Juha Sipila
Prime Minister Juha Sipila promised the unconditional basic income in his manifesto ahead of election.AFP / Getty Images

The Finnish government has begun a pilot of a radical new policy aimed at overhauling the benefits system in the northern European country. Under the proposed system, the government will pay a basic income to citizens seeking employment.

The pilot scheme of 2,000 people, randomly selected to participate, awards €560 (£490) to each participant by the state for a two-year period.

No tax is paid on that amount, nor are there any conditions, such as in the UK where claimants of Jobseeker's Allowance, which amounts to around £317 per month, are required to sign a Claimant Commitment detailing how they will search for employment.

The Finnish Ministry of Social Affairs and Health consulted on legislative provisions in order to conduct what it referred to as an "experiment."

At the time of the consultation launch, it said the objective of the pilot was to explore whether or not basic income promotes employment, in particular it said "to reduce incentive traps relating to working".

Critics of the policy say giving people money with no conditions attached to receipt of it is unlikely to encourage more people to work.

However, others suggest that giving people the freedom to find work that uses their talents would make them happier and more productive bringing greater economic prosperity, as well as a decline in demands on the health system.

In Finland, jobseekers are entitled to an allowance of up to €25/day – approximately €758/month. Around 805 of workers in Finland are also members of employment insurance schemes, which pay out the daily allowance plus 45% of the difference between their previous job's pay and the allowance, in the event of unemployment.

Finland has experienced troubled times economically in recent years, with high levels of unemployment at 8.1% in November 2016, which was unchanged from the previous year.

The policy hopes to challenge issues such as benefits claimants turning down low-paid or short-term jobs for fear of losing benefits.

Olli Kangas, the senior government official responsible for the policy, is quoted in The Times as saying: "Like in the UK, we have lots of people with zero-hours contracts. The digital economy is taking over and the social security systems created in the age of industrialisation don't resolve the problems we have today.

"People are afraid to take on temporary jobs or start small businesses because they would lose their benefits; they prefer safe but low income to the risk of failing."

According to Trading Economics, the average monthly wage in Finland is €3,384, and the minimum "living wage" for individuals in the country is €1,200.