Canadian HR Reporter

September 8, 2014

Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.

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Canadian HR RepoRteR September 8, 2014 News 3 Money for nothing What effect would guaranteed annual income have on employers? By Liz BeRnieR For most, earning an ex- tra $10,000 or $15,000 per year sounds like a pretty good bonus. It sounds even better if it's an income bump that's earned not by slaving away nine-to-five but handed out — no strings attached — simply for being a Canadian. While it sounds like an impos- sible dream, it's one potential in- carnation of basic income. Also referred to as guaranteed annual income, basic income generally refers to the idea of an income supplement that's not earned or tied to any specific ac- tivity, such as being employed. Numerous models of the idea have been proposed, some more drastic than others. Proponents argue a national basic income would dramatically reduce poverty, encourage higher education and promote employ- ment; those critical of the idea say it could pose a disincentive for people to work, particularly in low-wage jobs, and it is unrealis- tic and unsustainable from a fiscal standpoint. However, the idea has been gaining more attention as the Liberal party this year adopted two resolutions around a basic income supplement at its Febru- ary convention. What exactly is basic income? ough there are different mod- els, it's important to understand that basic income is not intended to replace employment income, said experts from the Basic In- come Canada Network. "A basic income is envisioned as the guaranteed annual income or top-up that pays for the basics of food, clothing and a place to live. It's not meant to replace other forms of income such as work," said Kelly Ernst, secretary-general of the Basic Income Canada Net- work in Calgary. "It's there to give the basis for food, clothing and a warm place to live — not go beyond that." ere are already some types of basic income mechanisms in place, said John Stapleton, an in- novation fellow at the Metcalf Foundation in Toronto. "In Canada, we already have a guaranteed annual income — it's just very, very low. It's more in the form of refundable credits, like GST and HST credits. It's only about $1,000 a year for a single (person), but for a mother with two kids who is poor, she's going to get about $8,000 to $10,000 from the state through child bene- fits and that sort of thing," he said. "So we already have the rudi- ments of a guaranteed income. If you take all of our income se- curity measures and mass them all together, it can kind of look like a very, very low (guaranteed income)." Guaranteed annual income systems have existed in varying incarnations in Brazil, Iran and Nambia, among other places. Canada had its own basic income experiment in the "Mincome" program in Dauphin, Man., in the 1970s, which saw each family re- ceive a minimum income benefit. How would labour market be impacted? So what sort of impact might a basic income have on employers, and the labour market at large? For critics, the answer is a disin- centive to work and more people dropping out of the labour force. But Ernst and other proponents argue that a relatively small basic income amount — say $10,000, $15,000 or so — is simply not enough money to spark a mass exodus from the labour market. "For an employer, I think it's really important to understand that basic income is not intended to be created in such a way that it would interfere with people's motivation to work," said Ernst, adding there is still plenty of in- centive to participate in the labour market. "If you think of it from the per- spective of how people currently work and what they're motivated to do now, people are motivated to not only pay for their homes and their education and their kids' tuition and their car and maybe some holidays and so on and so forth... have all of those things in your life and you're going to be motivated to have a good career and get good work to (support) that." There is some research evi- dence around basic income and the motivation to work, said James Mulvale, dean of social work at the University of Manitoba in Winni- peg. His colleague Evelyn Forget's research on the Dauphin Min- come project suggested labour force withdrawal was not nearly as dramatic as critics would expect. "She found in the Mincome project… that labour force with- drawal occurred to some extent, but just on a very minor basis. And it was often young kids that wanted to finish high school, young parents who wanted to stay home with infants and their ma- ternity benefits had run out. So... people were withdrawing for good reasons," he said. e incentives we often fear are not in the labour market actually are there, said Stapleton, simply because $15,000 is just not going to support a middle-class lifestyle. "How many people are go- ing to quit their work because someone's going to give them $15,000 a year?" he said. "But we fear that there's a type INCeNTIVes > pg. 6

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