Lithuania should consider introducing a basic income model that could provide €200 to every citizen, changing the current complex and costly social security system, said economist Nerijus Mačiulis.
Nerijus Mačiulis
© DELFI / Šarūnas Mažeika

An increasing number of countries have recently began considering introducing a monthly basic income to replace the complicated raft of social benefits that are difficult to administer and can have uneven effects.

Switzerland will soon be voting holding a referendum on this issue with a monthly basic income there could be reach €2,300. Finland is considering about €800 and the Canadian province of Ontario will provide €400 basic income from this autumn.

Mačiulis said one of the main arguments for the basic income model is that the current social security system is very inefficient and this argument is particularly relevant in Lithuania.

For example, the state pays seven types of social insurance pensions – old age, disability and work incapacity, widows and orphans, retirement, for special working conditions and early retirement pensions. And this is only pensions – there is a whole raft of other social benefits, grants, guarantees and payments and the mechanism for all these benefits is complicated and expensive.

He said administrative costs are high but more importantly the expensive and complicated system is not proven to work effectively in providing supports for those and only those who need them most.

What sum of money could Lithuania provide as a basic income? Lithuania will allocate €4.6 billion to its social protection budget this year, equivalent to about €132 per month for each resident of Lithuania.

Moreover, the state would save considerable costs by refusing large bureaucracy for identification and distribution of a variety of social benefits and allowances. With a bit of optimizing of the public sector or the refusal of some of the tax benefits, Maciulis said a €200 basic income would be a real possibility in Lithuania.
Introducing it would almost double the income of minimum wage earners in Lithuania, said Mačiulis.

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