The same money for all?

Is a universal basic income the answer to the transformation of work resulting from the transition to Industry 4.0? Arguments for and against.

Unconditional basic income: participation for all?
Unconditional basic income: participation for all? dpa

What will happen to employees whose work is performed by robots? Should every person in Germany receive money from the government to cover their basic needs? This would be an amount equivalent to the current level of social security plus housing support. The debate on a universal unconditional basic income repeatedly comes to the fore; especially in the face of increasing digitalisation and automation.

One pioneer in this field is drugstore chain founder Götz Werner, who published a book called “Einkommen für alle” (Income for All) in 2007. He argues that every person should be paid an income financed by higher value-added tax. Essentially, this would be a new welfare system. The idea finds some support among associations and parties, but is also a subject of criticism. But what are the arguments for and against it? An overview:

The arguments in favour

An unconditional basic income would be good because…

  • it could cushion the social impacts of industrial change,
  • it would be less bureaucratic than the existing retirement pension and welfare system,
  • it would be fairer than the existing welfare system,
  • it would give employees greater security and enable personal fulfilment,
  • jobseekers could turn down badly paid jobs in the low-wage sector and
  • the labour market would become more flexible.

The arguments against

An unconditional basic income would be bad because …

  • it would be almost impossible to pay for from the Federal Budget,
  • the existing welfare system in Germany would be abolished as a result,
  • the effects on the retirement pension fund and social security systems are speculative,
  • funding such a scheme with value-added tax would reduce purchasing power,
  • funding it with a wealth tax or income tax would not be sufficient and also be unfair,
  • there would be a shortage of specialists in rural regions because it would reduce the incentive to work there and
  • hardly anyone would want to work any more.

An unconditional basic income is not yet feasible

Major questions about the pension and welfare system, funding and concrete effects on the labour market remain unanswered. One reason for this is that pilot projects have often not delivered very reliable data. That is because of their temporary nature, which influences the behaviour of the trial participants. Furthermore, the debate is dominated by socialists and liberals. While most trade unions and business organisations reject the idea, its proponents – neoliberal economists and leading politicians in the Left Party – argue about its design.