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Switzerland To Start Paying Its Citizens? Swiss May Pay $2,800 A Month Unconditional Basic Income

By Andrew Galbreath
Published on: 16:17 PST, May 23, 2016

The Swiss are discussing a bold social experiment: paying their citizens 2,500 Swiss francs ($2,800) a month unconditionally.

The mountainous Central European country will vote on June 5 as to whether the government should start giving an unconditional basic income for all adults in order to replace existing welfare benefits and social programs. While the plan’s advocates haven’t stipulated how much the payout will be, the suggested tax-free amount is 2,500 Swiss francs or $2,800 for an adult and one-fourth of that for a child. Voters next month will decide if all 8 million citizens and legal residents of Switzerland will receive the sum, which would be a global first.

The idea comes as the result of a grassroots campaign since 2013 to combat income inequality and provide a financial safety net for the population felt since the financial crisis, according to Reuters.

“Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday and tipped a truckload of 8 million five-rappen coins outside the parliament building in Berne, one for each person living in Switzerland. Under Swiss law, citizens can organize popular initiatives that allow the channeling of public anger into direct political action. The country usually holds several referenda a year.”

The payment would be provided to everyone regardless of work status. While few sovereign countries in the world could afford such a measure, Switzerland is one of the world’s richest nations, with a per capita income of $85,000, or 40 percent higher than that of the United States. Proposals for an unconditional basic income have been discussed before in countries such as the Netherlands, Finland, Canada, New Zealand and others, but only on the level of individual cities. If the referendum passed, Switzerland would be the first country to implement a guaranteed income nationwide.

The initiative was first drawn up and put on the ballot by a group of Swiss intellectuals, writers, and artists, who argue that the basic income would allow for at least a “decent existence.” Still, critics note that the annual sum would only be about 30,000 francs, or barely above the 2014 poverty line of 29,501 francs. Nearly one in eight people in Switzerland were below that poverty line that same year, more than other European countries. One in five people over 65 were also at risk of poverty.

The Straits Times was critical of the proposal and argued that it wouldn’t pass through Switzerland’s People Power Plebiscites, which are part of the country’s direct democracy.

“It sounds good, but – two things. It would barely get you over the poverty line, typically defined as 60 per cent of the national median disposable income, in what’s one of the world’s most expensive countries. More importantly, it’s probably not going to happen anyway.”

Switzerland’s unique system allows any citizen to bring forward a referendum by collecting 100,000 signatures in a petition. Polls show some 60 percent of the Swiss population oppose it, but the plan has its strong advocates.

“It would lead to a more motivated workforce and more humanized, stable and productive economy,” Che Wagner, the referendum’s co-organizer and campaign manager, said to USA Today. The paper then lined out the exact terms of the proposal. For example, if a person earns no income, they would receive the full amount, whereas if they earned $1,600, the basic income would be $1,000, and so on.

“Someone who currently earns, say, $6,500 month would not receive any money from the government but $2,600 of it would not be taxed. For those getting welfare or other social benefits, payments of up to $2,600 a month would be replaced by the new basic income. Anything over this amount would continue to be provided as a separate payment and taxed accordingly. Theoretically, a family of two non-working adults and two children at home would be eligible for $6,500 a month, or $78,000 a year tax-free. That’s nearly twice the after-tax income of a typical American family.”

Former Greek Finance Minister Yanis Varoufakis supported the measure to the Times, saying it was necessary in the age of automation and loss of productive jobs.

“A rich country like Switzerland has the great opportunity to try out this great experiment,” he said.

[Image via Blue Jacaranda/Shutterstock]

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