'Radical' income solution pushed as answer to job automation

Future of Work

With the looming reality of a "society that's going to produce more wealth with fewer human inputs" (in Australia, automation threatens up to 40 per cent of current jobs), prominent global figures, from economists and tech entrepreneurs to futurists and politicians, are asking if there is another way.

One "radical" solution up for discussion is a universal basic income (UBI), which has already been trialled in both developed and developing nations. A UBI provides unconditional and automatic payment of a given sum of money to every citizen in a nation regardless of their income, employment status, economic class or social demographic on a periodic basis.

In Australia, the call to explore a universal basic income scheme comes from NSW Greens MP David Shoebridge; in the United States, Democratic presidential hopeful Andrew Yang is a passionate advocate; and Lawrence H. Summers, former chief economist of the World Bank and US treasury secretary under Bill Clinton, has described UBI as "the biggest social policy idea of the 21st century so far". Outside the political bubble, mercurial tech entrepreneur Elon Musk is not necessarily a proponent but sees it as ultimately inevitable.

The interest in such a scheme comes as the economic assumptions on which our post-industrial society were built are challenged. Musk says "there are fewer and fewer jobs that a robot cannot do better. What to do about mass unemployment? … I think, ultimately, we will have to have some universal basic income."

Elon Musk "We Need Universal Basic Income" (UBI)www.youtube.com

In Australia, a 2016 estimate on the impact of automation by the Committee for Economic Development of Australia (CEDA) found around 40 per cent of jobs were at risk of being automated or computerised in the next 10 to 15 years.

With so many facing potential unemployment as a result of automation, the shortcomings of Australia's Newstart unemployment benefit scheme are also in the spotlight. The Newstart allowance for a single person, at $282 per week, is 40 per cent less than the minimum wage, according to the Australian Council of Social Service (ACOSS), and places the recipient approximately $100 per week below the poverty line.

A 2019 ACOSS survey of 589 people on Newstart or Youth Allowance revealed 84 per cent skipped meals to save money, 44 per cent skipped five or more meals a week, 66 per cent did not use heating in winter and over half had less than $100 a week left after housing costs. Some recipients said an extra $75 a week could mean removing themselves from abusive relationships, getting more food for their kids, keeping their car which would allow for more work, and even 'feeling human again.'

'We are in the third inning of the greatest technological and economic shift in human history.'

How does a universal basic income work? It seems to depend on who you ask and where it is applied.

In Alaska, citizens are paid a universal basic income payment of between $1000 and $2000 annually and it has reportedly resulted in a fall in poverty amongst Native Americans and created more than 10,000 additional jobs for the state.

Finland conducted a two-year basic income trial, beginning in January 2017, where 2000 unemployed adults received €560 a month (A$818 at the time). They found those on the trial spent, relatively, the same amount of time in employment as those without UBI access and reported feeling a more positive sense of self and reduced stress levels.

In Kenya, GiveDirectly, a not-for-profit organisation working to end poverty in East Africa, launched what it called "the largest basic income experiment in history" in November 2017. The experiment is a 12-year trial whereby 40 villages (approximated 6000 people) will receive roughly US$22.50 per month, no strings attached.

In June 2016, Switzerland became the first nation to hold a referendum on the introduction of a UBI (it was overwhelmingly rejected). In November 2016, the Australian Parliament published a social policy report titled "Basic income: a radical idea enters the mainstream".

In the United States, Democratic presidential candidate Yang, who will speak at the fifth Democratic presidential debate this Wednesday, November 20, is running on a platform to give $1000 a month to every adult US citizen, which he calls the Freedom Dividend. While seen as a long shot, Yang's message has gained some traction with younger voters, (The New York Times calls him "The Internet's favourite candidate"). He has an energised online following called the Yang Gang, and that #yanggang is now 1 million followers strong.

"We are in the third inning of the greatest technological and economic shift in human history," Yang told CNN earlier this year.

"(UBI) would improve people's health, nutrition, it would elevate graduation rates, it would improve people's mental health. It would help people make transitions in a time of historic change," he said.

Yang, who founded Venture for America, a not-for-profit focused on creating jobs in struggling American cities, says he would pay for a UBI by implementing a value-added tax, enforcing tougher taxes on the top earners, and creating new revenue by putting money in the hands of people which would grow the economy. His UBI would also subsidise aspects of existing welfare programs and the lower poverty rates would reduce existing costs to the government such as incarceration, homelessness and health care.

What Yang's advocacy for UBI has done is spark a conversation about the policy in the US. Professor Joseph Stiglitz, a Nobel laureate in economics, is committed to tackling the global inequality crisis. He told CNBC earlier this year he is "not a UBI person" but he still "understands there are some advantages" to the idea. Rather than offer a single program providing a basic income to everybody, he thinks the basic responsibility of the government should be to "make sure there's a job for everybody who's able and willing to work."

Could a UBI program work in Australia? In early 2019, the Greens' Shoebridge proposed a trial of UBI in South Nowra of $700 a fortnight, arguing for both occupational retraining and a UBI in the face of job automation in Australia.

"I personally believe that UBI should be rolled out in conjunction with a work guarantee. The two policies I think complement each other and allow people to engage in meaningful occupations, but also provide sufficient economic security and a fair share of the wealth," he said in an interview with Newsworthy in March.

"We see increased social engagement, we see improved health outcomes, we see improved social outcomes and we also see increased engagement with the labour market. If you give people economic security, they don't choose to opt out of society, they choose to opt in [to] society.

"UBI allows for lifelong learning. Pretty much nobody is going to have an occupation for life anymore. There is going to be multiple retraining requirements throughout our working life and the UBI allows for the three or six or twelve months that may be required to step outside of the paid labour market and engage in that retraining," Shoebridge said.

Professor Nick Wailes, Director of UNSW's Australian Graduate School of Management, agrees on the importance of occupational retraining and sees a role for government, but not through the provision of a UBI.

"All the industrial revolutions have grown the economic pie and created more work, not less work. It's just changed what people do.

"We need a lot of retraining and a lot of reskilling, and then the question is who bears the responsibility of that. Is it the individual? Is it your responsibility to make yourself hireable? Is it the company?" he asks.

"I think there's a strong case that companies have got a role to play here if they're introducing these technologies, they should also be thinking about how they transition their workforce and then open up. Also, the government, in creating an environment that allows people to retrain and reskill without significant economic loss," Wailes said.

Shoebridge foresees a future where broader structural changes in the economy mean "jobs that people take for granted now [will] literally disappear".

"As that happens, we're going to need economic and social policies that prevent large chunks of our society falling into chronic poverty. In a society that's going to produce more wealth with fewer human inputs, how do you share that wealth around? A UBI is one of the obvious ways we can do that," he said.

As the title of the Australian parliamentary social policy report "Basic income: a radical idea enters the mainstream" acknowledges, UBI is no longer a fringe idea but neither is it likely to be adopted in Australia in the near future. The report concluded "even if there was little prospect of a UBI being introduced in the near future, debating UBI proposals helps draw out and clarify the differences in values and vision that shape social and economic policy".


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