Covid-19 and basic income

12 October 2020

The pandemic is opening up a policy window for the introduction of a basic income.

Basic income — the idea to pay each individual member of society a small monthly income without requiring a means test or work obligation — is a policy proposal in search of a window of opportunity. In the past decade, such policy windows have presented themselves in various countries. Examples include the Citizen’s Referendum in Switzerland, a series of experiments in Finland, Spain and the Netherlands, discussions about piloting basic income at the highest political levels in France, Scotland and most recently Ireland, and basic income was even given a central place in the platform of US Presidential Candidate Andrew Yang. While this has yet to lead to the full implementation of a basic income policy in any of these places, each case has contributed to spurring public awareness and policy attention in basic income across Europe and beyond.

To many advocating for a basic income, the COVID-19 pandemic and the massive economic fallout of the lockdown measures implemented globally are opening up a new policy frontline. The idea of an Emergency Basic Income has been advanced as a leading proposal to counter the most dire effects of the public health response to the pandemic, with vocal support ranging from grassroots organisations to high-level international institutions such as CEPAL or the UNDP. But should we regard this as genuinely opening a policy window for basic income?

In this short commentary we want to argue that the pandemic is indeed opening up such a prospect. Even more stronger, we want to argue that the current policy window to institute at least a temporary variant of a basic income, aimed at establishing an income floor for those most affected by the pandemic, constitutes a unique moment in the history of basic income. What makes this window so unique is the co-existence of three conditions that have never occurred simultaneously in recent social history.

First, COVID-19 impacts the whole population (albeit in decidedly unequal ways) and not merely an easily identifiable segment or group. The pandemic policy response has already caused massive working time reductions and layoffs, with the estimated total working-hour losses in the second quarter of 2020 now reaching 17.3% or 495 million full-time equivalent jobs. Furloughs and other worker retention schemes have been used to defer the risk of even greater layoffs. Meanwhile gig workers and small business owners too had to drastically reduce their activity. All of this has led to significant income loss for a large proportion of the population. Recent ILO estimates of labour income losses before income support measures suggest a global decline of 10.7% during the first three quarters of 2020, which amounts to US$3.5 trillion or 5.5 per cent of global growth. Even where those at the lower end of the income distribution are most impacted, such a drastic economic impact creates a strong ripple effect across society more broadly.

Governments are under pressure to institute measures that are sufficiently ambitious to support an affected population that is  not only large in size but that is also very heterogeneous when compared to previous crises. COVID-19 affects both regular and precarious workers, those in the gig economy, the self-employed, those working in the shadow economy (estimated at 2 billion worldwide), those with small businesses, and so on. It disproportionately affects youth, women and informal workers. It also clearly impacts those who are designated essential workers and who are expected to continue working under increasingly risky and difficult conditions. Designing a policy that can adequately respond to this heterogeneity is not straightforward — as is borne out by many of the current schemes that fail to capture all those impacted by the restrictions. Basic income, by virtue of being a universal scheme, is uniquely well-placed in this regard and offers a secure economic floor that is independent of one’s particular situation.

Second, COVID-19 is best regarded as the economic equivalent of being struck by lightning. The pandemic ravages whole countries and the remedy is a drastic population-level response of enforced social distancing, restrictions on movement and economic activity, and, in some cases, full quarantine. Individuals bear no responsibility for the restrictive measures imposed upon them by governments purported to be guided by public health principles and evidence. Consequently, individuals are certainly not responsible for having to close their businesses, losing their jobs, or for being unable to work because their job does not allow for adequate social distancing or cannot be easily moved online.

The frequent practice of blaming the victim — the poor, the unemployed, the sick and the disabled, and of course the immigrant — for their dire circumstances is rendered moot when the root cause is a major external shock — in this case a pandemic. On the contrary, responsible behaviour is precisely to abide by the new lockdown rules that come at great personal economic cost to many of the most disadvantaged in society. The oft-heard knee-jerk response to a policy such as basic income — that it rewards idleness — is inappropriate when the whole purpose of pandemic policy is to keep people at home and to actively prevent them from engaging in economic activity for fear of increasing rates of community transmission. In the midst of the pandemic, the most common objection to basic income — that it gives workers “something for nothing” — is not only disarmed but is effectively turned on its head.

Third, COVID-19 has caused an almost global u-turn on the dominant imperative of budget balancing and appears to have sent the austerity paradigm governing social spending in the past decade into oblivion. Governments are borrowing at an unprecedented level to be able to spend on emergency financial support with apparently little or no immediate concern of who is going to foot the bill. In this new (albeit no doubt temporary) reality, another common concern about basic income — how are we going to pay for it? — is left with little real bite. When government borrowing is de rigueur, the point isn’t so much to worry about where the financing is coming from but rather how best to spend the vast pot of cash that is now suddenly being made available? In short, being able to sidestep questions of financing, the real debate can focus on which of competing policy proposals is most effective in terms of coverage and impact: this is the battleground on which basic income will have to prove its mettle.

But even if funding concerns persist, there are unique ways in which basic income can respond. The pandemic requires a solidaristic public health response in the form of lockdown measures that everyone needs to abide by to prevent further virus spread, but equally a solidaristic economic support programme to compensate for the most dire fallout. If solidarity is baked into pandemic policy responses, then why not also insist on broad social solidarity to pay for them? A Pandemic Solidarity Levy could be instituted to specifically pay for an Emergency Basic Income  programme. It could take the form of a temporary progressive tax that would kick in whenever the economy is back in recovery. Proportionally borne by those who weathered the economic fallout during the pandemic best while those still recovering would be largely exempted, this Pandemic Solidarity Levy is an example of a budgetary solution grounded in — and representative of — the solidarity that is essential to a robust population-wide pandemic policy response.

Together these three conditions open a unique window of opportunity for implementing an Emergency Basic Income scheme for the duration of the lockdown that could even be extended into the recovery period after the virus itself is contained. A basic income scheme offers both a chance to recover and positively evolve from the COVID-19 pandemic; but critically, as we have argued elsewhere, this also offers a foundation for a fairer and more resilient social and economic system to deal with future pandemics, which many public health scientists predict will increasingly occur. If basic income had been in place as COVID-19 emerged, there would have been far greater security for people when adhering to the lockdown requirements. In this environment, it is our responsibility to ensure that we are better prepared for future disaster scenarios.

Recognising this unique opportunity, two challenges immediately present themselves. The first challenge is to keep the policy window open for as long as possible. The current situation is complex. As the pandemic policy response enters its third quarter, pressure is mounting to ease restrictions, to open economies and return to work, and to downgrade or to discontinue the government’s emergency financial support programmes. At the same time many countries have again started to experience rising infection and mortality rates, pressuring governments in those countries to reimpose restrictions and continue or renew economic support measures. Those advocating for an Emergency Basic Income need to combat the idea that the pandemic has turned a corner and must instead point at the widespread evidence that the situation is far from resolved — COVID-19 will likely be with us for quite some time. Uncertainty about both the evolution of the pandemic itself and its likely impact is a reality that needs to be recognised but also addressed as a matter of policy. Rather than thinking they can afford to tear down the scaffold of pandemic protection measures, decision-makers must be convinced of the social and economic cost of failing to provide continued economic security when the fallout of the lockdown are still very much felt across the population and when the likelihood of economic restrictions returning remains a very real possibility.

The second challenge pertains to seizing the chance to move basic income forward as a policy. Basic income advocates should point at the growing impact of cash transfers as key pandemic policy responses around the world, while simultaneously emphasising the coverage gaps, delays, bureaucratic costs and other deficiencies that often occur when such cash transfers are implemented in a selective, targeted and inequitable manner. Advocates can make good strategic use of the fact that a temporary Emergency Basic Income scheme avoids many of the alleged drawbacks of more permanent basic income proposals, especially in the unique policy context we currently find ourselves in. In addition, they can point at how Emergency Basic Income meets the central policy and political objectives of a pandemic policy response by offering an immediate and agile response to an urgent and evolving disaster scenario that simultaneously gives priority to those most impacted and that builds on the solidaristic nature of the response to the COVID-19 pandemic.

Engaging with the twin challenges of keeping the current policy window open and pushing basic income onto the policy agenda involves a highly coordinated effort by multiple actors and stakeholders on multiple policy fronts. In recent years we have seen the public awareness and support for basic income growing exponentially. Likewise, we have seen the number of local, regional and national organisations around the world pushing the case for basic income mushrooming. What has been most exciting to witness is how the pandemic has contributed to the many diverse groups coordinating their campaigns and exploring options for more structured collaboration. Good examples are the recent surge in the UK Basic Income Lab network or the emergency of the Mayors for A Guaranteed Income network in the US. That these efforts are having a clear impact is reflected in several high-profile public statements, such as the very public support for basic income demonstrated by the First Minister of Scotland or the public call for an Emergency Basic Income by the UN Economic Commission for Latin America and the Caribbean.

This is a unique moment in history, which has thrown many of the existing economic and social paradigms up in the air. Under COVID-19, orthodoxies which had been considered unassailable look far less secure in light of their failings. Those who support basic income have a responsibility to work with civic society and politicians in order to take advantage of this unique moment to bring about real social change.

The responsibility for the opinions expressed in this article rests solely with its authors, and publication does not constitute an endorsement by the International Labour Office.