Spain set to introduce permanent basic income scheme to rebuild economy post-coronavirus

People use ATMs in Caldas de Montbui, near Barcelona, Spain. Source: AP

The scheme, which will deliver unconditional monthly payments to low or no income families, looks set to be approved by cabinet next week.

Up to a million Spanish families could soon receive an ongoing monthly payment to help them through the coronavirus crisis as the country’s government looks set to approve a €3 billion ($A5 billion) basic income scheme.

The program, targeting low or no income families, will likely remain beyond the COVID-19 pandemic, which is expected to push the unemployment rate to more than 20 per cent in the country of almost 47 million people, according to the International Monetary Fund.  

Discussing the measures on local television last month, Economy Minister Nadia Calvino said they were intended to “stay forever, that it becomes a structural instrument, a permanent instrument.”

Shops are slowly starting to reopen in Spain after the lockdown was lifted.
Shops are slowly starting to reopen in Spain after the lockdown was lifted.

Spanish daily newspaper El Pais reports the payment would deliver at least €440 ($A735) to families each month.

Households would be means-tested against the number of children in the family, their assets and income.

Families will continue to receive the payment even if they get a job to encourage job seeking. 

The idea of a basic income was first floated in December, according to El Pais, with its introduction brought forward due to the fallout of COVID-19. 

Spain is among the countries hit hardest by the virus, with more than 232,000 people infected and almost 28,000 deaths - the fourth highest death toll in Europe.

In a radio interview this week, Social Security Minister Jose Luis Escriva said the cabinet would likely approve the scheme during a meeting on 26 May. 

A basic income has been widely touted as a possible buffer to the economic shock from the coronavirus shutdowns, which has put tens of millions of jobs at risk worldwide.

Finland undertook an experiment between 2017 and 2018 to provide an unconditional, tax-free monthly payment of €560 to a group of randomly selected unemployed people, but this month found it didn’t increase employment compared to traditional unemployment benefits, which are cut off when a recipient is employed.

Researchers said the basic income led to participants being employed for an average of just six extra days during a one-year period of the trial. 

The Spanish scheme differs from the well-established idea of a “universal basic income”, which would deliver a regular cash payment to all citizens regardless of employment status, income or wealth.

With Reuters, AFP

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