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The idea of a European universal basic income bears potential as a palpable way of delivering on the promise of ‘social Europe’. However, many proposals remain vague. We outline a concrete policy design for an EU-wide basic income to foster debates on how such a policy could look like in practice.
By Dominic Afscharian, Viktoriia Muliavka, Marius S. Ostrowski, Lukáš Siegel
Whenever Europe is hit by a crisis with obvious social implications, one idea pops up in public debates with clockwork regularity: Paying everyone a regular amount of money in the form of a universal basic income (UBI) to remedy the social repercussions of the crisis. Since Europe has certainly had no shortage of such shocks in recent decades, UBI debates have become a staple feature of the discourse on European social policy. However, these debates are characterised by a number of misconceptions, which we aim to tackle head-on through our policy proposal for a progressive European UBI (EUBI). At a glance, they are as follows:
- There is only one UBI
- UBI is a simple policy
- UBI is a silver bullet of social policy
- UBI must replace the welfare state
- UBI should be organised at the national level
We argue that such misconceptions lead to a number of overgeneralisations, which ignore the fact that UBI is not fundamentally different from many other policies: its implications hinge on the concrete shape it takes. Policy design can make the difference between an EUBI being a tool of market-making or a disruptive mechanism of redistribution across the European Union. It can make an EUBI foster progressive ideas or cement conservative models of society. It can make the difference between a revolutionary utopia or a marginal reform. In short, policy design matters.
Therefore, we attempt to provide a proposal of how to make the rather ambiguous idea of an EUBI concrete. We build on our in-depth 2021 open-access study ‘The European Basic Income – Delivering on Social Europe’ published by the Foundation for European Progressive Studies. It contains more background information on our theory, reasoning, and calculations. Throughout the following sections, we outline the key pillars of our proposal following some guiding questions: Who should receive a UBI? How much should a UBI provide? How should a UBI be distributed? And how is such a UBI to be funded?
In answering these questions, we aim to be pragmatic as well as nuanced. Although our proposal might potentially upset those who favour more revolutionary, fully emancipatory UBI designs, it should nevertheless illustrate mechanisms whereby the general idea of a UBI can be moved a few steps closer to becoming feasible by doing away with some of the misconceptions mentioned above.
The Borders of the Universe
One of the main reasons UBI is often considered a ‘simple policy’ is the idea that it would be paid to everyone – after all, it is universal. However, defining the borders within which it is universal can dramatically change policy implications: Is UBI implemented locally, regionally, nationally, EU-wide, or perhaps even globally? Is it universal to all citizens or everyone who currently resides within the territory in question?
Our proposal aims for a UBI across the whole EU. Thus, we opt for introducing an EUBI directly at the EU level, co-administered by the Commission and Parliament. This is crucial for our proposal as it would maximise the scheme’s ability to contribute to a palpable ‘social Europe’. As this implies, our proposal is in large parts motivated by considerations around EU integration. On top of this, past experiences with Eurosceptic narratives indicate that if a UBI were to be introduced solely at the national level within an EU that continues to embrace free movement, this might – rightly or wrongly – spark debates about welfare chauvinism.
Furthermore, we propose paying the EUBI out directly to every adult long-term EU resident, albeit with adjustments regarding whether they are to receive this payout automatically. Starting at the respective national median income, the amount of EUBI paid out by default would be increasingly tapered off. Anyone would still have the right to claim their full EUBI, but the need for the wealthier to make such claims actively instead of receiving automated payments should act as a nudge to increase the scheme’s feasibility and address some concerns over justice. For minors, we further propose paying out a share of the full monthly basic income to their caregivers, with the rest being paid into a sovereign wealth fund. Acting as a starting capital, the accrued amount of money would then be paid out to the individuals in whose name it has been saved upon turning 18 years old. For adults dependent on care, we suggest that their EUBI be administered on trust by their caregivers – as is already the case under current ‘power of attorney’ arrangements.
Modest Beginnings
But how much exactly should the EUBI provide? Here, we propose a combination of modest beginnings and ambitious goals. We believe that one of the biggest hurdles to introducing any UBI consists in first establishing its basic principle. On that basis, we propose introducing the scheme at very low levels. To avoid disturbing labour markets or causing unexpected externalities, the EUBI would be first introduced at only a few euros per month which would slowly be raised under close supervision by interdisciplinary research groups. Eventually, the EUBI should cover the national at-risk-of-poverty thresholds at 60% of the national median, or 50% of the national mean income, whichever is higher. By implication, UBI levels would vary between EU member states.
In order to take account of income differences between member states, we further propose what we call an ‘EUBI corridor’. Once fully implemented, no member state’s UBI level would fall below 20% of the EU-wide median income, and none would exceed 60%. This should ensure a combination of sufficiency, redistribution, and incentives for richer member states to encourage income growth in poorer member states. What is of fundamental importance is that an EUBI must not be used as cover to abolish national welfare states. Only purely monetary schemes that are in sum entirely covered by the EUBI might optionally be replaced. Otherwise, the scheme would risk increasing social hardship, and would rapidly be overburdened by unreasonable expectations about the level of redress for social problems it is capable of providing. It goes without saying that this condition is vital for progressive political actors to consider a UBI a viable social policy option.
Distribution
While levels of payments are important, the impact of an EUBI further depends on how distribution is carried out. As alluded to before, we emphasise the importance of paying out UBI directly in monetary form to individuals over the course of their entire lives, with the exception of children and people fundamentally dependent on care by others. This is intended to maximise the scheme’s emancipatory potential. We further opt for a regular interval of payments, preferably monthly, to allow for some flexibility in spending patterns while avoiding the risk that the EUBI’s security component becomes lost through high one-off payments.
In order to increase the potential effect of the scheme on the palpable social dimension of the EU that citizens actually associate with European integration, payments should be explicitly marked as coming from the EU. However, this obviously does not rule out leveraging existing national welfare infrastructures in order to reach citizens with a minimum of extra bureaucratic hassle.
Funding – More than just a Hurdle
Another important component of designing an EUBI is funding. While this dimension usually dominates UBI debates through questions around the feasibility of the scheme, we argue that funding is central to an EUBI far beyond this consideration. In fact, funding is at least as important as output, as it can become a direct lever to control the impacts of the policy. A UBI funded entirely by taxes on labour income would have entirely different implications regarding redistribution, incentives, and economic effects than one fully funded from taxes on land value.
To balance the many considerations at play, we propose spreading the funding of the scheme across many shoulders. Thus, a mix of revenue sources should be introduced gradually. At a first stage, the EU needs its own financial resources, introduced through an expanded fiscal capacity at the EU level. These would include a financial transaction tax, a CO2 tax, a green border tax, an extension of emission trading schemes, and a sovereign wealth fund. Following this, a diverse portfolio of further taxes could be added, consisting of an EU-level digital services tax, an EU-wide VAT, and contributions from national corporate taxation. At a final stage, EU-level taxes on luxury goods, high incomes, inheritances, wealth, and land value, along with a ‘robot tax’ could institutionalise direct solidarity and redistribution between EU citizens. Just as with the introduction of the scheme itself, we propose introducing revenue sources gradually. Linking both elements of the policy design, EUBI levels could be fully tied to increasing revenue sources at the beginning.
In Embrace of Gradualism
These are the most basic elements of our complete proposal, which hint at an underlying conflict within UBI debates. While the idea itself is often praised as a revolutionary, emancipatory concept, it runs into problems regarding its perceived feasibility. Thus, our proposal embraces gradualism: We acknowledge that a slow and careful introduction comes at the cost of immediate decommodification. However, we argue that looming conflicts over justice, feasibility, impacts, and the value of empirical trials can hardly be resolved by insisting on introducing a high-level, disruptive UBI right away. Implementing the most basic elements of the policy mechanism first would likely make it easier to reliably monitor the large-scale effects of a policy that remains associated with empirical uncertainties. Furthermore, this approach might make it easier to overcome procedural hurdles such as partisan opposition and institutional resistance within the EU. Crucially, the option of expanding the scheme in the long run remains in place.
What should have become clear from our proposal is that there are countless ways to tweak the design of a UBI, and that a UBI is neither the simple policy nor the silver bullet some believe it to be. That said, we believe that our proposal represents a solid basis for moving the debate over UBI in the EU forward and making it more concrete, while pairing traditional elements of UBI proposals with some innovative tweaks in policy design.
