Here’s Why Switzerland Won’t Have A Basic Income Anytime Soon

Bern Coins Dumped Switzerland
A truck dumps five cent coins in the centre of the Federal Square during a an event organised by the Committee for the initiative ‘CHF 2,500 monthly for everyone’ (Grundeinkommen) in Bern October 4. REUTERS/Denis Balibouse

Economists and economics writers are very excited about a Swiss proposal for an unconditional basic income (UBI), which would send every Swiss resident a monthly check for 2,500 Swiss francs ($2,800) simply for being alive.

But while this proposal this interesting, you shouldn’t expect to see it implemented in 2014, if ever.

A UBI is often discussed as a more efficient substitute for welfare programs and a way to combat rising inequality, and the Swiss could provide the world with a large-scale (and expensive) experiment with the concept.

However, economists should not pack their bags for Bern quite yet. A date hasn’t been set yet for the vote. It’s not obvious that the Swiss support the proposal. And even if they do back it, parliament would then take years to draft legislation before the law took effect.

On October 4, the Basic Income Initiative submitted 126,000 signatures in favour their proposal. That was more than the 100,000 signatures needed to trigger the referendum. Supporters of the initiative celebrated by dumping eight million five-cent coins outside the parliament building, one for every Swiss citizen.

The movement gained traction in 2008 when Daniel Häni and Enno Schmidt produced a movie that outlined the growing unemployment and increased income inequality as reasons to implement an unconditional basic income.

“Basic income means enough money to live without need,” Schmidt said in an interview with The Real News Network last month. “And in Switzerland it’s only a number to say 2,500 francs. I don’t know how many it is in the States. It’s not to be rich. It’s simply to say, today we are rich enough and there are goods enough that we can say everybody needs an income to live. And why shall we — why have we to bound it to conditions?”

Supporters of the initiative are concerned about the rising level of income inequality in Switzerland. Between 1996 and 2010, Swiss trade unions say the top 1% saw their incomes rise by 39% while the incomes of the bottom earners rose less than 10%.

Swiss citizens are also upset with the rising disparity in compensation levels between company executives and their least paid employees. The Swiss overwhelmingly passed a referendum on creating more shareholder oversight of company management in March.

“Generally, people feel the loss of their independence regarding to the economic powers of the multinational corporations,” Ralph Kundig, the President of the Switzerland chapter of the Basic Income Earth Network, wrote in an email.

Critics of the proposal are most concerned with its potential effects on work. Kundig has said that while he has received support from both the right and left, he knows he will face opposition from both as well.

Christa Markwalder, a member of parliament for the Free Democratic Party in Switzerland, believes Swiss citizens will oppose the proposition, much like they defeated a 2012 proposal to require six weeks of paid vacation for workers.

“Since Swiss citizens generally vote in a very pragmatic way, political observers think that an initiative for an unconditional basic income does not pass in Switzerland,” Markwalder told Business Insider in an email. She particularly noted concern about the lack of a funding mechanism for the proposal.

The proposal also will face the barrier of requiring a “double majority”: To be adopted, it must win a majority of the national vote, and win a majority of the vote in a majority of Switzerland’s 26 cantons, or states.

“At the present time, few political actors have voiced their opinion,” Kundig wrote. “But we already know that we can expect a broad opposition from the right to the left of the political spectrum… [T]here are discussions and fears about which amount a basic income will be and which benefits will be replaced.”

No funding mechanism has been decided yet. Part of it will be made up from a reduction in other social benefits that basic income replaces. However, this does not fully fund the policy. He also mentioned increased taxes on corporations and high-income individuals, a financial transaction tax or increasing Switzerland’s value added tax to provide the remaining funds.

Gathering the 100,000 signatures is just the beginning of a long journey for Schmidt, Kundig and other supporters of unconditional basic income. The referendum must take place within two or three years from now. If it passes, then parliament must work with the initiative’s leaders to draft implementation legislation. This can take a few years as well.

Kundig does not believe the referendum would pass if it took place today, but is prepared to embark on a lengthy information campaign to build support during the intermittent two to three years before the vote takes place. He’s hoping that similar plans in other European countries will build support for the initiative as well.