Can a universal basic income offer protection against the uncertainties of the labour market?

In brief:

  • As a response to the wave of rationalisation brought about by the digitalisation of the economy, several analysts are championing a universal basic income (UBI) that would be paid to citizens regardless of income and assets. It would be financed by dismantling the present social security systems that – allegedly - would no longer be needed after the introduction of a UBI. Minimum wages and collective agreement would also be unnecessary if a UBI were to be introduced.
  • The end of work is not in sight. Employment rates in most countries have risen in recent years and there are so many unmet needs in the world that there will be sufficient employment opportunities in future as well.
  • The abolition of minimum wages and collective agreements would create a gigantic low-wage sector. Toping up low wages with the UBI would become the norm.
  • A UBI would plunge many people into poverty, since it would not be sufficient to live on in the event of accidents, serious illness, disability or a need for long-term care. Better solutions have been found through the risk pooling and redistribution that characterise our social insurance systems. If progressive income tax were also abolished, all that would remain would be redistribution on a massive scale from the bottom to the top.
  • However, the UBI’s promising relatives, such as minimum pensions, a universal basic income for children, the strengthening of social insurance and development of citizens’ or wage earners’ insurance schemes and universal employment rights, are certainly worthy discussing.

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