Wealth distribution: Universal basic income

We’ve explored three key models for redistributing income, and their implications for the psychology of work and HR

Picture the scene: robots have taken all the jobs. Everyone is paid £x a month from the state to survive. Taking home a pay packet is no longer synonymous with work.

This may sit at the more extreme end of predictions. But many say the growing possibility of such a reality is why a universal basic income (UBI) model is the drastic facelift the UK social security system needs – whether the future turns out to be quite this characterised by joblessness or not.

A UBI is a regular, unconditional, automatic and non-withdrawable payment made to every citizen. Such an income support scheme has been pledged by the Italian government as part of its 2019 budge; although this involves payment only to the poorest households.

Some proposals do away with a need for any additional income from employment. But Matthew Taylor, chief executive of the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) and author of the government’s independent review into modern employment, says his organisation is calling not for a “revolutionary leap” but a “more effective welfare system for the 21st century”.

“We’re part of a network exploring pilots in Scotland and Greater Manchester,” he explains. “In Rochdale we’ve been exploring a programme that would combine a basic income with job coaching and mentoring to help people where unemployment is high and people are in low-paid, low-skilled and insecure jobs. We’re exploring whether UBI might give people space to choose jobs where there’s more opportunities for them to get training, development and growth.”

But if individuals no longer rely on employment for financial security how will this change the psychology of work? Will people still be incentivised to work if they no longer need to for survival? And will employers then find themselves fishing from an even smaller talent pool?

These are questions that urgently need addressing, feels Resolution Foundation senior economic analyst Stephen Clarke. “People may feel disincentivised to work,” he says. “Some groups will seek work whether they are given payment or not. But other groups will react to UBI by seeing work as a chore and a choice.”

“If there’s no condition to accept work then some jobs may not be filled. With Brexit meaning some organisations are already struggling to find workers for roles, employers may be forced to change their business models because they can’t get the staff,” agrees Chris Goulden, deputy director of evidence and impact at the Joseph Rowntree Foundation.

A workplace exodus could throw up all sorts of challenges to individuals’ sense of purpose, argues editorial board chair at Duke Corporate Education and executive director at Authentic Leadership Liz Mellon. “Part of the psychological damage of being out of work is that you don’t have a foothold in society in the same way,” she warns. “It could do tremendous harm to people’s sense of identity.”

Some worry that those out of work would quickly become out of touch. Caroline Nugent, HR director of the Financial Ombudsman Service, cautions: “20 years ago if someone took six to 12 months out not much would move on. But technology is moving so quickly now… we’ll start to quietly deskill and won’t even have the basic skills anymore. So if you get on that conveyor belt how will you ever get off it?”

It’s not just those choosing to sit outside the labour market who could face problems, adds Reeve. “If the workforce gets smaller and employees become a rare species then there will be more pressure on the remaining workforce to deliver,” he warns.

But, for Taylor, concerns of UBI being “an anti-work policy” are unfounded. “It’s a myth that the British population is full of people wanting to sit on the sofa all day watching TV and living on the breadline,” he says. From what he has seen through pilot projects, UBI could actually incentivise more to work – for reasons including employees not losing UBI when they enter employment (unlike means-tested benefits).

It comes back to an “innate human need to be productive”, agrees Matt Elliott, incoming chief people officer at Bank of Ireland.

And many believe that greater economic freedom could give rise to a more highly-skilled workforce. “My guess is that more skills will be gained and more small new businesses started,” says Goulden. “Because everyone has the same basic security, people will feel more able to take risks.”

Crucially, UBI could place much more onus on businesses to behave ethically and treat employees well. “Today many people find it difficult to leave a job as they know it will cause chaos for them and their families,” says Malcolm Torry, director of the Citizen’s Basic Income Trust. “But with universal basic income, if people aren’t treated well or face bullying at work, they’ll just move on.”

Which nonetheless creates a challenge – albeit a positive one – for employers and HR. “Work will move on from people being rewarded for labour, to them wanting a fantastic experience. We’ll have to provide an accentuated purpose as we won’t be able to rely on good pay and benefits packages,” says Elliott.

Non-financial aspects of an EVP such as social consciousness will need to come to the fore to attract people, adds Nugent: “For, the environmental impact of their roles and who their work helps in the world”. So too will the social dimension of work, believes Deloitte’s UK human capital leader Anne-Marie Malley. “The psychology of it is that people like to work with other people so there’ll be a need to incentivise work around the social aspect, as well as personal development opportunities,” she says.

Which all spells a huge change for the profession, Nugent emphasises: “Employee engagement will be the biggest challenge; I think we could end up with an issue with engagement if we don’t keep these things in check from the beginning.”

Potentially more complicated challenges arise when drilling into the different ends of the employment market. “For low-quality jobs employers will have to up wages to make them worth doing,” says Torry. “But we don’t know what will happen at the other end of the spectrum. If there’s a very desirable job that pays well but had long hours and everyone is getting a UBI, what shifts will happen there?”

The best way to offset these issues is investing in training and – as Goulden asserts – overhauling existing job design. “Employers will have to be more creative and redesign jobs, particularly at the low-skilled end of the economy, to give people the chance to work on both low- and high-skilled tasks,” he says.

But the biggest shift HR will need to prepare for in a world of UBI is the even greater proliferation of gig working in response, says Torry. While this model might be rolled out mainly to counter job losses as a result of technology, its effect could be to empower people to work ever-more flexibly.

“What’s wrong with flexibility now is that changes to working hours make people’s income vulnerable and make it difficult to manage means-tested benefits,” says Torry. “But UBI will make it easier for people to take on more diverse employment patterns so it’s likely there’ll be a rise in flexible working.”

Check back tomorrow to read about trials of UBI in Finland and Namibia

Further reading

Wealth distribution in the future world of work

Wealth distribution: Stakeholder capitalism