The need for universal basic income

May 6, 2020


The spread of COVID-19 has fundamentally shaken economies, and people are beginning to question existing economic models; this pandemic has really thrown up the existing levels of both injustice and inequality worldwide. So bolder ideas are needed including some, that previously, were pushed aside.

At UNDP, we’re saying that, if there isn’t a minimum income floor to fall back on when this kind of massive shock hits, people literally have no options. Without the means to sustain themselves, they are far more likely to succumb to hunger or other diseases well before COVID-19 gets to them.

Millions and millions of people are now out of a job. A huge proportion of people work in the informal sector, without a contract, insurance, or any kind of job security. Added to this are displaced persons, refugees, and undocumented people who were never part of any formal system to begin with. 

It is so essential to bring back a conversation about universal basic income, and to make it a central part of the fiscal stimulus packages that countries are planning for.

We are getting much more response from governments in the Asia Pacific region than we’ve had in the past. For the first time there's also much more data tracking the most vulnerable. We're asking very specific questions of the type of social security packages that cover people today, and we're finding that, in Asia Pacific, about 60 percent of people do not have any form of social protection at all, and certainly cannot afford some of the options that are out there. 

The money invested in making sure that people do have some kind of safety net, is much cheaper than the huge investments that are now needed to bail out entire economies, or pay for fossil fuel subsidies.

But what about the cost? The majority of countries in Asia Pacific either carry high domestic debt or high external debt, and we don't want to see a growing debt burden, because that's just going to cause more problems for generations down the line. 

But in most countries in this region, the tax to GDP ratio is very low, and most public money comes from regressive, indirect taxes. In other words, it is mainly the poor who are being disproportionately taxed, and this must change.

“Fiscal termites” eat into a country’s tax revenue in countries allow for tax havens and tax breaks and massive fossil fuel subsidies. This is a heavy drain on public resources. On top of that, developing countries lose over a trillion dollars each year on illicit financial flows, and this is without even counting domestic corruption and inefficiency.

We must stop this financial bleeding. Fixing any part would free up enough money to pay for universal basic income. It’s is not forever but given the social and economic hits by COVID-19, it is needed right now.

One of the main reasons that coronaviruses jump from animals to humans so fast, is that we haven’t taken care of our environment. We've destroyed so much natural habitat that the disease transmission from animals to humans seem unavoidable.

So it was encouraging that the Republic of Korea, which successfully ran elections during the pandemic, saw the winning party run on a promise of a low carbon economy, and zero emissions by 2050. The overwhelming support for this platform shows that voters are starting to connect the dots. They're not just seeing this as an economic and health crisis, but also recognize that it is linked to the climate and environmental crisis. 

That is why we insist on the importance of economic, social, and environmental sustainability, and the need to bring people and planet together, and invest in both. 

This is not just some out-of-reach dream. The cost of living with fossil fuels, and with diseases such as COVID-19, is far more expensive, not just in the long-term, but even in the short-term.

Universal basic income is not the solution to the region’s economic problems, but it will save people from falling off the edge. There was a growing job crisis in the Asia Pacific region, even before the pandemic, because so many jobs are vulnerable to changes in supply chains, market fluctuations and automation.

Many countries in Asia, with a few exceptions, have a very youthful, growing, population, so more and more people are entering the job market. Their education levels are improving, and they’re ready to contribute. But that job market is not expanding rapidly enough. And they must be offered greener, safer jobs this time around.

The closer integration of the world’s economies is bringing new problems. Bangladesh had very few cases of COVID-19 a couple of months back, but more than one million people in the garment industry were laid off because when Chinese manufacturing halted at the start of the pandemic, the supply chain broke and essential parts such as buttons and zips could not be shipped. The laid-off workers have a cash cushion of a week’s wages, at best, and no social protection. In many places, they are now on the streets. The government is looking at ways to support the laid-off labour force.

Another example is countries that are heavily reliant on tourism, such as the Maldives, Thailand, Sri Lanka and Bhutan. These economies were severely affected when tourist travel stopped. Economic diversification for socioeconomic and strategic reasons is a must, going forward.

This crisis poses several questions concerning the resilience of economies. For example, how much should you grow and produce locally to stay secure? While remaining globally interconnected, we’re learning the hard way that global supply chains are only as strong as their weakest link; when that link breaks, entire economies can collapse.