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Rethinking the whole social security system

Nazaré Cabral / Fotos - Uwe Heitkamp

As a lecturer and researcher at the Centro de Investigação de Direito Económico, Financeiro e Fiscal (Research Centre on Economic, Financial and Fiscal Law) of the Faculty of Law in Lisbon, Nazaré Cabral has worked for two decades in areas such as Social Security, Public Finance and Economic and Monetary Union. She has written a large number of works in these areas since 200 and a member of the Scientific Committee of the 17th BIEN Congress. She regards the UBI as an “appealing measure”, but is hesitant about its implementation, saying that it is necessary to weigh up the “implications it would have in relation to work” and the “impact it could have in terms of the distribution of wealth”.

What is your analysis of the Unconditional Basic Income (UBI)?
It is a appearing as a new type of social benefit, associated with other kinds of models such as the Minimum Income. Irrespective of the studies that have been carried out, it is a recent idea and relatively experimental. We need to try and understand what its characteristics are, its basis and possible weaknesses.

What do you think of the possibility of paying every individual 500 euros?
If the country is in a position to support such a system? It would be essential to define how it would be financed, to know if it is necessary to redefine the Portuguese tax system and in what way. If this benefit replaced other social benefits, we would have to rethink the whole social security system, which in Portugal is insurance and work-related. It is based on an approach whereby workers fund their own protection, as if they were acquiring an insurance policy which then guarantees them security in eventualities such as sickness, unemployment or retirement. In Portugal, we still have many citizens who receive small pensions but workers who pay their contributions throughout their career have the right to social protection that is higher than the €500 that would be guaranteed by the UBI. Apart from which, our constitution mentions in Article 63 that Social Security must be structured to provide protection against sickness, old age or death.

One of the advocates of the UBI estimates its amount as being between €500 and €1,000 per person, with a contribution of 50% of their salary in income tax (IRS).
I don’t know to what extent present-day societies would accept this very simplistic solution. People’s lives are not organised in such a way as to be able to cope with such sharp drops. One of the solutions to avoid there being a disincentive to work is to increase the salary to a specific amount when it is combined with work.

There could be those who stop working and just live off the UBI but there could also be those who have the support and keep working.
You would not expect people to keep working eight hours a day. They could work for four or five hours, but the idea is to try and create stimuli for there to be productivity. And if there is a possibility of combining the two for the purposes of income tax (IRS), this would endanger the idea of tax progressivity, which is a right enshrined in the constitution. The higher the level of income, the higher the rate of tax. 50% income tax is not something paid by a person earning €1,500, but rather by someone earning €500,000.

At present, a system from the 20th century is in force, with pillars that are showing serious problems, such as a large number of pensions and pensioners.
Yes, but a UBI will always be financed at the expense of those people who work. The greatest difficulty will be to keep citizens as part of the labour market.

Does the UBI have a future?
I don’t think so yet. I think the system can be improved. But I think it is important that people have the idea that they could have benefits that would replace their income.

Thank you.

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Manuel Batista e Dina Adão

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