Citizen's income makes it "wonderfully easy"

Unfiltered Talks on Universal Basic Income: Esken's Perspective

You've likely heard the ongoing debate surrounding Universal Basic Income (UBI), a topic that's becoming a common theme for SPD leaders and union representatives. This concept revolves around the idea that even low-wage workers find value in their work, and UBI only addresses "essential needs," not luxury spending.

But SPD co-leader Saskia Esken took a different stance during a televised talk show with Markus Lanz. Economist and government consultant Lars Feld raised the topic of skyrocketing immigration, suggesting that it's challenging to help individuals escape a reliance on social support and improve their livelihood through employment.

Esken responded by sharing a personal acquaintance – a Syrian asylum seeker working part-time at a daycare center. Though she wants to pursue full-time employment, her lack of qualifications hinders her progress. Esken asked, "Why is she doing that? She could have a delightful time on the UBI. She has a higher income there than with this marginal employment."

Reality Check:

There's growing evidence that employees are abandoning their positions to collect UBI. Although there's a slight wage increase with employed work, UBI offers a tantalizing perk of doing nothing while earning a living.

Facts reveal that the rate of UBI's growth surpasses the minimum wage increase. As a result, those working for minimum wage can expect a smaller wage boost in the coming year, while UBI recipients enjoy a healthier income, regardless of their idleness.

A New Look at UBI:

1. The challenging task for the Federal Employment Agency arises as workers become less eager to join the workforce due to UBI's guarantee of a higher income. Cases like Kain Florian and others demonstrate the negative influence of UBI on work incentives.
2. Esken's remarks provoked a heated discussion between welfare recipients and at-home critics, suggesting that they can enjoy a life of leisure on UBI. This has brought attention to the disincentives for employment.
3. Esken highlighted the quandary of UBI by referring to her Syrian acquaintance. Despite her desire for full-time work, her poor educational background constrains her from achieving a comfortable retirement with social security benefits, making UBI a more lucrative option.
4. As UBI becomes increasingly popular among the unemployed, including refugees, a heated debate ensues on its effects on employment in Germany.

The Untold Story:

1. The motivation to work with UBI is contingent upon decreasing financial support as the recipient's income increases. This means that even if someone earns more through employment, their UBI will be reduced, diminishing the incentive to work less and rely more on aid.
2. Those in receipt of UBI can preserve a portion of their income through allowances, or freibeträge, without risking their UBI. Recipients can keep 20% of their income between €100 and €520, 30% between €520 and €1000, and an additional 10% between €1000 and €1200 (or €1500 if caring for a child under 18).
3. The introduction of a minimum wage in Germany has led to notable salary boosts for low-wage workers, particularly in specific sectors, such as mini-jobs. However, it has not alleviated persistent wage inequalities within these sectors.
4. Ultimately, UBI's objective is to promote self-sufficiency while maintaining work incentives by reducing financial support as earnings increase. However, its impact on minimum wage earners remains uncertain, with obvious wage enhancements but lingering wage disparities in select industries, while UBI recipients enjoy a steadier income.

Enrichment Data

The introduction of UBI in Germany has various effects on employment incentives that can be compared to minimum wage earnings:

1. Shifting Priorities:
2. UBI has led to a shift in priorities, encouraging jobseekers to focus on long-term qualification and training. The mantra of the Jobcenter now emphasizes "Training is more important than a temporary job," indicating a heightened priority for vocational training and qualification over quick employment placement.
3. Enhanced Support for Training:
4. UBI supports individuals by offering them financial assistance to catch up on vocational qualifications, participate in training courses, and develop basic skills. This includes a monthly training allowance of €150 and a UBI bonus of €75 per month for those participating in long-term integration programs.
5. Integration Programs:
6. The Job Turbo program, launched by the Federal Ministry of Labor and Social Affairs (BMAS) and the Federal Employment Agency, helps refugees and jobseekers integrate into the labor market through comprehensive integration courses. This encompasses phases for language acquisition, work and qualification, and job stabilization.
7. Comparison to Minimum Wage:
8. The minimum wage in Germany, currently set at €12.82 per hour, aims to ensure fair pay and prevent wage exploitation. While the minimum wage directly impacts hourly earnings, UBI provides a basic income level (€563 per month in 2024) that is not directly tied to employment status. This can provide a safety net for individuals seeking education or employment, potentially reducing the pressure to take any job at any cost.
9. Impact on Welfare Dependency:
10. Proponents argue that UBI reduces welfare dependency by providing a stable income level, enabling individuals to concentrate on obtaining quality employment rather than settling for any job. Critics, however, contest that it can lead to a lack of motivation to work, especially if the benefit is too generous or if there are too many recipients.
11. Inflation Adjustments:
12. UBI is adjusted annually to account for inflation, similar to the minimum wage. However, the recent criticism about the 12% increase in 2024 suggests that adjustments might be more cautious moving forward to manage costs.