Proposal for a European Universal Basic Income

Photo by Ibrahim Boran via Unsplash

This post is based on the article The prospects of an EU-level Universal Basic Income written by François Denuit via the European Green Foundation.

Denuit defines European Universal Basic Income (EUBI) as a periodic and partial cash payment paid by the EU to all legal residents living within its borders, on an individual basis, and without resources or work requirement conditions. EUBI is similar to that of ideas for a national UBI. Still, EUBI is a “partial” basic income because its level is not sufficient to provide everyone with the means for subsistence on its own.

The author writes that the idea is not to replace existing national social models with a supranational European welfare state. Instead, the EU works as a complementary welfare layer offering systemic support to its member states’ social models by taking a distributive role directly relating to its citizens.

Thereby, the desirability of the EUBI may thus be assessed concerning its capacity to improve the social dimension of the European project according to three dimensions - individual, national and European, respectively related to the proposal’s potential to support individuals’ economic security, member states’ core redistribution and stabilization capacities, and the EU’s political legitimacy.

Poverty, welfare, and citizenship

When it comes to poverty aspects, the author writes that the European social model remains a poorly defined and ambiguous concept, there is a need to guarantee a decent minimum standard of living for all residents as a right that is protected under EU law. As a supranational instrument of unconditional and universal income support, which can be topped up at will by other sources of earnings or by national social benefits, the EUBI embodies a radically novel form of European antipoverty strategy.

For example, for those individuals facing precarious labor contracts and multiple forms of economic insecurity on the labor market, the so-called “precariat”, the EUBI will supplement low wages with additional purchasing power and ensures a regular and permanent income flow, thereby contributing, even if only modestly, to the reduction of in-work poverty and the strains of chronic uncertainty. Also, aspects as minimum wages and collective bargaining remain indispensable to ensure that the EUBI does not become a mere wage subsidy for employers.

The author writes that EUBI as a universal scheme would avoid the failures of means-testing, which is the prime reason for bad coverage and high rates of unclaimed rights. It will not distinguish between “deserving” and “undeserving” poor. Thereby, an income would be provided to those such as young people, long-term unemployed, working poor, homeless people, and migrants, who are generally among the groups not effectively covered by last-resort safety nets.

One proposal av by opinion-makers as van Parijs is that EUBI should be 200 euros per person and per month on average with variations according to the local cost of living. For example, when adjusted to purchasing power parities (PPP), this would yield 85 euros in Bulgaria, 273 euros in Denmark, 201 euros in Germany, and 166 euros in Greece as shown in the table below.

From the article

Support for national-level welfare systems and European social citizenship

The author argues that the organization of social protection within the EU must be seen in the light of the “social deficit” of European integration, understood as the asymmetry between its economic and social dimensions. This is explained by that market-making and economic focus of European integration, the construction of the EU has had a “destructuring” impact on national social protection arrangements which have not been matched by equivalent “restructuring” the creation of common regulatory and redistributive instruments for market-correcting purposes at the supranational level.

As in the of the Eurozone, the structural defects of the monetary union and the political response to the euro crisis, primarily focused on fiscal discipline and “structural reforms” oriented towards welfare retrenchment, imposed additional constraints on national systems of redistribution and increased social imbalances as unemployment and poverty rates between member states. Thereby, a EUBI could provide a system of cross-border transfers desirable for three main reasons- unconditionally, universality, and harmonization. For example, by providing additional income security, an EU-wide basic income reduces the risk of “brain drain” from poorer EU-member states to richer ones.

The EUBI would function as a European social policy in scope and substance and embodies a materialization of EU social citizenship. As a partial basic income, it would strengthen the social rights element of EU citizenship which currently lags far behind its economic and political dimensions. Also, as the author puts it, the expression of European solidarity would be even more legitimate if it establishes a link between the wealth generated by European integration and the requirement to distribute it fairly among all Europeans.

This is also connected to the fact that the EU legal order has created a “social citizenship space” in which all bearers of EU citizenship or long-term residents may formally enjoy benefits and services anywhere in the EU according to local rules. At the same time, effective access to the advantages of EU citizenship remains unequal as testified by the asymmetry between workers and non-workers’ right of free movement while European law also allows restrictions if someone lacking sufficient resources risks becoming “an unreasonable burden” for the host member states’ social systems.

Feasibility, funding, and fixing

The author writes that given to the institutional constraints associated with the complex distribution of legal competencies in the multi-tiered EU polity and the limited size of the European budget, the EUBI’s legal and financial feasibility constitute key background conditions for its overall political feasibility.

For example, a suitable legal base can be found in the combination of articles 175(3) and 352(1) of the Treaty on the Functioning of the European Union (TFEU), meaning that the European Parliament and the Council of Ministers can decide to adopt specific actions with their own eligibility criteria if these actions prove necessary to attain the objective of strengthening social cohesion.

When it comes to funding aspects, the author states that it would be necessary to find new budget revenues to finance a credible proposal as in raising additional contributions from member states where affair evaluation of a member state’s contribution must weigh the scheme’s costs against its expected benefits for national citizens and against the potential positive effects of cross-border redistribution in terms of overall economic stability. Examples of funding could include various forms of carbon taxes, a tax on fossil fuels, and taxes on the production, transport, and sale of electricity. Also, new EU budgetary resources may also be generated by the proceeds of a European financial transaction tax that aims to discourage excessive financial speculation and ensure that the financial sector pays its fair share to public budgets.

From the article

Finally, when it comes to paying out a EUBI system, one idea is that a new European agency could be set up in order to make the payments directly to all individual bank accounts. In comparison, another way would be to transfer European funds earmarked for the payment of the EUBI to national, regional or local public authorities who would then make the transfer based on information available to them.

The author also states that it is interesting to explore three proposals moving in the direction of the EUBI.

The first idea is to have EU co-funding support the many regional and local authorities throughout Europe who have expressed their desire to start basic income experiments funded via the European Programme for Employment and Social Innovation.

While the second idea, called “quantitative easing for the people” (QE4P) or “helicopter money”, concerns the provision of an unconditional lump-sum payment of limited duration to residents of the Eurozone, funded through money creation by the European Central Bank, in order to boost consumer demand in times of economic downturn.

Last but not least, the third idea consists of distributing a categorical European basic income restricted to a specific subset of the population as for example a Child Basic Income as a universal child benefit of the kind that exists in many European countries, and examples as a European universal basic pension.

In his concluding remarks, the author writes that a modest European basic income will not solve all ills affecting social welfare in the EU but instead that the strength of the EUBI lies in a broad range of issues associated with the social dimension of the EU:s development.

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