. A problem is that if only half the current workforce is still working how could they possibly pay enough tax to pay for all the people who are not working? One suggestion has been the introduction of a robot tax so that companies that use robots to replace workers need to pay a tax for the robot worker. Of course all of this is assuming that new jobs will not be created – notably over the years many jobs have become redundant through the introduction of technology only to be replaced by new jobs. So will we need to work in the future? I think that the short answer is I’m afraid so.