Pros and cons of universal basic income: solution to unemployment or too expensive?
What is universal basic income?Universal basic income (UBI) is a system in which every adult receives a set amount of money on a regular basis. This payment is unconditional, meaning it does not depend on the recipient's income, employment status, or any other criterion.Universal– to everyoneBasic– to cover everyday expensesIncome– regularly, for people to spend how they wish.UBI has been an interesting and controversial topic of conversation over the past few years, with various trials and studies conducted to evaluate its potential impact. While we may be a long way off from this being considered in reality, let’s look at some of the pros and cons of introducing this concept.Pros of universal basic incomeReduce povertyOne of the main arguments in favour of UBI is its potential to reduce poverty and economic inequality. A 2022 study by the University of York found that a UBI model could cut poverty by more than half. This would be achieved through tax adjustments and guaranteed weekly payments, providing a stable income for everyone. This stability could lead to a more robust economy, increased consumer spending, more job opportunities, and a healthier market overall.Increased consumer spendingWith more disposable income, people would likely spend more, stimulating demand for goods and services and benefiting businesses across various sectors. This increased spending could also lead to higher tax revenues, which could be reinvested into public services and infrastructure.Empowering workersUBI would offer a safety net, reducing the pressure on individuals to accept low-paying or precarious jobs. This could lead to higher job satisfaction and productivity, as people would be more likely to pursue jobs that align with their interests.Improve workplace conditionsIt would also encourage businesses to enhance their working conditions by shifting the power dynamic to the employees. With a guaranteed income, workers would no longer be compelled to stay in jobs solely for financial reasons, allowing them the freedom to leave roles with poor working conditions.This shift in bargaining power would encourage employers to enhance job quality, offer higher wages, and create more supportive work environments to attract and retain employees. Consequently, businesses might need to implement more employee-focused policies, such as flexible working, improved benefits, and a stronger emphasis on work-life balance, to stay competitive in the labour market.Innovation and entrepreneurshipMany people hesitate to start their own businesses due to fear of failure and financial risks. However, UBI could provide the financial stability needed to encourage entrepreneurship and innovation, potentially resulting in economic growth for the country. This could lead to the creation of new industries and job opportunities, further boosting the economy.Foster education and societal benefitsHaving a steady income would encourage more individuals to pursue further education and training, culminating in a more educated and skilled population. This increase in educational attainment can have numerous positive effects on society, including:Higher civic engagement: an educated population is more likely to participate in civic activities such as voting, volunteering, and community involvement, fostering a stronger democratic process and community cohesion.Enhanced critical thinking and creativity: education cultivates critical thinking and creativity, which are essential for technological innovation and economic growth.Reduction in poverty and inequality: education is a powerful tool for breaking the cycle of poverty. By providing individuals with the skills and knowledge needed to secure better-paying jobs, UBI can help reduce income inequality and improve overall economic stability.Improved public health: educated individuals are more likely to make informed health choices, meaning lower rates of chronic diseases and improved overall public health.Cons of universal basic incomeHigh costImplementing UBI would be extremely expensive, requiring significant tax increases and reallocation of public spending. While it's challenging to estimate the exact cost, one analysis projected a gross cost of €555 billion – which includes the UBI payments themselves as well as the cost of integrating it into the existing tax and benefits system. Therefore, many critics argue that for this reason, UBI is not sustainable or even feasible.Decreased motivation to workCritics argue that UBI could reduce people's incentives to work, prompting higher unemployment rates. They fear that with a guaranteed income, people might choose to work fewer hours or not at all. If this were the case, higher unemployment rates could negatively impact economic growth due to less taxable income.Those who do continue working while receiving UBI might be less motivated to perform at their best. With their basic financial needs met by UBI, the urgency to excel and advance in their careers could diminish and we could see reduced effort and productivity.Challenges for low-wage industriesIndustries relying on low-wage labour might face increased wage demands, as workers with a financial safety net might be less willing to accept low-paying jobs. This could cause higher operational costs and potentially drive businesses to automate more processes.InflationIncreased disposable income could generate higher spending, driving up demand and prices, resulting in inflation. This could erode the purchasing power of the UBI payments, potentially negating some of the benefits.Potential inequalityWhile UBI aims to reduce poverty and inequality, some argue that providing the same payment to everyone wouldn't solve inequality but merely shift the goalposts. Critics suggest that a more targeted approach might be necessary to address the specific needs of different groups within society.The debate around UBI is far from settled, and its implementation would require careful consideration and robust policy design. As we move forward, it's important to engage in thoughtful discussions, consider diverse perspectives, and explore pilot programmes to better understand UBI's real-world impacts.Ultimately, the question remains: can UBI be the transformative solution we need to fix the unstable labour market, or will it prove too costly and complex?If you are looking for a talented professional to join your team, or seeking a new employment opportunity yourself, get in touch with a specialist consultant today.
How to create a great recruitment strategy
Getting your recruitment strategy right is key to hitting your business goals. Here are some expert tips to help you set up your company for success – and the shortcuts to keep you ahead of your competition.What is a recruitment strategy?A recruitment strategy is a clear plan that explains what roles you’ll recruit for, when, why and how. It should be tied to your overall company objectives.Your strategy must be possible to implement and easy to communicate. While you can tweak your tactics, the strategy must always be clear.The core aspects of a great recruitment strategyGrowth PlansIn order to scale up your workforce, you’ll need to hire – which takes time and resources.Create a measure to help you identify which areas of your business will benefit most from increased headcount.This could focus on return on investment or opportunities lost.Shortcut: Unsure how many new employees you’ll need? A recruitment agency will give you access to temporary staff and contractors to help you expand quickly and risk free.Employer BrandMake sure your employer brand and message are attractive to your target audience, particularly over social media. A well-known brand is a big selling point to talented job hunters.Be open and transparent about the company’s working culture to ensure you attract candidates that will match your business.Shortcut: If your brand isn’t well known, a recruitment agency can contact candidates directly and spend time promoting your employer messages.Skills AuditUse your company objectives to identify developing areas of the business, then decide on the skills you will need to succeed.Your recruitment strategy should include ways to find and bring new skills into the company.Employers often focus on advanced digital and technical skills, but you should also consider bringing in candidates with different experiences.Shortcut: When interviewing for a role you’ve never done yourself, your recruitment consultant can offer interview tips and support to build your confidence."You can tweak your tactics, but your end goals must be clear."FlexibilityIf your company needs to adapt quickly to an unpredictable market then hiring permanent staff may not be the right option.Your strategy should include a plan for temporary staff and contractors to cover projects that are likely to change at short notice.Shortcut: Unless you already have an advanced payroll function, it makes sense to ask your recruitment agency to manage payroll for your temporary workforce. They look after tax, holiday pay and even pension contributions – saving you a lot of hassle.When to review your recruitment strategyYou should always be thinking about how you differentiate your company from your competitors, and how you can be a more attractive prospect for potential candidates.Pay close attention to all aspects of the recruitment process, and make tactical tweaks throughout the year when necessary – while holding firm to your recruitment strategy.You should review your overall recruitment strategy annually to make sure it ties in with your wider business objectives. It’s important that everyone in the company understands your goals – so be clear and concise about what success looks like and how you will get there.