Article Switzerland: Voters Reject Unconditional Basic Income

(June 6, 2016) On June 5, 2016, Swiss voters rejected by a vote of 76.9% to 23.1% the initiative “For an Unconditional Basic Income.” (Vorlage Nr. 601, Vorläufige amtliche Endergebnisse [Proposal No. 601, Preliminary Official Results], Schweizerische Bundeskanzlei [Swiss Federal Chancellery] website (June 5, 2016).) The initiative proposed to grant every person in Switzerland a certain amount of money each month, regardless of how much money they earn or how wealthy they are. The exact amount would have been determined by the Swiss Parliament. (Volksabstimmung vom 5. Juni 2016, Erläuterungen des Bundesrates, Volksinitiative ‘Für Ein Bedingungsloses Grundeinkommen’ [Referendum of June 5, 2016, Explanations from the Federal Council, Popular Initiative ‘For an Unconditional Basic Income’], at 13, Federal Social Insurance Office website.)

The initiative proposed inserting a new article 110a into the Swiss Constitution. The draft text stated:

1 The Federation will see to the introduction of an unconditional basic income.

2 The basic income shall enable the people to live a dignified life and to participate in public life.

3 A law will regulate the financing and the amount of the basic income.  (Bundesbeschluss über die Volksinitiative ‘Für ein bedingungsloses Grundeinkommen’ [Federal Decision on the Popular Initiative ‘For an Unconditional Basic Income’] BUNDESBLATT [BBl.] [FEDERAL GAZETTE] 9553 (2015).)

Background

The exact amount of money to be granted to each individual was not specified in the initiative. The group that submitted the referendum suggested an amount of CHF2,500 (about US$2,525) per month for adults and CHF625 for children and adolescents. The basic income would therefore have been slightly lower than the poverty level in Switzerland, which is set at CHF2,600. (Bundesamt für Sozialversicherungen [Federal Social Insurance Office], Hintergrunddokument, Bedingungsloses Grundeinkommen: Zentrale Fragen [Background Document, Unconditional Basic Income: Central Questions] (Mar. 11, 2016), at 2, Federal Social Insurance Office website.)

The organizers of the referendum suggested financing the unconditional basic income from three different sources. Every person would transfer the part of their income up to the amount of the proposed basic income into a common national fund. In addition, social security payments would be reallocated to the common basic income fund. The remaining balance would have been financed through taxes. (Id. at 3.) The unconditional basic income would not have changed the income of people earning higher wages than the basic income. They would have received the basic income from the common fund and their additional wages on top of that from their employer. (Volksabstimmung vom 5. Juni 2016, Erläuterungen des Bundesrates, …, supra, at 15.)

Reaction of the Federal Council

The Federal Council (the Swiss government) advised the Swiss voters to reject the referendum. It argued that the goal of living a dignified life was already codified in the Constitution and was fulfilled by means of the social security system. According to the Federal Council, an unconditional basic income would weaken the Swiss economy, because a basic income would make it no longer financially worthwhile for certain groups to work, thereby making people earning low wages or working part-time drop out of the workforce. It added that an unconditional basic income would question the goal of social policy to reintegrate people into the workforce, because people would lose the incentive to work. Furthermore, the Federal Council feared a rise of illegal and undocumented work. (Bundesamt für Sozialversicherungen, Der Bundesrat ist gegen die Initiative ‘Für ein bedingungsloses Grundeinkommen’ [The Federal Council Is Against the Initiative ‘For an Unconditional Basic Income’] (Apr. 8, 2016), Federal Social Insurance Office website.)

In addition, the Federal Council proposed rejecting the introduction of an unconditional basic income due to the costs the government would incur of an estimated CHF208 billion per year (about US$214 billion). Although the major part of that amount would be financed by a transfer of income and social security payments, the remaining balance of CHF25 billion (about US$25.7 billion) would have to be financed by the imposition of significant savings in the budget or tax increases. (Id.)

Lastly, the Federal Council submitted that a basic income would negatively affect the social security system. Monetary benefits in addition to the basic income, as well as counseling and care services, would have to remain in place, but would be a lot harder to finance. Therefore a basic income would not replace or simplify the social security system. (Id.)

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