IMPLEMENTING a temporary basic income (TBI) to shield poor and near-poor households from external shocks may take as much as a percent of the country’s GDP, according to the United Nations Development Program (UNDP).
In the Philippines, the UNDP estimates that TBI beneficiaries could reach 59.85 million. This covers those with incomes below $5.50 a day, the threshold used for countries in East Asia and Pacific and the Middle East and North Africa.
Providing relief to these individuals would amount to a total of $3.75 billion to $10.01 billion. This translates to 0.39 percent of GDP to as much as 1.05 percent of GDP.
“The idea of a temporary basic income arises from the urgency to deliver shock-resistant transfers to an unprecedented crisis. Several countries have taken a step forward in this direction by rolling out similar schemes under different names and with diverse targeting thresholds,” the UNDP working paper stated.
“A temporary basic income is within reach and can inform a larger conversation about how to build comprehensive social protection systems that make the poor and near-poor more resilient to economic downturns in the future,” it added.
To estimate the TBI per country, including the Philippines, the UNDP used the 2018 population estimates. For the Philippines, this means a total population of 106.65 million.
With $5.50 a day poverty threshold in 2011 purchasing power parity (PPP) values, this would translate to as many as 59.85 million possible beneficiaries of the TBI in the country.
The assistance considered in each scenario of a TBI comprising cash transfers with homogeneous amounts across targeted individuals within a country under three options.
These options are top-ups on existing average incomes in each country; lump-sum transfers that are sensitive to cross-country differences in median standard of living; and lump-sum transfers that are uniform regardless of the country where the beneficiary population lives.
Under the top-up scenario, it will cost the government $3.75 billion or 0.39 percent of GDP. Using and exchange rate of P50 to $1, this would cost P187.625 billion.
This means that each beneficiary will receive $62.7 per month. In peso terms, this would translate to P3,135 per beneficiary.
If the second option is used where the lump-sum transfers are sensitive to cross-country differences in median standard of living, it will amount to $4.497 billion or P224.86 billion. This will account for 0.47 percent of the country’s GDP.
Per beneficiary, this means extending $75.14 per month or around P3,757 using an exchange rate of P50 to a dollar.
For the last scenario, where lump-sum transfers are uniform regardless of the country where the beneficiary population lives, governments are bound to spend more.
This scenario would cost the country $10.01 billion a month or P500.62 billion using an exchange rate of P50 to a dollar. This, the UNDP said, would account for 1.05 percent of GDP.
Under the uniform cash transfer, each beneficiary would receive $5.50 per day or P275. If there are 30 days per month, BusinessMirror estimates this would translate to a uniform amount of $165 or P8,250 a month per beneficiary.
“The idea of a temporary basic income arises from an unprecedented set of responses to an unprecedented crisis. It is being rolled out under different names and with diverse targeting thresholds in countries around the world,” UNDP said.
“It intersects with existing social assistance and insurance systems, but also with the idea of an entitlement-based Universal Basic Income (UBI) that secures a basic income floor for all people, regardless of means and behavioral testing or work considerations,” it added.
Earlier, local economists said that while UBI is a long-term solution in terms of shielding the poor from economic shocks, careful study must be done to evaluate how it can be implemented and how much will be needed for the measure.
The UBI was implemented in Finland which gave its unemployed citizens aged 25 to 58 years old a monthly stipend of 560 euros a month. This two-year experiment is envisioned to cut red tape, poverty, and unemployment.
However, economists said in some countries where the UBI was implemented, the programs were discontinued after a year of implementation because of the high costs involved.
Image credits: Jimbo Albano