Letter IEDI n. 1019–Minimum Income in COVID-19 times: international experience
The unprecedented nature of the economic crisis resulting from the COVID-19 pandemic made it necessary to adopt, on an emergency basis, income transfer mechanisms to the most vulnerable social groups in most of the affected countries. The granting of this emergency aid reinforced, in turn, the discussion on permanent minimum income programs, which in some cases had already been occurring, due to the increase in social inequalities and the ongoing technological changes.
Brazil has not escaped this trend, as the debate surrounding the renewal of the BRL 600 emergency aid in June this year made clear, as did the frequency with which proposals for the permanence of such a program have appeared in the press and other discussion channels. Today's Letter IEDI, based on a study available on the Institute's website (in Portuguese), addresses the international experience with non-contributory cash transfer programs for the vulnerable population, especially during the fight against the COVID-19 pandemic.
These initiatives seek to ensure minimum material conditions for unemployed people who have already exhausted their unemployment insurance rights and for those who, although employed, do not earn a sufficient level of income to avoid poverty.
In the world, the experiences with “universal basic income,” that is, income indiscriminately guaranteed to all citizens, proved to be specific and transitory. The most frequent are “guaranteed minimum income” programs, aimed only at the lower-earning population and presenting conditionalities, such as a commitment to active job search.
Among developed nations, most countries in Europe have had this type of program for longer, as in the case of France, Germany, Norway and Switzerland, beside others. In some cases, the experiences are more recent, starting after the 2008–2009 global crisis or now with the pandemic, like Greece, Italy and Spain. Outside Europe, experiences are rarer and only appeared as emergency aid with the coronavirus crisis, as in Canada, the United States and Japan.
In Europe, in general, the condition for unemployed working-age individuals to have access to the minimum income benefit is to be enrolled in government job search centers, to actively seek work and, in some cases, to participate in training. Consecutive refusals of job offers may result in sanctions and even loss of the benefit. The amount received monthly is usually 50% to 60% of the median national income, normally used as a criterion for the poverty line.
Some countries allow combining work income with social assistance, such as France. But even in these cases, European minimum income programs have proved to be insufficient in the face of the COVID-19 crisis. It was necessary not only to relax some rules of access and/or permanence, but also to establish emergency programs for certain groups more exposed to the crisis, such as independent and self-employed workers, as happened in Germany, France and the United Kingdom.
In Germany, under the economic revitalization plan launched in June 2020, a single-payment € 300 per child financial bonus was also granted to low and middle income families. For single parents, the amount is doubled.
In Spain, the national minimum income scheme was created precisely from the experience with emergency aid in response to the pandemic. For the time being, it has not gone so far in other non-European countries, but still many programs have been renewed and extended into the period after the lockdown. The United States and Japan have provided financial assistance to the entire (or a large part of) population, while Canada has designed a program for the most vulnerable groups.