A preliminary assessment of the

financial feasibility of basic income in Belgium

Emily Van de Walle

Academic year 2015-2016

University of Antwerp

Faculty of Applied Economics

Promoter:

Prof. dr. Erreygers G.

Master’s thesis submitted to obtain the

degree of:

Master of Applied Economic Sciences:

Economic Policy

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Preface

Basic income has received much attention in the media in recent years and it was also in

this manner that I was first brought into contact with basic income. Admittedly, at first I

was dubious yet interested in the possible advantages of unconditionally granting all

citizens an income. During my bachelor’s year, I was thrilled to find basic income as one of

the topics for the final task of the bachelor’s project and thus wrote a paper on the

futurology and feasibility of basic income. By reading up on the literature about basic

income, my interest for the proposal had grown but at the same time I found myself

bothered by the lack of transparency in the methodology applied by basic income

proponents to assess how basic income may be possibly financed in Belgium. For this

reason, I decided to take up the challenge to personally assess the financial feasibility of

basic income in Belgium and this master’s dissertation is the final product towards that

end.

I could not have made it through this challenging journey without the support of a number

of people. First, I would like to express my deepest gratitude to my promoter prof. dr.

Erreygers Guido. I am not only grateful for his advice, comments, corrections, and his

guidance, but also for giving me the opportunity to write on a subject that I am passionate

about. Second, I am also thankful to my partner for his unconditional support,

encouragement, and for reading my master’s thesis. Third, I would like to thank my parents

and friends for their support from start to finish.

Emily Van de Walle

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Abstract

The costs of unconditionally granting every citizen an equal fixed monthly income, known

as basic income, are substantial. In Belgium, advocates have attempted to ascertain the

financial feasibility of the proposal; however, the contributions are not only limited in

number but the applied methodology is also lacking in transparency. This dissertation

provides a preliminary assessment of whether basic income is financially feasible in

Belgium for the year 2010. The yearly costs of five basic income proposals including the

costs of the remaining social protection system are estimated. The cost of unconditional

basic income is estimated by multiplying the level of basic income with the number of

beneficiaries and the cost of the social protection system is estimated as prescribed in the

proposal. The basic income proposals covered a range between two extremes, basic income

as a substitute and basic income as a complement to the social protection system. The costs

vary greatly in magnitude depending on the characteristics of each proposal. Proposals

leaning towards the first extreme are naturally more financially feasible due to lower costs

and the opposite is applicable to the second extreme. I suggest a proposal that is financially

feasible as well as socially desirable with respect to beneficiaries of social benefits. The

financing of this proposal was assessed by determining the costs of social benefits that

would be made redundant by implementing basic income. I applied a criterion in which

basic income entirely replaces social benefits that are on average lower than basic income

and partially when higher than the level of basic income. The cost savings on the

replacement of social benefits are determined to be considerable in size and largely

contribute to financing basic income. The financing of the remaining cost of basic income

after accounting for the cost savings is beyond this paper. According to proponents, it is

technically feasible to finance the remaining cost gap with tax reforms. However, besides

improving the techniques to assess the financial feasibility of basic income there are other

concerns that have to be addressed in the context of Belgium, such as political feasibility,

sustainability, distributional effects and behavioral effects which follow from basic income

and the suggested tax reforms. These are the next steps that have to be taken before we can

contemplate implementing basic income in Belgium.

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Executive summary

The proposal that unconditionally grants every citizen an equal fixed monthly income,

known as basic income, has recently received much attention in the media. In Europe, a

growing number of individuals, academics, policymakers, and interest groups have shown

interest in the proposal thanks to the solutions it has to offer in order to overcome a

number of obstacles. With respect to the high unemployment rates, basic income provides

the unemployed a wider scope of opportunities by granting them income security, enabling

individuals to look for a job they desire. Basic income is said to also stimulate

entrepreneurship. Furthermore, the disincentives to work implied by the conditionality of

unemployment benefits are eliminated as basic income is granted regardless of income.

Last but not least, basic income is said to also emancipate the poor and ensures “real

freedom for all” (Van Parijs, 1995). (Groot, 2004, p. 17-21; Soininvaara, 200, p. 7-8)

The contributions to the literature have been steadily increasing, covering a wide range of

topics varying from, but not limited to the social desirability, the political feasibility, and

the financial feasibility of basic income. In Belgium, there has also been a growing interest

in the radical proposal by academics and politicians alike. The contributions, however, are

limited to only a small number of topics and the financial feasibility of basic income is

unfortunately not one of them. Proponents of basic income have only provided rough

calculations of how to finance basic income with a lack of transparency on the

methodologies of how the calculations were obtained. I, therefore, took up the challenge to

provide a preliminary assessment of the financial feasibility of basic income by providing

an answer to the following two research questions in the context of Belgium, given a

dataset of the year 2010: ‘How much would a scheme of basic income cost?’ and ‘How much

are the cost savings that are realized by basic income replacing social benefits?’

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Cost of basic income

Aside from the three main features of every basic income, unconditionality, individuality,

and without means test or work requirement, basic income schemes come in all shapes and

sizes, and as a consequence, so do their costs (Peña-Miguel, De la Peña Esteban, &

Fernandez-Sainz, 2014, p. 96). To acknowledge the variety of basic income proposals, five

basic income proposals are discussed that can be placed between two extremes, the ‘basic-

income-to-substitute-everything’ scheme, a low-cost benchmark, and the ‘basic-income-

purely-as-a-complement’ scheme, a high-cost benchmark (Melzochová & Špecián, 2015 p.

555-556).

The first basic income proposal to be considered is of the extreme ‘basic-income-to-

substitute-everything’ and is determined to be the most financially feasible due to the

substantial cost savings implied by the complete abolishment of the social protection

system. Given a breakeven of the costs of basic income and the current expenditures of the

social protection system of €95 billion in 2010, Belgium can afford to grant every adult

citizen a basic income of €911 per month. However, while the extreme proposal is

financially feasible, a number of vulnerable social groups would be worse off under the

scheme of basic income as the level of certain social benefits are higher than the basic

income level, making the proposal socially undesirable. Accounting for social desirability,

the following three discussed basic income proposals partially maintained the social

protection system and the last proposal, which is by the authors Raventos et al., can be

considered to lean closely to the second extreme, ‘basic-income-purely-as-a-complement’.

Raventos et al. namely set the level of basic income so that it is “topped up to an equal

quantity when the public cash benefit is of a greater amount” (Arcarons, Raventos Pañella

& Torrens Mèlich, 2014, p. 82) for current beneficiaries of social benefits. However, given

the great complement to the social protection system, the scheme has considerable costs

and is considered to be less financially feasible. A trade-off is thus identified between

financial feasibility and social desirability: basic income schemes that incorporate the

ethical principles of the social protection system by granting the socially vulnerable groups

a higher level of basic income, is socially desirable, but leads to higher costs. To enhance

the financial feasibility of the proposal by Raventos et al., I modified the proposal and

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adjusted the level of basic income downwards. This modified proposal grants every adult

€600 per month and every minor €150 per month while ensuring that recipients of social

benefits are at least as well off under the scheme of basic income compared to the current

social protection system. This modified proposal is estimated to cost Belgium €114 billion,

including the cost of health care and the retained social benefits, with a ceteris paribus

assumption for the year 2010. Placing this number in perspective, the total cost is 120% of

what we spent on the social protections system in 2010. The next research question to be

addressed is how to finance this enormous cost. (B.U.B., 2016; FOD Sociale Zekerheid,

2011; Melzochová & Špecián, 2015 p. 555-556)

Financing basic income

There are two main methods through which basic income may be financed, cost savings

and extra government revenues generated through tax reforms. This paper focuses on the

former method, assessing the cost savings that are realized by the replacement of social

benefits by basic income for the modified basic income proposal by Raventos et al. In order

to determine which social benefits are entirely or partially replaced by basic income, I

made a comparison between the average level of social benefits to the level of basic income

while applying the criterion by Raventos et al. that prescribes to entirely replace social

benefits of a lower level by basic income and to partially replace social benefits of a higher

level, up to the level of basic income. So that beneficiaries of social benefits do not receive

the level of basic income on top of what they currently receive. The cost savings that are

realized are concluded to be significant in size. Concerning the modified basic income

proposal by Raventos et al., the cost savings of the proposal is €79 billion, the summation

of the initial total expenditures of all social benefits and health care. The remaining cost gap

of €36 billion can technically be financed through tax reforms suggested by Belgian basic

income proponents. However, the calculations of these tax reforms have to be improved in

quality, applying a transparent and reliable methodology by using micro-simulation models

that allow integrating the behavioral effects as well as the distributional effects of basic

income and the implemented tax reforms. Only then will the picture on the financial

feasibility of basic income truly be complete. (Arcarons et al., 2014)

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Table of Contents

Preface ...................................................................................................................................................... 1

Abstract .................................................................................................................................................... 2

Executive summary .............................................................................................................................. 3

1.Introduction ...................................................................................................................................... 13

2.Basic income ...................................................................................................................................... 16

2.1 Defining basic income .......................................................................................................................... 16

2.2 Basic income in Europe ....................................................................................................................... 19

2.2.1 The two obstacles .......................................................................................................................... 19

2.2.2 Overcoming the obstacles .......................................................................................................... 22

2.2.3 The administrative efficiency argument............................................................................... 23

2.3 Basic income in Belgium ..................................................................................................................... 24

3.Financial feasibility of basic income ......................................................................................... 27

3.1 An introductory assessment of the costs of basic income ..................................................... 27

3.2 Review of the literature ....................................................................................................................... 31

3.3 Preliminary themes to consider ....................................................................................................... 33

3.3.1 Social protection in Belgium ..................................................................................................... 33

3.3.2 The social integration income and the poverty threshold ............................................ 39

3.3.3 The demographics of Belgium .................................................................................................. 41

3.4 Basic income proposals ....................................................................................................................... 42

3.4.1 The B.U.B. proposal ....................................................................................................................... 44

3.4.2 The Vivant proposal ..................................................................................................................... 48

3.4.3 The proposal by Defeyt ............................................................................................................... 52

3.4.4 The proposal by Raventos et al. ............................................................................................... 55

3.4.5 A modification of the proposal by Raventos et al. ............................................................ 59

3.4.6 An overview of the considered basic income proposals ................................................ 61

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3.5 Financing basic income........................................................................................................................ 64

3.5.1 The modified basic income proposal by Raventos et al. ................................................ 64

3.5.2 Savings on social benefits ........................................................................................................... 66

3.5.3 Additional financing measures ................................................................................................. 70

3.5.4 Sustainability ................................................................................................................................... 73

3.6 Topics for further research ................................................................................................................ 75

4.Conclusion .......................................................................................................................................... 78

Bibliography ......................................................................................................................................... 80

Appendices ............................................................................................................................................ 91

Part A - Figures ............................................................................................................................................... 91

Part B – Tables ................................................................................................................................................ 92

Part C - The key figures on social protection expenditures .......................................................... 95

Part D – Statistical figures of social benefits ..................................................................................... 106

Part E – Cost estimations of the basic income proposals............................................................. 126

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List of figures and tables

Figures..........................................................................................................................................................

Figure 1: Basic income versus conventional minimum income schemes .....................................

Figure 2: Long-term unemployment rate, total % of unemployed, 2000 – 2015 ......................

Figure 3: Unemployment rate, total % of labor force, 2000 - 2015 .................................................

Figure 4: A comparison of the total expenditures on social protection and the cost of a

basic income proposal at the level of the social integration income, in million euro,

Belgium, 2000-2013 ...........................................................................................................................................

Figure 5: A Belgian subdivision of the Belgian social protection system ......................................

Figure 6: A European subdivision (ESSPROS) of the social protection expenditures ..............

Figure 7: Social protection expenditures, in percentages (%), Belgium, 2010 ...........................

Figure 8: The evolution of the monthly social integration income and the monthly

poverty threshold in Belgium, in euro ......................................................................................................

Figure 9: Basic income proposals placed between two extremes ....................................................

Figure 10: Total yearly cost of the considered basic income proposals, including social

benefits and health care if applicable, in million euro, Belgium, 2010 ..........................................

Figure 11: Total yearly cost of the modified basic income proposal by Raventos et al., in

million euro, Belgium, 2010 ............................................................................................................................

Figure 12: Comparison of the cost savings and the grand total cost of the basic income

proposal by Raventos et al., in million euro, Belgium, 2010 ..............................................................

Figure 13: The Laffer curve .............................................................................................................................

Appendix: Part A - Figures………………………………………………………………………………………….

Figure A1: Slope of the linear functions: total expenditures on social protection and the

cost of the basic income based on the social integration income, in million euro, Belgium,

2000-2013..............................................................................................................................................................

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Tables ...........................................................................................................................................................

Table 1: Social protection expenditures, in euro, Belgium, 2009-2010 .........................................

Table 2: The age structure of Belgium in four categories, population on 1 January 2010 .....

Table 3: The B.U.B. proposal, Belgium, 2010 ............................................................................................

Table 4: The Vivant proposal, Belgium, 2002 and 2010 ......................................................................

Table 5: The proposal by Defeyt, Belgium, 2010 and 2016 ................................................................

Table 6: The proposal by Raventos et al., Belgium, 2010 ....................................................................

Table 7: A modification of the proposal by Raventos et al., Belgium, 2010 .................................

Appendix: Part B - Tables…………………………………………………………………………………………….

Table B1: Gross domestic product (GDP), total general government expenditures, total

general government revenues, total expenditures on social protection (ESSPROS), in

million euros (current prices), Belgium, 2000-2013 ............................................................................

Table B2: Monthly social integration income for the category of single persons and the

calculated yearly social integration income of single persons, in euro, Belgium, 2000-

2013 ..........................................................................................................................................................................

Table B3: Calculation of the yearly cost of the basic income proposal based on the yearly

social integration income of single persons, Belgium, 2000-2013 ..................................................

Appendix: Part C - The key figures on social protection expenditures ………………………..

Table C1: Expenditures in the context of health care, in euro, 2009-2010 .................................

Table C2: Expenditures for incapacity to work, physical injuries and disability, in euro,

2009-2010 ............................................................................................................................................................

Table C3: Expenditures for old age, in euro, 2009-2010 .....................................................................

Table C4: Expenditures for survivors, in euro, 2009-2010 ................................................................

Table C5: Expenditures for family/children, in euro, 2009-2010 ....................................................

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Table C6: Expenditures for unemployment, in euro, 2009-2010 .....................................................

Table C7: Expenditures for labor market policy and activation policy, in euro, 2009-2010 .

Table C8: Expenditures for social integration and social assistance, in euro, 2009-2010 .....

Appendix: Part D - Statistical figures on social benefits …………………….………………………..

Table D1: Statistical figures for primary incapacity, Belgium, 2010 ...............................................

Table D2: Statistical figures for invalidity, Belgium, 2010 .................................................................

Table D3: Statistical figures for disability, Belgium, 2010 ..................................................................

Table D4: Statistical figures for occupational diseases, permanent incapacity for work,

Belgium, 2010 .......................................................................................................................................................

Table D5: Statistical figures for occupational diseases, temporary incapacity for work,

Belgium, 2010 .......................................................................................................................................................

Table D6: Statistical figures for accidents at work, allowances and compensations for

victims with permanent injuries, Belgium, 2010 ....................................................................................

Table D7: Statistical figures for accidents at work, annuities for victims with permanent

injuries, Belgium, 2010 .....................................................................................................................................

Table D8: Statistical figures for retirement pensions Belgium, 2010 .............................................

Table D9: Statistical figures for income guarantee for the elderly, Belgium, 2010 ...................

Table D10: Statistical figures for old age annuities, Belgium, 2010 ................................................

Table D11: Statistical figures for survivor’s pensions, Belgium, 2010 ...........................................

Table D12: Statistical figures for yearly compensation to survivors whose spouse has

passed away due to an accident at work, Belgium, 2010 ....................................................................

Table D13: Statistical figures for yearly compensation to survivors whose spouse has

passed away due to an occupational disease, Belgium, 2010 ............................................................

Table D14: Statistical figures for family benefits, Belgium, 2010 ....................................................

Table D15: Age structure of eligible children, Belgium, 2010 ...........................................................

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Table D16: Statistical figures for maternity leave, Belgium, 2010 ...................................................

Table D17: Statistical figures for work removal of pregnant women, Belgium, 2010 .............

Table D18: Statistical figures for paternity leave, Belgium, 2010 ....................................................

Table D19: Statistical figures for adoption leave, Belgium, 2010 .....................................................

Table D20: Statistical figures for parental leave, Belgium, 2010 ......................................................

Table D21: Statistical figures for maternity fee and adoption fee, Belgium, 2010 ....................

Table D22: Statistical figures for tide-over benefits for seafarers, Belgium, 2010 ....................

Table D23: Statistical figures for compensated unemployment, Belgium, 2010 .......................

Table D24: Statistical figures for temporary unemployment, Belgium, 2010 .............................

Table D25: Statistical figures for bankruptcy insurance for the self-employed, Belgium,

2010 ..........................................................................................................................................................................

Table D26: Statistical figures for social integration income, Belgium, 2010 ...............................

Table D27: Statistical figures for social assistance (financial aid), Belgium, 2010 ....................

Table D28: Statistical figures for full-time early retirement pensions, Belgium, 2010 ...........

Table D29: Statistical figures for part-time early retirement pensions, Belgium, 2010 .........

Table D30: Statistical figures for early retirement pensions for seafarers, Belgium, 2010 ...

Table D31: Statistical figures for career interruption, Belgium, 2010 ...........................................

Table D32: Statistical figures for time credit, Belgium, 2010 ............................................................

Table D33: Statistical figures for leave for medical assistance, Belgium, 2010 ..........................

Table D34: Statistical figures for leave for palliative care, Belgium, 2010 ...................................

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Appendix: Part E - Cost estimations of the basic income proposals……………………...……..

Table E1: Regular recurring social benefits, comparison on a monthly basis, in euro,

Belgium, 2010 .......................................................................................................................................................

Table E2: Regular recurring social benefits, taking time off work, comparison on a yearly

basis, in euro, Belgium, 2010 ..........................................................................................................................

Table E3: Exceptional one-time and yearly recurring social benefits, comparison on a

yearly basis, in euro, Belgium, 2010 ............................................................................................................

Table E4: Basic income proposal by Raventos et al. – Social integration income – Total

costs of basic income and retained social benefits.................................................................................

Table E5: Basic income proposal by Raventos et al. – Poverty threshold – Total costs of

basic income and retained social benefits .................................................................................................

Table E6: A modification of the proposal by Raventos et al. - Total costs of basic income

and retained social benefits ............................................................................................................................

Table E7: List of references, categorized by the type of data .............................................................

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1. Introduction

The idea of unconditionally granting a benefit to every citizen (or resident) at a regular

interval, a basic income, can be traced back as early as 1797 to the plan of the agrarian

radical, Thomas Spence, in The Rights of Infants. Spence propagated “the ownership of

natural resources, such as land, by local parish communities, who would then proceed to

lease these resources to the highest bidder. [The obtained revenues would contribute to

the financing of] public goods, the national government, and the residual income would be

distributed equally between all members of the parish at quarterly intervals” (Cunliffe &

Erreygers, 2004, p.81), clearly indicating a scheme of basic income. (Cunliffe & Erreygers,

2004, p. 81; Melzochová & Špecián, 2015, p. 550)

The concept of basic income is thus far from being a novel idea in contemporary society. As

a matter of fact, proposals of basic income have kept reappearing throughout the past two

centuries and notably; according to Cunliffe & Erreygers (2004, p. xiii) this has occurred

independently. The appealing characteristics of basic income have again led basic income

to resurface as strong as ever in the twenty-first century. This can be witnessed from the

promising upcoming experiments concerning basic income, such as in Finland, the recently

rejected but meaningful referendum of Switzerland, and the numerous discussions

surrounding basic income by academics, policymakers, and interest groups all over the

world (Agence France-Presse, 2016; Cunliffe & Erreygers, 2004, p. xiii; Soininvaara, 2000;

Laterza, 2015, p. 7).

However, the appealing concept of basic income nevertheless warrants a comprehensive

analysis: basic income remains as radical as it was back in 1797. Namely, the

unconditionality aspect of basic income is grandly opposed to conventional minimum

income schemes which are conditional of nature. This causes basic income to be considered

as “a threat to the primacy of paid work, as the central source of legitimate security”

(Soininvaara, 2000, p. 7). (Cunliffe & Erreygers, 2004, p. 81; Solow, 2000, p. ix)

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A first traditional approach towards analyzing basic income, according to Solow (2000, p.

ix-x), would be to address the question of the feasibility of basic income on the one hand,

and that of the desirability of basic income and its consequences on the other. Although

both questions are vital in assessing the potential of basic income as a reformation of the

existing social protection system, the focus of this paper will lie on the former aspect: the

financial feasibility of basic income.

Specifically, this paper wishes to contribute to the debate of financial feasibility, by

providing answers to the following two research questions in the context of Belgium: ‘How

much would a scheme of basic income cost?’ and ‘How much are the cost savings that are

realized by basic income replacing social benefits?’

The first research question is a natural starting point when assessing the financial

feasibility of basic income. Basic income proposals come in all shapes and sizes, and

consequently so do the costs of basic income. For this reason, static cost estimations will

be provided for a range of basic income proposals for Belgium. Additionally, the current

social protection system will be analyzed and its costs will be compared to those of the

various basic income schemes in order to have a better perspective of the magnitude of the

costs. (Melzochová & Špecián, 2015, p.554-556)

The second research question contributes directly to the financial feasibility of basic

income. Basic income is namely financed by two methods. On the one hand, the cost savings

realized by basic income replacing social benefits reduces the total costs of basic income.

On the other hand, the remaining costs of basic income are principally financed by a tax

reform. (Monnier & Vercellone, 2014, p. 71-73)

The cost savings are dependent on the specific basic income scheme, but generally,

proponents at least advocate for a partial replacement of social benefits due to the

implausibility of simultaneously sustaining the costs of the social protection system and a

scheme of basic income. In order to concretely assess the cost savings, a criterion is

required to distinguish social benefits that are retained and social benefits that are

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dissolved with the introduction of basic income. The criterion prescribed by Raventos et al.,

which instructs to completely replace social benefits of a lower level than basic income and

to partially replace social benefits of a higher level than basic income, will be applied for a

specific basic income scheme (Arcarons, Raventos Pañella & Torrens Mèlich, 2014, p. 82).

After accounting for cost savings, the next step is to finance the remaining cost gap. The

most conventional method is to generate extra revenue by tax reforms. A number of tax

reforms suggested by Belgian proponents of basic income will be presented. A formal

analysis of these tax reforms is beyond the scope of this paper; however, this is a step that

needs to be taken in order to complete the picture on financing basic income.

In order to provide an answer to these research questions, the paper is largely composed of

two chapters.

The first chapter allows an understanding of basic income by providing a definition of basic

income as well as by emphasizing its particularities by comparing basic income to

conventional minimum income schemes. Furthermore, the most relevant arguments for

basic income in Europe are discussed before situating the basic income debate in the

context of the political and academic sphere of Belgium.

The second chapter focuses on the financial feasibility of basic income. First, a literature

review will be presented and a number of preliminary themes will be covered, building

towards the cost estimations for a range of basic income proposals for Belgium.

Subsequently, the financing of the cost of basic income will be analyzed. The two research

questions will be addressed and an answer will be formulated in this chapter.

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2. Basic income

2.1 Defining basic income

Hereby, I introduce two accessible definitions of basic income which jointly reflect the

cornerstone of every basic income proposal.

The first definition of basic income put forward by the Basic Income Earth Network (n.d. a)

draws special attention to three features which distinguish basic income from conventional

minimum income guarantees (Peña-Miguel, De la Peña Esteban, & Fernandez-Sainz, 2014,

p.96):

1.) Unconditionality; “basic income is to be considered a fundamental right”

(Melzochová & Špecián, 2015, p.551) regardless of a person’s background.

2.) Individuality; basic income is granted to every individual citizen (or resident)

irrespective of their household situation. (Melzochová & Špecián, 2015, p.551)

3.) Without means test or work requirement; further emphasizes that unconditionality

also implies that basic income is unconditional on any (work) requirement or

income level.

In comparison to conventional minimum income schemes which are conditional of nature,

these three features are exactly the opposite (Frazer & Marlier, 2009, p. 8; Peña-Miguel et

al., 2014, p. 96). A schematic overview is given in Figure 1. To illustrate; the requirements

of receiving a social integration income, a benefit received by individuals enabling them to

meet an income of subsistence level, clearly adheres to the following three opposite

characteristics in Belgium (Vlaanderen, n.d. a):

“A basic income is an income unconditionally granted to all on an individual basis, without

means test or work requirement” (BIEN, n.d. a).

“A universal basic income [is] an income paid by a government, at a uniform level and at

regular intervals, to each adult member of society” (Van Parijs, 2001, p.5).

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1.) Conditionality; the social integration income is only granted to individuals of legal

age with a Belgian nationality, with Belgium being the factual country of residence,

with an income below subsistence level and fulfillment of the means test.

2.) Dependent on the household situation; the amount received depends on which

category the individual belongs to: a situation of cohabitation (spouse or legal

cohabitant) , a situation of cohabitation attached to family responsibilities (e.g.

taking care of a minor) or a one-person household.

3.) With means test or work requirement; verifying that the individual has first exerted

all possible options (e.g. first relying on other possible social benefit schemes) and is

yet unable to earn an income above subsistence level. An additional condition is that

the individual is willing (if able) to work if an opportunity were to present itself.

Figure 1: Basic income versus conventional minimum income schemes

Note: The arrows pointing in opposite directions are illustrative in showing that the characteristics of

basic income vis-à-vis conventional minimum income schemes (e.g. integration income and

unemployment benefits) are the opposite of one another.

Source: Own creation based on Peña-Miguel, De la Peña Esteban, & Fernandez-Sainz, (2014,

p. 96).

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The specifications of each basic income proposal, however, (e.g. the exact level of the basic

income, the precise target audience of basic income, whether basic income is

supplementary to the social protection system…) may differ across diverse basic income

proposals. The diversity of these particularities will be illustrated by a range of basic

income proposals, which are discussed in chapter 3 of the paper. (Melzochová & Špecián,

2015, p. 554-555)

The following section first elaborates on the arguments for basic income on European soil

and proceeds by zooming in on the basic income debate in Belgium.

2.2 Basic income in Europe

The current topical reappearance of basic income in Europe, according to Soininvaara

(2000, p. 7-8), is thanks to the solutions offered by basic income in order to overcome two

obstacles faced by the present European welfare systems.

2.2.1 The two obstacles

The first obstacle is the trend of growing structural unemployment with the unskilled

struggling to obtain a job due to a mismatch between labor demand and supply

(Soininvaara, 2000, p.8) (C.W., 2014). This trend has already been occurring in advanced

economies for a number of decades and is expected to continue growing in the future due

to the threat that evolving technology poses for low-skilled jobs (C.W., 2014; Rotman,

2013). The long-term unemployment rates in Figure 2 suggest that especially Europe (EU-

28) seems to be greatly affected, with the EU-28 average being consistently higher than the

OECD average, which in turn is consistently higher than the rates of the United States for

the time span of 2000 to 2015 (OECD, 2016a). Belgium is no exception and seems to suffer

from long-term unemployment rates even higher than the EU-28 average (OECD, 2016a).

High long-term unemployment rates are problematic for various reasons. Besides being an

indicator of inefficient operating labor markets, long-term unemployed individuals are

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shown “to have poorer health than average [due to mental and material stress] and [these

high rates] squeeze the social security budgets” (C.W., 2014). (OECD, 2016a)

Additional to having a greater percentage of long-term unemployed, Europe bears high

unemployment rates relative to the rest of the OECD and the United States. This is shown in

Figure 3. Note that although the current trend of the European Union is strongly influenced

by the extremely high unemployment rates of Greece and Spain, with respective

unemployment rates being 24.9% and 22.06% in 2015, all countries belonging to the

European Union are in all cases, except for two member states being Germany and the

Figure 2: Long-term unemployment rate, total % of unemployed, 2000 – 2015

Note: “The long-term unemployment rate refers to the proportion of people who have been

unemployed for 12 months or more among all unemployed” (OECD, 2016a).While the indicator itself

is relevant, it may also be considered as a proxy for structural unemployment as there is a tendency

of long-term unemployment turning into structural unemployment (C.W., 2014).

Source: OECD, (2016a).

20 | P a g e

Czech Republic, higher than those of the United States in 2015 (figure not shown). For the

specific case of Belgium, the unemployment rates have been fluctuating around 8% for the

past decade, with a percentage of 8.48 in 2015. (OECD, 2016b)

High levels of unemployment translate to low incomes on the unemployed which in turn

leads to an increased level of government spending on social benefits and decreased tax

revenues (Eurostat, 2016a). The unemployment rates and its effect on the government

revenues, the main source of funding basic income, through personal income taxes form an

important aspect of financing basic income. Although this aspect is beyond the paper, an

assessment thereof is recommended for further research.

Figure 3: Unemployment rate, total % of labor force, 2000 - 2015

Note: “The unemployment rate is the number of unemployed people as a percentage of the labor

force. The labor force consists of the unemployed plus those in paid or self-employment” (OECD,

2016b).

Source: OECD, (2016b).

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The second obstacle lies in the incompatibility between incentives to enter the labor

market and conditions attached to unemployment benefits (Soininvaara, 2000, p. 8). “The

social income transfers in the European systems [are namely] diminishing as earned

income rises” (Soininvaara, 2000, p.8) with the typical dis-incentivizing outcome of

individuals losing these benefits completely when joining the workforce. In the Belgian

labor market, individuals who are unwillingly unemployed and fulfill the minimum amount

of days of paid employment have the right to request an unemployment benefit (RVA,

2015; Vlaanderen, n.d. b). The level of the unemployment benefit received is again of

conditional nature as it depends on the individual’s household situation, the individual’s

most recent paycheck, their employment history and the duration of unemployment due to

the benefits being of digressive nature (RVA, 2016). In this case, the mismatch is reflected

by receiving a lower level of unemployment benefits if the individual belongs to a

household in which their partner has income and the complete loss of unemployment

benefits when obtaining a job (RVA, 2016).

2.2.2 Overcoming the obstacles

Basic income provides a solution in order to overcome both these obstacles and is the

reason why basic income has received much attention in Europe (Soininvaara, 2000, p. 7-

9).

First, basic income alleviates the problem of high unemployment rates not by decreasing

these rates but rather by offering the unemployed a wider scope of opportunities. Van

Parijs (2004, p. 17-21), a well-known Belgian proponent of basic income, argues that basic

income enables individuals to comfortably look for a desirable job corresponding to their

capabilities and preferences, perhaps, more importantly, it also stimulates

entrepreneurship due to lower failure anxiety, encourages individuals to engage in training

and sharpen their existing skillset, facilitating the possibility to “take a break between two

jobs and reducing working time” (Van Parijs, 2004, p.19). This reduction in working time,

in turn, will allow individuals to dedicate themselves to academic research, volunteer work,

domestic work and charity. Furthermore, proponents argue that basic income empowers

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the position of employees in negotiations leading to improved working conditions.

(Melzochová & Špeciána, 2015, p. 551-552)

Second, basic income is expected to eliminate the disincentives to work as unlike with

unemployment benefits, individuals do not lose this guaranteed income when deciding to

join the workforce. Basic income detaches the relationship between the amount of support

and the earned income. (Soininvaara, 2000, p. 8)

2.2.3 The administrative efficiency argument

Next to these policy-oriented arguments for basic income, the argument of basic income

emancipating the poor, and the classic ethical argument by Van Parijs (1995) of basic

income ensuring “real freedom for all”, there is another argument which is of particular

interest when considering the financial feasibility of basic income: the efficiency

implications brought forward by the characteristics of basic income. (Melzochová &

Špeciána, 2015, p. 551; Soininvaara, 2000, p. 8)

As basic income is unconditional without a means-test or work requirement, proponents

argue that basic income economizes on administration costs compared to other income

support schemes: there is no longer a need to verify whether an individual is eligible for

income support or not and there is no urge of cheating under the scheme of basic income. It

goes without saying that the more complex the initial social protection system set in place

is, the more savings that accumulate on administration costs when substituting the former

system by a simplified and more transparent scheme of basic income. This is a significant

argument in the European context considering how the social safety net in advanced

economies, such as in Western Europe and the Scandinavian countries, has grown into a

complex construct. However, while basic income may be more administratively efficient in

comparison to conditional income support schemes, the extent of its efficiency should be

still put under scrutiny. (De Wispelaere & Stirton, 2011, p. 115-116, p. 125-126;

Melzochová & Špeciána, 2015, p. 551)

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Overall, the two aforementioned obstacles and the complexity of the social safety net faced

by Europe are also concerns shared by Belgium: Belgium had an unemployment rate of

8.48% in 2015 and 51.7% of those individuals were unemployed for longer than twelve

months (OECD, 2016a; OECD, 2016b). Furthermore, Belgium is known to have a very

elaborate social security net (Belgium, n.d. a). This makes Belgium ripe for considering

basic income. The next section focuses on the academic and political attention that basic

income has received in Belgium.

2.3 Basic income in Belgium

In Belgium, the topic of basic income first emerged in academic and intellectual circles,

before receiving attention in the field of politics. (Vanderborght, 2000, p. 277)

Among the Belgian scholars who have delved into basic income, Philippe Van Parijs stands

out the most, being a firm proponent of basic income and one of the founders of Basic

Income Earth Network (BIEN, n.d. b). Van Parijs (1995) is especially known for his book

“Real Freedom For All”, in which he argues that capitalism has introduced inequalities in

our society which he deems as unacceptable. To fight against these inequalities, Van Parijs

places freedom on a pedestal and specifically advocates for “real-libertarianism, or real-

freedom-for-all”, which is different from formal freedom as he describes “real freedom not

only [being] a matter of having the right to do what one might want to do, but also a matter

of having the means for doing it” (Van Parijs, 1995, p.4). Van Parijs further argues that the

regime which best incorporates this type of freedom is “the highest sustainable

unconditional income”(Van Parijs, 1995, p.30), with the level of basic income set

sufficiently high to guarantee the means to put an end to the inequalities imposed by

capitalism and ensure real freedom.

In politics, there is a division of proponents versus opponents of basic income not only

between political parties and labor unions but also between individuals within a single

party or union. (Evenepoel, 2016)

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First, regarding the political parties, there are currently only two Belgian small-scale

political parties of which the members have collectively agreed to explicitly take up basic

income in their program: Piratenpartij and B.U.B. (Belgische Unie – Union Belge) (B.U.B.,

2016; Piratenpartij, 2014). Other parties who have supported basic income in the past are

Vivant and two green parties, ECOLO and AGALEV (Vanderborght, 2000). Furthermore, a

number of individuals belonging to the well-known parties, Open VLD and sp.a, have shown

interest in the radical proposal, although their personal interest does not necessarily

correspond to their affiliation (Cornillie & Kherbache, 2016; “Open VLD: Basisinkomen”

2015).

Piratenpartij (2014, p. 19, own translation) contended through their program of 2014 that

“labor should be more than just a mean to obtain income, and should instead primarily

contribute to the self-realization of individuals”. Piratenpartij pleads for basic income as

the long-term solution towards achieving that goal. “As a first step, the party implores an

assessment of the feasibility of implementing and financing basic income on European and

Belgian soil while accounting for the administrative efficiency brought upon by

bureaucratic simplification” (Piratenpartij, 2014, p. 19, own translation).

The party urging for a unified Belgium, B.U.B. (2016, p.10), is a supporter of basic income in

order to guarantee an equal treatment of all Belgians. They propose a scheme of basic

income at a subsistence level of €800 per month, which is to be implemented as a complete

substitute for existing social benefits. Similar to Piratenpartij, B.U.B. emphasizes the

administrative efficiency argument as a method of partially financing basic income, which

is maximized by abolishing the current social protection system. The basic income proposal

by B.U.B. is one of the proposals of which I will assess the costs.

“The green parties ECOLO and AGALEV supported basic income since the mid-1980s.

Compared to ECOLO who considered basic income as a medium-term objective more

belonging to the theoretical horizon than a policy proposal, the support by AGALEV was

more outspoken as it was promoted as a short-term reform” (Vanderborght, 2000, p.276).

The parties’ resolute support, however, is a remnant of the past. Groen left the name of its

25 | P a g e

predecessor AGALEV behind with the idea of basic income in 2003 (Groen, n.d.; Llc, 2003).

In comparison with AGALEV’s commitment to basic income, today Groen (n.d.) merely

labels basic income as an interesting proposal worth exploring on the long-term. For the

case of ECOLO, the already limited presence of basic income seems like it will further

disappear into the background as the idea was mainly upheld by the economist Philippe

Defeyt who recently retired in March 2016 (Dupriez & Khattabi, 2016). The resolute

proponent of basic income, however, is still going strong as he independently released a

concrete basic income proposal as of June 2016 (Van Horenbeek & Wauters, 2016). A cost

estimation of his proposal will be provided.

Vivant, although currently retired from the political scene, is a unique party with a sole

focus on basic income. The basic income proposal made public by Vivant is well-developed

compared to its counterparts and will therefore be elaborated upon next to other basic

income proposals, such as those by B.U.B. and Defeyt. (Vanderborght, 2000; Vivant, n.d.)

Notable individuals who have shown their interest for basic income and are requesting for

a thorough investigation are, but not limited to, Nele Lijnen, federal parliament member of

Open VLD, Yasmine Kherbache, Flemish parliament member of sp.a, Jan Cornillie, director

of the research affiliation of sp.a, and Karel Van Eetvelt, the managing director of an

organization supporting entrepreneurs, UNIZO. (Cornillie & Kherbache, 2016; Evenepoel,

2016; “Open VLD: Basisinkomen” 2015).

Second, the same divide can also be found in the labor unions. For example, the socialist

labor union, ABVV, disapproves of basic income due to the threat it poses to the current

social protection system. Another labor union, ACV, however, is rather favorable of basic

income and considers the proposal a negotiable matter. (Evenepoel, 2016)

All things considered, the limited political interest in the radical reform, which is primarily

restricted to small-scale parties and certain individuals, shows the current limitations of

the political feasibility of basic income in Belgium. Different parties and individuals,

however, request for more research. As a reaction to these demands, this paper would like

26 | P a g e

to partially contribute with a focus on financial feasibility, which is the topic for the

remainder of the paper. (Evenepoel, 2016; Vanderborght, 2000)

3. Financial feasibility of basic income

3.1 An introductory assessment of the costs of basic income

According to the Dutch historian, Rutger Bergman (2014, p. 44-45, own translation), “for

the first time in history, we are rich enough to afford a generous scheme of basic income”.

Bergman validates his argument by the following reasoning, which is re-interpreted for

Belgium in the year 2010.

In 2010, Belgium had a gross domestic product (GDP) of €356 billion (Eurostat, 2016b).

The Belgian government expenditures consisted of €195 billion and €107 billion thereof

were social expenditures1, as identified by the European System of Integrated Social

Protection Statistics (ESSPROS – see in detail later) (Eurostat, 2016c, 2016d). A simple

basic income scheme would be to endow the aforementioned social integration income of

the category of single persons to every Belgian eighteen years or older (B.U.B., 2016, p. 10).

With 8,625,750 eligible recipients of basic income and the average monthly social

integration income at the level of €731 for a single person in 2010, this proposal would

cost €76 billion (FOD Economie, K.M.O., Middenstand en Energie, 2011; POD

Maatschappelijke Integratie, 2016; and own calculations). Given that the social

expenditures of 2010 were €107 billion, completely substituting the current social

protection system by the proposed scheme of basic income, would even lead to a positive

difference of €32 billion (Eurostat, 2016d; and own calculations). The remaining amount is

high enough to retain the system of health care, which cost €29 billion in 2010.

Alternatively, policymakers can even choose for a higher level of basic income, €1037 per

month, by making a breakeven between the cost of the proposed basic income scheme and

the social protection expenditures (Eurostat, 2016d; and own calculations).

1 The social expenditures are as identified by the European System of Integration Social Protection

Statistics (ESSPROS). This will be discussed in further detail in the subsection 3.3.1 Social protection in Belgium.

27 | P a g e

Figure 4: A comparison of the total expenditures on social protection and the cost of a

basic income proposal at the level of the social integration income, in million euro,

Belgium, 2000-2013

Note: (1) The observations of all five series are annual. (2) The cost of basic income is calculated by

multiplying the number of Belgian citizens who are 18 years or older by the yearly social integration

income of the category of single persons. (3) The corresponding tables, which include an overview

of the data as well as the computations of the suggested basic income proposal, can be found in

Table B1, Table B2, and Table B3 of the appendix.

Source: Own creation based on Eurostat (2016b, 2016c, 2016d); FOD Economie, K.M.O.,

Middenstand en Energie (2011); POD Maatschappelijke Integratie (2016); Steunpunt

tot bestrijding van armoede, bestaansonzekerheid en sociale uitsluiting, (2016); and

my own calculations.

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Figure 4 provides a graphical illustration of the abovementioned indicators (GDP, total

general government expenditures and revenues, total expenditures on social protection

according to ESSPROS) and the cost of the proposed basic income scheme for Belgium

annually re-calculated for the years 2000-2013. Note that the annual recalculation of the

basic income scheme attached to the social integration income incorporates the change in

population (of Belgian citizens eighteen years or older) and the effect of inflation as the

social integration income is regularly revised upwards to ensure equal purchasing power

over time (FOD Economie, K.M.O., Middenstand en Energie, 2011; POD Maatschappelijke

Integratie, 2016).

If the social protection system were to be substituted by a basic income scheme, which

provides all Belgian citizens eighteen years or older the social integration income of the

year in question, at first glance there is a promising outlook that this basic income scheme

is financially feasible as the trend of expenditures of social protection lies higher than the

trend of the cost of the basic income proposal for all years from 2000 until 2013.

Furthermore, Figure 4 also shows that the gap between the expenditures of social

protection and the cost of the basic income proposal widens as the years go by.

Alternatively, the slope of the former is steeper than the latter.2 In other words, the average

growth of the expenditures of social protection is greater than the average growth of the

cost of the basic income proposal.1 This finding suggests that, even if the government

cannot afford a (generous) scheme of basic income scheme today, it may be able to do so in

the future. The improved position of the Belgian government to afford more expensive

policies, such as the basic income proposal, over time is thanks to the (generally) positive

growth rate of real GDP (Eurostat, 2016e): the higher the GDP, the higher the general

government revenues (due to the design of tax collection) and the higher the expenditures

on social protection may be.

2 This statement is confirmed by a visual and a corresponding mathematical exercise which can be found in Figure A1 of the appendix.

29 | P a g e

Overall, these findings of Figure 4 imply a positive notion of the financial feasibility of basic

income: the suggested basic income proposal based on social integration income is most

definitely financially feasible if it were to substitute the social protection system and if a

(generous) basic income proposal is not financially feasible today, it may become feasible

in the future thanks to the positive real growth of GDP (Eurostat, 2016e).

Nevertheless, this is only a simple and at the same time extreme basic income proposal

which completely abolishes the current social protection system to make way for basic

income, making it the most financially feasible variant of basic income. There are, however,

other basic income proposals worth examining. Especially considering the fact that the

basic income proposal based on the social integration income might be a system in which

we treat everyone equally, it might not be the most ethical system as it also implies that

equal treatment is granted to the sick and to the healthy. For this reason, more complex

basic income proposals which incorporate the ethical principles of social protection and

their respective costs will also be discussed. (Melzochová & Špecián, 2015, p. 554)

Next to these proposals, this chapter about the financial feasibility of basic income covers

the following subjects.

First, a literature review of the contributions to the financing of basic income will be given.

While the contributions on European scale are numerous with a number of publications

applying a reliable and valid research method, the contributions in Belgium are lacking and

are limited to back-of-the-envelope calculations.

Second, relevant material concerning the social protection system, the social integration

income, the poverty threshold, and the demographics of Belgium will be covered. Being

informed about the expenditure posts and the social benefits of the social protection

system will enable understanding of which social measures will cease to exist and which

social groups will receive a lower amount of benefits with a substitution of the social

protection system by basic income. The social integration income and the poverty

threshold will also be addressed as many proponents, such as Philippe Van Parijs, argue for

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a basic income of a sustainable level, a level sufficiently high to cover one’s basic needs,

lifting people out of poverty and optimally ensuring people “real freedom” (Van Parijs,

1995, p.4; 2004, p. 11-13). The demographics of Belgium will briefly be discussed as data of

the age pyramid is needed in order to calculate the cost of basic income.

Third, different basic income proposals and their corresponding cost estimations will be

presented in order to put emphasis on the fact that the financial feasibility of basic income

should be evaluated on a case-by-case basis as basic income proposals may differ greatly.

As a personal contribution, I will provide the means to obtain a relatively accurate cost

estimation of the intriguing basic income proposal by Raventos et al. (Melzochová &

Špecián, 2015, p. 554)

Fourth, as a follow up to the basic income proposals, the financing of basic income will be

discussed. The focus will lie on obtaining a refined estimation of the cost savings which are

realized by the replacement of social benefits by basic income.

Fifth and finally, I will point out the limitations of the static approach and suggest an

alternative approach for further research.

3.2 Review of the literature

Starting from back-of-the-envelope calculations and progressing to estimations provided

by micro-simulation models, the field of financing basic income has positively made

headway over the past decade. The measures by which basic income may be financed have

furthermore been creative and diverse. (Raventos, 2007, p. 156)

There are two principal steps by which basic income can be financed. The first step

requires an assessment of the cost savings which are realized by the replacement of social

benefits by basic income. In the second step, additional measures have to be found in order

31 | P a g e

to close the remaining cost gap after accounting for the cost savings. These measures

consist primarily of tax reforms. (Monnier & Vercellone, 2014, p. 71-73)

The literature largely focuses on tax measures and the progress in the field of financing

basic income is also mainly due to advancements in the evaluation of tax measures. Tax

measures were first assessed by back-of-the-envelope calculations but have evolved to

micro-simulation models. Micro-simulation models are highly endorsed for three reasons.

The first reason is based on the grounds that these models generate accurate cost

estimations of the tax revenues implied by the proposed tax reform (Raventos, 2007, p.

157). The second reason is that micro-simulation enables an assessment of the

consequences of basic income on inequality, progressivity, and redistribution (Arcarons,

Raventos Pañella & Torrens Mèlich, 2014, p. 87). The third reason is that micro-simulation

models are able to integrate the behavioral effects, such as on labor, caused by basic

income and a tax reform (Colombo, Schnabel, & Schubert, 2008, p. 26). Micro-simulation

models have been employed to assess the financial feasibility of basic income in a number

of European countries. Belgium, however, is not one of them. Research on financing basic

income has been limited to static cost estimations (Defeyt, 2016, p. 9; Cornillie, 2015;

Panorama, 2014; Tirez, 2014b; Vivant, n.d.).

While the two aforementioned steps of financing basic income are recognized by the

literature, the literature neglects to provide accurate cost estimations of the cost savings.

In Europe as well as in Belgium, the cost savings are generally estimated by simply

assuming that basic income will completely replace a number of social benefits if not all,

without a closer inspection of the differences between the current levels of social benefits

and the level of basic income (Colombo, Schnabel, & Schubert, 2008, p. 6; Cornillie, 2015;

Defeyt, 2016, p. 9; Panorama, 2014; Tirez, 2014b). Fortunately, a number of basic income

proponents are more attentive and acknowledge the insightful criterion of completely

replacing social benefits of a lower level by basic income on the one hand and partially

replacing social benefits of a higher level by basic income on the other hand (Arcarons,

Raventos Pañella & Torrens Mèlich, 2014, p. 80; Tirez, 2014b). These proponents, however,

do not actually apply the criterion (Tirez, 2014b) or do not provide an explanation or the

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calculations of how the criterion was respected (Arcarons, Raventos Pañella & Torrens

Mèlich, 2014, p. 82). For this reason, I would like to make a contribution to the literature by

effectively applying this criterion for Belgium with data from 2010. I will obtain an

estimation of cost savings which is comparatively more accurate than estimations provided

in the literature. But before I do so, there are a number of preliminary themes that first

have to be considered before cost estimations can be made.

3.3 Preliminary themes to consider

3.3.1 Social protection in Belgium

The Belgian social protection system is an elaborate construct that needs to be

decomposed in order to make a financial comparison between the expenditures of the

current social protection system and the expenditures resulting from the concrete basic

income proposals.

A first typical Belgian way of subdividing the Belgian social protection system is by

“distinguishing two systems: the ‘classical sectors’ of social security [on the one hand] and

‘social assistance’ [on the other]. [The former system], the ‘classical sectors’ of social

security, contains seven sectors: (1) old-age and survivor's pensions; (2) unemployment;

(3) insurance for accidents at work; (4) insurance for occupational diseases; (5) family

benefits; (6) compulsory insurance for medical care and benefits; and (7) annual vacation.

The ‘classical sectors’ of social security can be further sub-divided into three systems based

on the type of occupation: (1) a system for salaried persons, (2) a system for self-employed

persons, and (3) a system for civil servants (of the Belgian federal government). [The

financing as well as the requirements to receive a benefit differ in these three sub-systems.

The latter system of ‘social assistance’ exists of:] (1) integration income; (2) income

guarantee for the elderly; (3) guaranteed family benefits; and (4) benefits for disabled

persons” (FPS Social Security, 2015, p.7). A schematic overview of this subdivision can be

found in Figure 5.

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This is, however, only one way of presenting the Belgian Social Protection System (FPS

Social Security, 2015). Different governmental institutions and different publications

administer distinct subdivisions and contents of the social protection system, leading to a

discordance of data on social protection expenditures. This complication is also

acknowledged by the Federal Public Services (FPS) Social Security as they called a halt to

disclosing the total social expenditures encompassing all governmental institutions in the

post-2010 publications of “Key Figures” (FOD Sociale Zekerheid, 2012, 2013). As quoted in

these recent publications: “The alert reader will notice that the division into themes and

the content [of the social security expenditures] differ in comparison to publications by

other institutions (The Parliament, The Institute for National Accounts, Eurostat, the

Federal Planning Bureau,…). For this reason, we did not make a total expenditure of the

different themes” (FOD Sociale Zekerheid, 2012, p. 3; FOD Sociale Zekerheid, 2013, p. 3;

own translation).

Figure 5: A Belgian subdivision of the Belgian social protection system

Source: FPS Social Security, (2015, p. 7).

Social assistance

The Belgian Social Protection

System

1) Old-age and survivor's pensions

2) Unemployment

3) Insurance for accidents at work

4) Insurance for occupational diseases

5) Family benefits

6) Compulsory insurance for medical

care and benefits

7) Annual vacation

Salaried persons

Self- employed

Civil servants

1) Integration income

2) Income guarantee for the elderly

3) Guaranteed family benefits

4) Benefits for disabled persons

of social security

Classical sectors

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Furthermore, the Sixth State Reform, which was agreed upon in 2011, has also hindered

the unification of data on social expenditures across different governmental levels. This is a

consequence of the resulting reformation of the social protection system, which transferred

a number of responsibilities from the federal level to the three communities (Flemish,

French, and German speaking) and the Common Community Commission of the Brussels

Capital Region. The family allowances scheme, the allowance for assistance to the elderly

(with the disabilities), for example, were transferred. “As of 1 July 2014, these benefits fall

within the responsibility of the four federated entities, but, the management is still

temporarily being carried out by the federal institutions” (FPS Social Security, 2015, p. 13).

(Belgium, n.d. b).

Taking this discordance of data into consideration, the following analysis of the social

protection expenditures will be restricted to data provided by the FPS Social Security of

Belgium for the years 2007 – 2010, stemming from the 2010 edition of “Key figures” and

the corresponding Vade Mecum publication (FOD Sociale Zekerheid, 2010a, 2011). This

dataset may be considered as outdated. However, after exploring various publications by

different institutions, I have determined that this dataset fulfills most of the requirements

for calculating the cost estimation of the concrete basic income proposals, considering it

includes a total overview of the social expenditures across different governmental levels as

well as the corresponding number of beneficiaries per benefit (FOD Sociale Zekerheid,

2011).

The selected dataset by the FPS Social Security of Belgium provides data for the years

2007-2011 (FOD Sociale Zekerheid, 2010a, 2011). Out of these years of which data is

provided, the year 2010 is chosen to assess the financial feasibility of basic income. For this

reason, figures have been and will be reported for the year 2010. However, using data from

the year 2010 may create doubt of whether conclusions based on the financial feasibility of

basic income in the year 2010 may simply be extended to later years, such as the year

2016. In order to clear this doubt I make a crucial, but a plausible hypothesis that if a

specific basic income proposal is deemed to be financially feasible for the year 2010, that

the same conclusion can be made for years thereafter. The plausibility of this hypothesis is

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derived from the earlier presented argument that the Belgian government can afford more

expensive policies in years to come thanks to the positive growth rate of real GDP

(Eurostat, 2016e).

The chosen dataset categorizes the social expenditures to a large extent according to the

European System of Integrated Social Protection Statistics (ESSPROS). ESSPROS makes a

distinction between the social expenditures arising from administration, social risks, and

other expenditures. An overview of the ESSPROS and the eight social risks is displayed in

Figure 6. (Eurostat, 2012; FOD Sociale Zekerheid, 2012b)

Figure 6: A European subdivision (ESSPROS) of the social protection expenditures

Source: Own creation based on Eurostat, (2012, p. 10) and FOD Sociale Zekerheid

(2012b, p. 34).

Social Protection Expenditures

(ESSPROS)

Admini -stration

costs

Social Risks

Other Expenditures

1) Health care 2) Disability 3) Old age 4) Survivors 5) Family/children 6) Unemployment 7) Housing 8) Social exclusion not elsewhere

classified

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The social protection expenditures, as given by the dataset of choice, are shown in Figure 7

and Table 1. The only difference between the social risks of the ESSPROS (see Figure 6)

and the social risks foreseen in the dataset (see Figure 7) is that the latter excludes housing

but includes the expenditures from the labor market and employment policy. (Eurostat,

2012; FOD Sociale Zekerheid, 2012b)

Figure 7: Social protection expenditures, in percentages (%), Belgium, 2010

Note: The social risks incorporated in the chosen dataset are: “(1) Health care;

(2) Incapacity to work, physical injuries and disability; (3) Old age; (4) Survivors;

(5) Family/children; (6) Unemployment; (7) Labor market and employment policy; and (8) Social

expenditures not elsewhere classified. The social expenditures spent on protecting the Belgian

population from these social risks contribute to 91% of the total social expenditures” (FOD Sociale

Zekerheid, 2011, p. 10-11).

Source: FOD Sociale Zekerheid, (2011, p. 10-11).

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A more elaborate overview of the social protection expenditures and the corresponding

number of beneficiaries can be found in part C of the appendix: ‘The key figures on social

protection expenditures’. Additionally, supplementary statistical figures of the social

benefits were generated based on part C of the appendix. These statistical figures and a

description of the considered social benefits can be found in part D of the appendix:

‘Statistical figures of social benefits’. This data is indispensable when making cost

estimations for basic income proposals which are complementary to a number of existing

social benefits and when assessing the cost savings which are the result of basic income

replacing social benefits. (FOD Sociale Zekerheid, 2011, 2012, 2013)

Table 1: Social protection expenditures, in euro, Belgium, 2009-2010

Expenditures 2009 2010

Social Risks 82,327,905,730 86,271,994,852

Health Care 22,121,948,000 22,826,873,000

Incapacity to work,

physical injuries and

disability

6,560,742,796 7,007,413,254

Old age 24,635,164,576 25,570,435,628

Survivors 6,341,373,393 6,422,739,610

Family/children 5,503,830,431 5,667,694,544

Unemployment 7,843,883,473 7,789,568,706

Labor market and

activation policy

3,631,492,082 4,074,405,570

Social expenditures not

elsewhere classified

5,689,470,979 6,912,864,540

Administration costs 2,253,940,889 2,313,359,060

Other expenditures 5,298,139,671 5,661,323,761

Total expenditures 89,879,986,290 94,246,677,673

Source: FOD Sociale Zekerheid, (2011 p. 10; 2012; 2013).

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3.3.2 The social integration income and the poverty threshold

The level of the social integration income and the poverty threshold are often quoted in

basic income proposals as they constitute a formal reference point of what is considered an

amount sufficiently high to make ends meet (Melzochová & Špecián, 2015, p. 555). Philippe

Van Parijs, for example, argues for a basic income of a sustainable level, a level sufficiently

high to cover one’s basic needs, lifting people out of poverty and optimally ensuring

people’s “real freedom" (Van Parijs, 1995, p.4; 2004, p. 11-13).

On the one hand, the social integration income, formerly known as the subsistence

minimum, is a minimum-income that is guaranteed by the government to eligible

individuals who do not possess the means or ability to provide for themselves. On

September 2010, the social integration income was €740 per month for single persons.

(FPS Social Security, 2015, p. 159; POD Maatschappelijke Integratie, 2016; Steunpunt tot

bestrijding van armoede, bestaansonzekerheid en sociale uitsluiting, 2016)

On the other hand, the poverty threshold indicates an income level under which people are

at risk of poverty. The monetary level of the poverty threshold is conventionally set at

“60% of the median disposable income at the individual level” in the European Union (FOD

Economie, K.M.O., Middenstand en Energie, 2016). In 2010, the poverty threshold was set

to €973 per month for a single person, under which 14.6% of the Belgian population were

at risk of poverty. (FOD Economie, K.M.O., Middenstand en Energie, 2016; Steunpunt tot

bestrijding van armoede, bestaansonzekerheid en sociale uitsluiting, 2016).

The evolution of the monthly level of the social integration income and the monthly

poverty threshold in Belgium is shown in Figure 8. The level for the category of single

persons is shown for both concepts, as it best incorporates the individuality characteristic

of basic income opposed to the dependency on the household situation of conventional

minimum-income schemes. Figure 8 shows that the level of the poverty threshold is

consistently (on average €222) higher than the level of the social integration income. The

implication of this observation is that while the government does provide aid to those in

39 | P a g e

need with the social integration income, the level is considered insufficient to lift people

out of poverty according to the poverty threshold. (FOD Economie, K.M.O., Middenstand en

Energie, 2016; Peña-Miguel et al., 2014, p. 96; POD Maatschappelijke Integratie, 2016)

Figure 8: The evolution of the monthly social integration income and the monthly poverty

threshold in Belgium, in euro

Note: (1) The figure displays the evolution of the social integration income (1990-2016) and the poverty

threshold (2004-2015) for the category of a single person. While the social integration income is

regularly revised upwards due to inflation, the poverty threshold evolves with the median disposable

income. (2) The dots indicate the observations. (3) Note that the adjustment of the social integration

income and the poverty threshold does not occur gradually, but rather in a stair-stepped manner.

Source: Own creation based on FOD Economie, K.M.O., Middenstand en Energie, (2016);

POD Maatschappelijke Integratie, (2016); and Steunpunt tot bestrijding van armoede,

bestaansonzekerheid en sociale uitsluiting, (2016).

Jan-10 973.2

Jan-15 1082.7

2

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3.3.3 The demographics of Belgium

As in other developed countries, Belgium is characterized by a demographic trend in which

the population ages over time due to the combination of low birth rates and a higher life

expectancy. (Melzochová & Špecián, 2015, p. 552; FOD Sociale Zekerheid, 2012, p. 41)

The age structure of Belgium placed into four age categories, in which the level of basic

income may differ, is displayed in Table 2. A distinction is made between children (0-17

years), young adults (18-24 years), adults (25-64 years), and the elderly (+65 years). These

figures on the Belgian age structure are fundamental when computing the cost of basic

income as the population structure of the country partially determines the magnitude of

the cost of basic income. (Statistics Belgium, n.d.; Vivant, n.d., p. 42)

Table 2: The age structure of Belgium in four categories, population on 1 January 2010

Age In absolute numbers In percentages (%)

Minors 0-17 years

Young adults 18-24 years

Adults 25-64 years

Elderly +65 years

2,214,156

929,428

5,836,162

1,860,159

20.43

8.57

53.84

17.16

Total 10,839,905 100

Source: Statistics Belgium, (n.d.).

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3.4 Basic income proposals

The financial feasibility of basic income should be judged on a case-by-case basis as the

features of each basic income proposal, such as the level of basic income, the target

audience of basic income, and whether basic income is (partially) complementary to the

current social protection system, have a direct impact on the cost structure. For this reason,

a variety of basic income proposals will be considered. These basic income proposals will

be applied to Belgium for the year 2010, using the chosen dataset of social protection

expenditures (FOD Sociale Zekerheid, 2011, p. 10) and a static cost estimation will be

provided ceteris paribus. In addition, a cost comparison to the current social expenditures

will take place, as when it comes to financing a basic income scheme, the first target of cost

savings is generally the social protection system. Many proponents of basic income namely

replace social benefits by basic income, leading to the cost savings in these benefits.

Regarding the calculations of the cost estimations of the basic income proposals and the

manner in which the basic income levels were revised for the year 2010, I would like to

refer the reader to part E of the appendix. (Melzochová & Špecián, 2015, p. 554)

Based on whether basic income is complementary or substitutable to the current social

protection system, Melzochová & Špecián (2015) identified that basic income schemes can

be placed between two extremes: “basic-income-to-substitute-everything” [versus] “basic-

income-purely-as-a-complement” (Melzochová & Špecián, 2015, p. 554). This is illustrated

Figure 9: Basic income proposals placed between two extremes

Source: Own creation based on Melzochová & Špecián, (2015, p. 554).

Basic-income-to

-substitute-everything

Low-cost benchmark

Basic-income-purely

-as-a-complement

High-cost benchmark

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in Figure 9. The former scheme involves “completely dissolving all the public support not

only on public security but also on health insurance and supplant all this with basic

income” (Melzochová & Špecián, 2015, p. 554). The latter scheme simply involves adding

“basic income as an additional measure complementing the existing system” (Melzochová

& Špecián, 2015, p. 554). With respect to financial feasibility, the two extremes are

respectively considered to be a “low-cost benchmark [on the one hand and a] high-cost

benchmark” (Melzochová & Špecián, 2015, p. 554) on the other hand. Given that the social

protection system cost Belgium €94 billion in 2010 (FOD Sociale Zekerheid, 2011, p. 10-

11), a ‘basic-income-purely-as-a-complement’ scheme would cost €94 billion more than a

‘basic-income-to-substitute-everything’ scheme in 2010, ceteris paribus. The

impracticability of financing the tremendous costs of a “basic-income-purely-as-a-

complement” scheme is the major reason why nobody sincerely advocates such a scheme.

For this reason, the following basic income proposals will only cover the most financially

feasible scheme of “basic-income-to-substitute-everything” and a number of basic income

proposals which are situated between the two extremes. (Melzochová & Špecián, 2015, p.

554)

3.4.1 The B.U.B. proposal

The basic income proposal by the Belgian political party, B.U.B., in their 2016 (p. 10)

program is an example of a ‘basic-income-to-substitute-everything’ scheme. As quoted in

their program, the party supports “the principle of an unconditional basic income as a

substitute for the various existing benefits (unemployment benefits, old age pensions,

family benefits, disability and sickness benefits, reimbursement of health care costs etc.)”

(B.U.B., 2016, p. 10). The proposed level of basic income is at the subsistence minimum,

suggestively at the height of the social integration income which was at €731 for a single

person in 2010 (POD Maatschappelijke Integratie, 2016). “This basic income is to be given

to every Belgian citizen and every individual belonging to the European Union, living in

Belgium, who is 18 years old or older” (B.U.B., 2016, p. 10). Note that the individuals

belonging to the European Union are excluded in the following analysis, in order to

accommodate comparison over the different basic income proposals.

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The basic-income-to-substitute-everything scheme is the most financially feasible basic

income proposal. The specific proposal by B.U.B. would ‘only’ cost €76 billion, which is

according to the statistics provided by the FPS Social Security €19 billion less than what

was spent on the social protection system in 2010. In fact, Belgium can even afford to grant

every citizen who is at least eighteen years old a basic income as high as €911 per month in

the case of a breakeven between the costs of basic income and the expenditures of the

social protection system. This level, however, still falls short of the poverty threshold which

was at the level of €973 per month in January 2010. The alternative basic income scheme

of providing very Belgian citizen above the age of 18 the poverty threshold would cost

€101 billion, which necessitates looking beyond the social protection system for financing.

Table 3 shows an overview of the aforementioned costs, as well as a cost comparison to the

present social protection system. (FOD Sociale Zekerheid, 2011, 2012, 2013; Melzochová &

Špecián, 2015, p. 555-556; Statistics Belgium, n.d.; and own calculations)

Table 3: The B.U.B. proposal, Belgium, 2010

Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(BI scheme as % of present social protection

expenditures)

Social integration

income

730.63 / 0 75,627 80.24

Poverty threshold

973.20 / 0 100,735 106.88

Breakeven 910.52 / 0 94,247 100

Source: Own creation based on Melzochová & Špecián, (2015, p. 555-556), B.U.B. (2016, p.

10), and my own calculations.

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In this basic income scheme, everybody would receive the same sum and would thus be

treated equally, irrespective of their gender, race, household situation, status of

employment… However, is it truly appropriate to simply grant everyone the same amount

of money? In other words, is it socially desirable and correct to treat two different

individuals, say a healthy person and a disabled person, one and the same? The answer is

undeniably no. Following the wisdom of Amartya Sen’s capability approach, I am convinced

that one of the motives of basic income should be not to equalize the functionings, which

are “certain beings and doings that together constitute what makes a life valuable”

(Robeyns, 2011), but to respect the choice of the individual and instead equalize

capabilities, which are “a person’s real freedoms or opportunities to achieve functionings”

(Robeyns, 2011) (Odekon, 2015, p. 513). For example, if both a healthy person and a

disabled person were to be given the same amount of resources, e.g. the same level of basic

income, with these given resources the healthy person would be able to achieve more

functionings than a disabled person. In order to equalize the capabilities between the two

individuals, it is necessary to divert more resources to the disabled person and thus grant

the people who are most vulnerable in society a higher level of basic income. The current

social protection system acknowledges this and therefore diverts resources to the

vulnerable social groups, such as the sick, the disabled, the unwillingly unemployed and the

old. Thus while the basic income scheme by B.U.B. might be a system in which we treat

everyone equally, it is not the most equitable system. Furthermore, the basic-income-to-

substitute-everything scheme might be the most financially feasible, but again it is not the

most socially desirable system. We should thus strive for a basic income scheme that is

socially desirable yet financially feasible, a scheme which accommodates an equality of

opportunities. For this reason, many supporters push for basic income schemes which are

partially complementary to the social protection system. This is especially the case if basic

income is not at a sustainable level. (Van Parijs, 2004, p. 14)

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In addition, I would like to draw attention to the fact that there exists a trade-off between

financial feasibility and social desirability. Basic income schemes that incorporate the

ethical principles of the social protection system by granting the socially vulnerable groups

a higher level of basic income, is socially desirable but leads to higher costs. The higher

costs are explained by two reasons.

First, the fact that a selective number of individuals receive a higher level of basic income

without changing the level of basic income for the remainder population evidently

increases the cost compared to the case in which everyone receives an equal level of basic

income. Naturally, a cost-reducing measure would be to decrease the level of basic income

for the remainder of the population. Alternatively, one can reduce the current levels of the

maintained social benefits for vulnerable social groups (Groot, 2004, p. 14) or subject the

social benefits to a ceiling which they may not exceed. (Defeyt, 2016)

Second, there is an opposition between basic income schemes which are substitutable and

basic income schemes which are complementary to the social protection system. While the

former basic income scheme incorporates the aspect of ‘unconditionality’, the latter basic

income scheme re-introduces ‘conditionality’ due to the need to verify whether the

individual in question meets the conditions to acquire a higher level of basic income, as

currently is the case with the social protection system. The latter basic income scheme has

higher administration costs because the efficiency gains on administration can no longer be

maximized as these are the result of a basic income scheme which is purely unconditional.

Possible cost-reducing measures in this regard would be to keep “conditional transfers in

simplified forms” (Groot, 2004, p. 14). (De Wispelaere & Stirton, 2011)

Overall, finding the balance between financial feasibility and social desirability brings us to

the following basic income proposals, which are more complex, more ethical, but also more

challenging to finance.

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3.4.2 The Vivant proposal

The basic income proposal by Vivant (n.d.) can be to a large extent considered as a ‘basic-

income-to-substitute-everything’ scheme (Melzochová & Špeciána, 2015, p. 554-555). The

political party proposes basic income as a substitute for currently existing social benefits,

such as “retirement pensions, unemployment benefits, the social integration income, family

benefits, scholarships, compensations for career interruption, …”(Vivant, n.d., p. 8, own

translation). There are, however, two crucial aspects that differentiate Vivant’s proposal

from the pure basic-income-to-substitute-everything scheme of B.U.B. (2016, p. 10).

First, Vivant (n.d., p. 42) introduced a diversified basic income scheme with the levels of

basic income increasing throughout the four different age categories. The suggested

monthly levels of basic income for the year 2002 (2010) were €135 (€163) for minors,

€400 (€482) for young adults, €540 (€651) for adults, and €800 (€964) for seniors. In

total, the basic income proposal would cost €60 billion (€77 billion). This diversified basic

income scheme is opposed to the uniform basic income scheme by B.U.B. (2016, p. 10) that

grants every Belgian adult an equal amount of basic income.

Second, while B.U.B. (2016, p. 10) replaces health care and other social benefits by basic

income, Vivant (n.d., p. 9) believes that health care should be maintained and health

insurance should become unconditional just as basic income. According to the political

party, the persons who currently do not receive health care are limited in number and the

implied additional costs are modest compared to the current budget of health care. Vivant

further argues that the administration costs will decrease greatly by modifying the

conditional health insurance to one that is unconditional, as there is no longer a need to

verify whether an individual has the right to health care. As a result, Vivant suggests that

the cost savings should even out the extra implied costs, bringing about heath care

expenditures that are unchanged in level. Assuming Vivant’s suggestion is correct, the cost

of health care would remain at €23 billion for the year 2010. (Vivant, n.d., p. 9)

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These two aspects contribute to the social desirability of Vivant’s basic income proposal.

The diversified basic income scheme across the different age categories provides seniors a

higher level of basic income as it substitutes their retirement pensions. Minors are also

given a basic income of which the level is approximated by the level of family benefits.

Furthermore, young adults receive a level of basic income, which is less than of adults but

more than of minors, that allows them to pursue higher education. Lastly, the sick are

protected thanks to unconditional health insurance. (Vivant, n.d. p. 7-24)

Table 4: The Vivant proposal, Belgium, 2002 and 2010

Scheme Monthly cash grant (€)

Minors / Young adults

Adults / Elderly

Yearly expenditures

(million €)

Cost comparison

(BI scheme as % of present social protection

expenditures)

Unconditional basic income

(2002)

135 / 400

540 / 800

60,249 N.A.

Unconditional basic income

(2010)

162.65 / 481.93

650.63 / 963.85

76,776 81.46

Health care

(2010)

N.A. 22,827 24.22

Basic income proposal and health care

(2010)

N.A.

99,603

105.68

Note: The dataset provided by FOD Sociale Zekerheid (2011, 2012, 2013) does not cover the year 2002,

thus no cost comparison is made for this year. I refrained myself from using data on social protection

expenditures provided by other sources as there is a wide diversity of which social categories are to be

included and which not.

Source: Own creation based on Melzochová & Špecián, (2015, p. 555-556), Vivant (n.d.),

and my own calculations.

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In total, Vivant’s basic income proposal and unconditional system of health care would cost

€100 billion for the year 2010. The costs of Vivant’s proposal would exceed the social

protection expenditures by €5 billion (5.68%). At a first glance, the proposal by Vivant can

be thus considered as one that is financially feasible if their proposal were to replace the

social protection system of Belgium and if additional funds are sought for the remaining €5

billion. An overview of the preceding costs and cost comparisons is given in Table 4. (FOD

Sociale Zekerheid, 2011, 2012, 2013; Vivant, n.d.; and own calculations)

Lastly, I would like to make two remarks. First, I have only presented what Vivant had

planned regarding the basic income scheme and the social protection system. Vivant’s

political proposal, however, includes more policy proposals, such as a reform of the labor

market. Second, Vivant’s basic income proposal also includes a transition phase that

imposes different costs in comparison to the final phase. During this transition phase,

recipients should be able to retain their benefits if the level thereof is higher than the level

of basic income. The transition phase plays an important role for the political feasibility:

with basic income being a radical reform in comparison to the existing social protection

system, it cannot be simply implemented overnight. Implementing such a phase smoothens

the transition from the current social protection system to a scheme of basic income,

allowing for the people to adjust and thus leading to higher political feasibility. The costs

from this transition phase will not be considered. However, as will be seen in the upcoming

basic income proposals, the basic income proposal by Raventos et al. is comparable to the

transition phase of Vivant, thus we will still have an idea of the temporary high costs of

such a transition phase. But overall to simplify the analysis I have only addressed the cost

implications of the final phase. (Melzochová & Špecián, 2015, p. 553-554; Vivant, n.d., p.7-

18)

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3.4.3 The proposal by Defeyt

An unconditional basic income of €600 for every adult Belgian citizen, yet maintaining a

number of social benefits for socially vulnerable groups, this is the core of the basic income

proposal for Belgium that the economist Philippe Defeyt (2016) recently made public in a

lecture staged by the Belgian Financial Forum. Defeyt advocates for a basic income scheme

that is complementary to a reformed version of the current social protection system. (Van

Horenbeek & Wauters, 2016)

In Defeyt’s basic income proposal for the year 2016 (2010), Defeyt unconditionally grants

€600 (€542) to every adult and €300 (€271) to every minor.3 Furthermore, on top of the

€600 (€542), he proposes an additional incentive premium of €250 (€226) for individuals

who are job hunting but do not meet the requirements to receive unemployment benefits,

such as fresh graduates and persons who have worked less than the minimum required

amount. (Defeyt, 2016, p. 1-2; Van Horenbeek & Wauters, 2016)

Next to a scheme of unconditional basic income, Defeyt’s proposition also includes a reform

of the social protection system. Concretely, he proposes to “establish insurance against the

risks of life, [which includes], unemployment insurance, health insurance (health care and

allowances), retirement assurance, and allocations to disabled persons” (Defeyt, 2016, p. 2,

own translation). The social benefits arising from these insurances would be granted above

basic income and they would be computed in a similar manner as today. They would be in

function of a certain percentage of the income that is lost and if desirable the social benefits

would also comply with a predetermined minimum and maximum level. There are

however two important differences. First, the percentages are lower than what is now the

case since an unconditional basic income is also received. Second, a distinction is no longer

made between the different household categories. Instead of having different

3 The numbers outside brackets are disclosed by Philippe Defeyt (2016) for the year 2016. The numbers between brackets are the approximated equivalent amounts for the year 2010, which I have personally calculated. It is equivalent in the sense that both numbers approximately imply an equal purchasing power. The approximation is accomplished by applying a formula which incorporates the health index. The approximation can be found in part E of the appendix.

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arrangements for cohabitants, single persons, and persons living together with a

dependent family, there will only remain a single arrangement which is strictly individual.

On a side note, Defeyt wishes to keep the current system of health care and allocations to

handicapped persons as they are. (Defeyt, 2016, p.2)

The unconditional basic income proposal by Defeyt would cost €73 billion in the year 2016

and €63 billion in the year 2010. The reformed social protection system is estimated at €30

billion by Defeyt for the year 2016.4 It is, however, unclear from his proposal whether

Defeyt includes the costs of health care in this estimation. I suspect that his estimate of €30

billion does not include health care as health care cost €23 billion and social benefits cost

€56 billion for the year 2010. That aside, in total, Defeyt’s proposal would cost about €103

billion for the year 2016. An overview of these costs is shown in Table 5. (Defeyt, 2016, p.

8)

Lastly, I would like to make a remark that the proposal by Defeyt is an excellent example of

a basic income proposal that attempts to find a balance between financial feasibility and

social desirability. The vulnerable social groups are protected in his proposal thanks to the

different types of insurances and remaining social benefits, which contributes to the social

desirability of the proposal. At the same time, Defeyt recognizes the increased costs of a

basic income proposal partially complementary to the social protection system. To

promote financial feasibility, he advocates for a lower level of basic income, lower levels of

social benefits, and a reform of the current social protection system. (Van Horenbeek &

Wauters, 2016)

4 Unfortunately, Defeyt (2016, p.8) does not provide calculations nor an exact description of how high the social benefits would be. He merely provides a total cost estimation for the reformed social protection system. For this reason, I cannot make a similar cost estimation of the remaining social benefits for the year 2010.

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Table 5: The proposal by Defeyt, Belgium, 2010 and 2016

Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(BI scheme as % of present social

protection expenditures)

Unconditional basic income as

specified by Defeyt

(2016)

600 / 300

72,901

N/A

Social protection system as

specified by Defeyt

(2016)

N/A ± 30,000* N/A

Basic income proposal and

remaining social protection system

(2016)

N/A ± 102,901 N/A

Unconditional basic income as

dictated by Defeyt

(2010)

542.07 / 271.04 63,311 67.18

Note: (1) As the year 2016 has yet come to pass, data on the social benefits have yet to be published.

There is therefore no cost comparison for the year 2016. (2) The figure with an asterisk is an estimation

provided by Defeyt (2016).

Source: Own creation based on Defeyt (2016), Melzochová & Špecián, (2015, p. 555-556),

and my own calculations.

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3.4.4 The proposal by Raventos et al.

The last basic income proposal to be considered is by Raventos and his co-authors,

Arcarons and Torrens, for the territory of Catalonia in the year 2010 (Arcarons, Raventos

Pañella & Torrens Mèlich, 2014). Their proposal is an example of a basic income scheme

that lies closely to the extreme ‘basic-income-purely-as-a-complement scheme’

(Melzochová & Špecián, (2015, p. 554-555), as there is an intertwining of the currently

existing social benefits and basic income. The following three points formulate how

existing social benefits are to be treated after an introduction of basic income.

“1.) Basic income replaces any existing public cash benefit of a lesser quantity.

“2.) When the public cash benefit is of a greater amount, the basic income must be topped

up to an equal quantity.

“3.) The basic income model allows for the financing of all extant services, such as health,

education, and all the others covered by public spending, as well the BI that is proposed

here.” (Arcarons, Raventos Pañella & Torrens Mèlich, 2014, p. 80)

Regarding the level of basic income, Raventos et al. grant a different amount to the minors

and the adults of Catalonia. In the first basic income scheme, the level of the Sufficient

Income Indicator for Catalonia was granted to adults (€664 per month) and a fifth of this

amount was granted to minors (€133 per month) for the year 2010 (Arcarons, Raventos

Pañella & Torrens Mèlich, 2014, p. 80-81). In the second basic income scheme, the

minimum wage was foreseen for adults (€451 per month), and minors were alternatively

allocated a basic income worth 100%, 50%, 30% of the basic income for adults for the year

2003 (Raventos, 2007, p. 158). As a general guideline, the authors suggest that the level of

basic income for adults should be above the poverty threshold (Arcarons, Raventos Pañella

& Torrens Mèlich, 2014, p. 80).

In the conditions of Belgium 2010, I will examine the proposal by Raventos et al. which

accords to the first proposed basic income scheme and which fulfills the three points

summed up earlier. Alternatively to the Sufficient Income Indicator for Catalonia, I will

examine the social integration income for Belgium, which can be considered as its Belgian

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equivalent as this amount is supposed to be sufficiently high to guarantee a decent

existence (FPS Social Security, 2015, p. 155). The social integration income, however, is

consistently lower than the poverty threshold in Belgium. For this reason, I will also

consider the poverty threshold of Belgium 2010, as the guidelines by Raventos et al.

requires the level of basic income for adults to be at least as high as the poverty threshold

(Arcarons, Raventos Pañella & Torrens Mèlich, 2014, p. 80). Concretely, this brings about

the following two basic income proposals for Belgium, 2010: (1) Basic income proposal by

Raventos et al. using the social integration income, €731 per month for adults and €146

per month for minors; (2) Basic income proposal by Raventos et al. using the poverty

threshold, €973 per month for adults and €195 per month for minors.

The cost estimation of both schemes is illustrated in Table 6. The unconditional basic

income alone would cost €80 billion for the first proposal and €106 billion for the second.

The retained social benefits, which exceed the level of basic income, are respectively

estimated at €21 billion and €11 billion. In total, including the costs of unconditional basic

income, the remaining social protection system, and health care, the implementation of the

proposal would require €123 billion for the basic income proposal using the social

integration income and €140 billion for the basic income proposal using the poverty

threshold. (FOD Economie, K.M.O., Middenstand en Energie, 2016; POD Maatschappelijke

Integratie, 2016; and Steunpunt tot bestrijding van armoede, bestaansonzekerheid en

sociale uitsluiting, 2016).

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Table 6: The proposal by Raventos et al., Belgium, 2010

Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(As % of present social protection

expenditures)

Unconditional basic income

(social integration income)

730.63 / 146.13

79,509

84.36

Social benefits N/A 20,537 21.79

Health care N/A 22,827 24.22

Total cost N/A 122,873 130.37

Unconditional basic income

(poverty threshold)

973.20 / 194.64

105,907

112.37

Social benefits N/A 11,414 12.11

Health care N/A 22,827 24.22

Total cost N/A 140,147 148.70

Note: The costs of the social benefits only include costs which are in excess of the level of the

unconditional basic income. For example, a senior receives a retirement pension of €1249. In the

context of the basic income at the level of the social integration income, €731 is considered as a cost of

basic income and the remaining costs, €518, are considered costs of social benefits.

Source: Own creation based on Arcarons, Raventos Pañella & Torrens Mèlich, (2014, p. 80-

81); Melzochová & Špecián, (2015, p. 555-556); and my own calculations.

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The cost estimation of the basic income proposal by Raventos et al. is more complex than

the previously discussed proposals. The three points that were put forward by Raventos et

al., have an important implication on the cost estimation: a comparison between the level

of current social benefits and the level of basic income will become necessary to determine

which social benefits are retained and which social benefits are replaced by basic income.

Due to this additional technicality, based on information from part C of the appendix, I have

generated statistical figures that show the average (monthly, yearly) level of social benefits

per beneficiary in part D of the appendix, creating the data that is needed to make such a

comparison possible. A cost estimation of the basic income proposals by Raventos’ for the

year 2010 followed the comparison. To understand how the comparison and the cost

estimation of the basic income proposal by Raventos et al. were achieved, I recommend

consulting part E of the appendix. (Arcarons, Raventos Pañella & Torrens Mèlich, 2014)

The cost estimation that I provide of Raventos et al.’s proposal is innovative in two aspects.

First, the comparison preceding the cost estimation is of a comprehensive nature because

35 social benefits will be considered and not only the retirement pensions, as was done in a

cost estimation of Raventos’ proposal by Melzochová and Špecián (2015, p. 556) for the

Czech Republic. Furthermore, the extensive comparison is mandatory because in Belgium

many beneficiaries receive social benefits of which the levels tower over that of the social

integration income and the poverty threshold (FOD Sociale Zekerheid, 2011). Second, a

cost estimation of a basic income proposal which “replaces any existing public cash benefit

of a lesser quantity [and] is topped up to an equal quantity when the public cash benefit is

of a greater amount”(Arcarons, Raventos Pañella & Torrens Mèlich, 2014, p. 80) has not yet

been realized for Belgium. Cost estimations have been largely limited to proposals in which

basic income is seen as a stand-alone with respect to currently existing social benefits. One

exception is the basic income proposal by Defeyt (2016) as he urges for a basic income

scheme which co-exists with a reformed version of the social protection system. Defeyt,

however, does not provide calculations for the reformed social protections system, he

merely gives an estimate. Overall, the cost estimation of Raventos’ proposal for Belgium

will allow for an assessment of a basic income scheme that safeguards the existing social

benefits. (Arcarons, Raventos Pañella & Torrens Mèlich, 2014)

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The basic income scheme by Raventos et al. is socially desirable as it maintains the social

protection system. However, due to the trade-off between social desirability and financial

feasibility, their proposal also accommodates high costs. As was expected, their basic

income proposal is indeed the most expensive to be considered out of all discussed

proposals, the costs are namely estimated at 130% and 149% of the total social protection

expenditures. Therefore, unlike the well-balanced proposal by Defeyt, the balance of the

proposal by Raventos et al. tips over to the side of social desirability, largely neglecting

financial feasibility. For this reason, I will propose a modification of the basic income

scheme of Raventos et al. which cherry-picks from the proposals of Defeyt and Raventos et

al. (Defeyt, 2016; Arcarons, Raventos Pañella & Torrens Mèlich, 2014)

3.4.5 A modification of the proposal by Raventos et al.

I will assess the costs of a basic income scheme that administers the levels of basic income

for adults as specified by Defeyt (2016) and incorporate this to the perspective by Raventos

et al. towards social benefits (Arcarons, Raventos Pañella & Torrens Mèlich, 2014).

A basic income scheme that replaces social benefits of a lower level and tops the level of

basic income up to the level of more generous social benefits, is a socially desirable scheme

as vulnerable individuals would be granted the same social protection as today. However,

setting aside basic income, in 2010 the social benefits alone cost €56 billion, presenting

59% of the total expenditures of the Belgian social protection system. Therefore,

introducing an additional basic income that maintains the social benefits would inevitably

introduce high costs. Accounting for financial feasibility, it is then advisable to keep these

high costs in control by lowering the level of basic income. This explains why Philippe

Defeyt proposes a scheme in which the basic income for adults is ‘only’ at the level of €600

due to the retention of social benefits. For this reason, instead of granting basic income at

the level of the social integration income (€731 per month) or the poverty threshold

(€973 per month) as was done by Raventos et al., the level of basic income for adults will

be adjusted downwards to €600 as proposed by Defeyt. (Arcarons, Raventos Pañella &

Torrens Mèlich, 2014; Defeyt, 2016; Van Horenbeek & Wauters, 2016)

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Regarding the basic income for minors, this will be set at the level of €150 per month, the

monthly average level of family benefits for the year 2010 which approximates the level

considered in the social basic income proposal by Raventos et al. for the social integration

income (€146), and will replace the current system of family benefits. By granting every

minor an equal amount and therefore no longer granting an amount that is based on the

birth order, the basic income scheme for minors is practically identical to the reform of the

family benefits which is to be implemented by 2019 in Flanders. The Flemish reformation

of family benefits namely involves adjusting the disparate levels of family benefits to an

equal monthly level of €160 for every minor born after 2019. Hence, the reformed family

benefits, which are unconditional in nature for minors, can be considered as a type of basic

income for minors. (Vlaanderen, n.d.; FOD Sociale Zekerheid, 2011, 2012, 2013)

Table 7 illustrates that given the Belgian conditions of 2010, a basic income scheme that

unconditionally grants every adult €600 per month and every minor €150 per month

would cost €66 billion. The expense of topping up basic income to the level of higher social

benefits costs an additional €25 billion. In total, the basic income scheme and the

remaining social protection system would cost €91 billion excluding health care and €114

billion including health care. In comparison to the costs of the basic income proposals by

Raventos et al. at the level of the social integration income and the poverty threshold,

which respectively constituted 130% and 149% of the social protection expenditures, the

costs of the revised basic income proposal amount to 120%. The basic income proposal is

thus not only socially desirable as before, but it is also more financially feasible due to the

lower costs. (Own calculations based on data provided by FOD Sociale Zekerheid, 2011,

2012, 2013)

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3.4.6 An overview of the considered basic income proposals

Basic income proposals come in all shapes and sizes, diverging in the level of basic income,

the target audience of basic income, and in their approach towards the social protection

system. The five basic income proposals that were discussed varied in these features and as

a result the cost estimations of each basic income proposal differed greatly. An overview of

the diverging cost estimations is illustrated in Figure 10. The total cost of the proposals is

expressed as a percentage of the social protection expenditures, in order to obtain a first

assessment of financial feasibility, answering the question whether the proposal would

cost more or less than what we currently spend on the social protection system.

Table 7: A modification of the proposal by Raventos et al., Belgium, 2010

Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(As % of present social protection

expenditures)

Unconditional basic income

(social integration income)

600 / 150

66,091

70.13

Social benefits N/A 25,323 26.87

Health care N/A 22,827 24.22

Total cost N/A 114,241 120.21

Note: (1) The costs of the social benefits only include costs which are in excess of the level of the

unconditional basic income. (2) The cost estimation of this basic income proposal is similar to the

proposal of Raventos et al. and can be assessed in part E of the appendix.

Source: Own creation based on Arcarons, Raventos Pañella & Torrens Mèlich, (2014, p. 80-

81); Defeyt, (2016); Melzochová & Špecián, (2015, p. 555-556); and my own calculations.

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Figure 10: Total yearly cost of the considered basic income proposals, including social benefits

and health care if applicable, in million euro, Belgium, 2010

Note: (1) The basic income proposals are ordered as they were discussed.

(2) The monthly level of basic income in euro is indicated under the label of the proposals, in the

format (minors/adults) and (minors/young adults/adults/seniors).

(3) SI stands for social integration income, PT stands for poverty threshold, and

SPS stands for social protection system

Source: Own creation based on Arcarons, Raventos Pañella & Torrens Mèlich, (2014); B.U.B.

(2010); Defeyt (2016); VIVANT (n.d.); and my own calculations.

80.24% 106.88% 105.68% 99% 130.37% 148.70% 120.21%

75,627

100,735 99,603 93,311

122,872

140,147

114,241

94,247

100%

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With respect to the social protection system, basic income proposals were covered in the

range between two extreme perspectives: the ‘basic-income-to-substitute-everything’

scheme, a low-cost benchmark, and the ‘basic-income-purely-as-a-complement’ scheme, a

high-cost benchmark (Melzochová & Špecián, 2015 p. 555-556). On the one side of the

spectrum, the basic income proposal by B.U.B. (2016), which provides every adult the

social integration income, is of the type ‘basic-income-to-substitute everything’. The

proposal would cost ‘only’ €76 billion for the year 2010, making the proposal financially

feasible given the abolishment of the social protection system. However, if the social

protection system were to be completely substituted by a scheme of basic income that

grants everybody an equal amount, the circumstances of vulnerable social groups would

surely deteriorate as many individuals would have to make do with a lower amount. This

insight led to the consideration of more socially desirable schemes, in particular schemes

that (partially) retain current social benefits and the health care. This brings us to the other

side of the spectrum, the basic income proposal by Raventos et al. (Arcarons, Raventos

Pañella & Torrens Mèlich, 2014), which leans towards the ‘basic-income-purely-as-a-

complement’ scheme. The proposal provides every adult the social integration income and

every minor a fifth of this amount while topping up basic income for beneficiaries who

currently receive a higher amount under the social benefits and while preserving the health

care. The proposal is estimated to cost €123 billion under the conditions of Belgium 2010.

This is a considerable amount and would cost Belgium €27 billion more than what was

spent on the social protection system in 2010. In order to curb the high costs, a

modification of the scheme by Raventos et al. was suggested, lowering the monthly basic

income level to €600 for adults as specified by Defeyt (2016). The total cost of the modified

proposal is estimated at €114 billion which is €9 billion less than the former variant.

However, the total cost is still 20% more than what was spent on the social protection

system in 2010. With the total cost of basic income proposals towering over what we

currently spend on the social protection system, the question that now remains is how

these grand amounts can be financed.

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3.5 Financing basic income

The large variety in the costs of basic income proposals caused by the diversified features

of basic income emphasizes that it is crucial to define a concrete proposal before assessing

how the costs can be financed. It is especially important to clearly communicate what the

consequences are for the current social protection system with the introduction of basic

income. For this reason, I have chosen to limit my analysis to only one of the discussed

basic income proposals, the modified proposal by Raventos et al. (Arcarons, Raventos

Pañella & Torrens Mèlich, 2014)

I will assess how the modified proposal by Raventos et al. can be financed through a ceteris

paribus assumption. This assessment will take place in three parts. First, I will personally

calculate the cost savings, realized by social benefits which are made redundant by the

introduction of basic income. Second, I will give an overview of tax measures that have

been suggested by Belgian basic income proponents to finance the remaining costs. To end,

I will address the essential issue of sustainability. (Arcarons, Raventos Pañella & Torrens

Mèlich, 2014; Melzochová & Špecián, 2015, p. 554; Monnier & Vercellone, 2014, p. 71-73)

3.5.1 The modified basic income proposal by Raventos et al.

The modified basic income proposal by Raventos et al. grants every adult a monthly basic

income of €600 and every minor a monthly basic income of €150. Furthermore, the system

of health care will be maintained, basic income would replace social benefits of a lower

level, and the level of basic income would be topped up for beneficiaries who currently

receive higher social benefits. For example, under the current social protection system, a

retiree received on average €1249 per month in the year 2010. Under the scheme of basic

income, this retiree would receive a basic income of €600 and an additional bonus of €649.

The retiree is thus just as well off in the scheme of basic income. (Arcarons, Raventos

Pañella & Torrens Mèlich, 2014; Defeyt, 2016)

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The modified basic income by Raventos et al. is chosen due to two reasons. First, the

proposal clearly stipulates the consequences for the current social protection system with

the introduction of basic income. The system of health care is to be retained and current

beneficiaries of social benefits should receive just as much in the scheme of basic income

compared to the current social protection system. The consequences on the social

protection system and the social benefits are relatively straight forward and the proposal is

chosen for this reason. Second, the modified scheme by Raventos et al. is chosen as it is

socially desirable and relatively more sustainable to maintain due to its lower costs

compared to the basic income scheme by Raventos et al. at the level of the social

integration income and the poverty threshold. (Arcarons, Raventos Pañella & Torrens

Mèlich, 2014)

As a recapitulation of the costs, Figure 11 gives an overview of the cost components of the

modified basic income proposal by Raventos et al. In total, the proposal is estimated to cost

€114 billion or expressed as a percentage of the social protection expenditures in 2010,

120%. In order to finance the proposal, there is a need to look for cost savings or revenues

beyond social protection expenditures.

Figure 11: Total yearly cost of the modified basic income proposal by Raventos et al., in

million euro, Belgium, 2010

Source: Own creation based on Arcarons, Raventos Pañella & Torrens Mèlich, (2014);

Defeyt (2016); FOD Sociale Zekerheid (2011, 2012, 2013); and my own calculations.

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3.5.2 Savings on social benefits

The first conventional step is to assess the cost savings induced by the replacement of

social benefits by basic income. In order to carry out this step, the specific criterion should

be known for replacing social benefits by basic income.

Raventos et al. stipulate a logical and socially desirable criterion, entirely replacing social

benefits, which are of a lower level, by basic income. Furthermore, basic income also

partially replaces social benefits of a higher level as beneficiaries do not receive the level of

basic income on top of what they currently receive. For example, a temporary unemployed

person eligible for unemployment benefits received on average €1725 per month in 2010.

Under the basic income scheme, that person will continue to receive €1725 per month:

€600 is received unconditionally and €1125 is received as a conditional social benefit.

When that person’s status changes from unemployed to employed, that person will no

longer be eligible for unemployment’s benefits, but will still unconditionally receive a basic

income of €600 per month. The level of basic income is, therefore, the minimum

guaranteed amount that every Belgian citizen receives unconditionally. (Arcarons,

Raventos Pañella & Torrens Mèlich, 2014; FOD Sociale Zekerheid, 2011, 2012, 2013;

Monnier & Vercellone, 2014, p. 71-73; and own calculations)

In order to assess the cost savings implied by the criterion provided by Raventos et al., a

comparison is necessary between the level of social benefits and the level of basic income.5

This comparison identifies which socials benefits are on average higher or lower than the

level of basic income. In order to make such a comparison possible, based on the dataset

provided by the FPS Social Security (FOD Sociale Zekerheid; 2011, 2012, 2013) (of which

an overview is shown in part C of the appendix), I calculated the average level for 35 social

benefits in part D of the appendix. After the comparison, an estimation of the cost savings

that are realized on the total cost of unconditional basic income (excluding the remaining

5 An elaborate explanation on how this comparison occurs can be found in part E of the appendix, under point (4), the proposal by Raventos et al. The comparison already took place in order to obtain cost estimations.

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costs of social benefits and health care) can be calculated by the summation of (1) the total

expenditures on social benefits of which the average level is lower than the level of basic

income and (2) the summation of the following product for every social benefit of which

the average level is higher than the level of basic income: the product of the monthly level

of basic income level multiplied by the number of beneficiaries who receive the specific

social benefit which in turn is multiplied by the average number of months during which

this specific social benefit is received.6 The first part of the summation reflects the

complete replacement of social benefits by basic income and the second part reflects the

partial replacement of social benefits by basic income. Note that this calculation can be

considered as a general formula when only the cost of the universal basic income has been

calculated.

6 Note that the average number of months during which the social benefit is received differs between social benefits. This explains why the product should be calculated for each social benefit separately. The average number of months is also calculated in part D of the appendix.

Figure 12: Comparison of the cost savings and the grand total cost of the basic income

proposal by Raventos et al., in million euro, Belgium, 2010

Source: Own creation based on Arcarons, Raventos Pañella & Torrens Mèlich, (2014);

Defeyt (2016), FOD Sociale Zekerheid (2011, 2012, 2013), and my own calculations.

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Concerning the modified version of Raventos et al. the implied cost savings are easier to

assess as the grand total cost estimation of basic income was calculated. The costs of social

benefits, the costs which are the result of social benefits in excess of the basic income level,

and the costs of health care additional to the costs of unconditional basic income are

included. As is illustrated in Figure 12, the cost savings of this grand total estimation (€114

billion) is €79 billion, the summation of the initial total expenditures of all social benefits

(€56 billion) and health care (€23 billion). The grand total cost estimation namely replaces

all costs of the initial social protection system. (Arcarons, Raventos Pañella & Torrens

Mèlich, 2014)

Alternatively, the cost savings realized on the cost of unconditional basic income (€66

billion), caused by an entire and partial replacement of social benefits, is €30 billion. This

can be calculated by the general formula aforementioned or it can be alternatively

calculated by the difference of the initial costs of social benefits (€56 billion) and the

remaining costs of social benefits under the basic income scheme (€25 billion), the costs

which are the result of social benefits in excess of the basic income level.7 Expressed in

percentages, the cost savings constitute 45% of the costs of unconditional basic income.

As concluded by Tirez (2014b, own translation), “the costs of basic income may be

enormous, but so are the savings”. The partial and complete replacement of social benefits

led to the realization of these significant cost savings. The remaining cost gap that has to be

financed is brought down to €36 billion.8

7 When the grand total cost estimation of basic income has already been calculated, this shortcut can be taken instead of the elaborate approach mentioned earlier. 8 Note that this cost gap is evidently equal for the ‘grand total cost of basic income’ and the total cost of

unconditional basic income. The cost gap is calculated as the following in million euro. (1) Grand total cost of basic income: Cost gap = 114,241 – 78,454 = 35,787 (2) Total cost of unconditional basic income: Cost gap = 66,091 – 30,304 = 35,787

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3.5.3 Additional financing measures

The second step is to implement additional measures in order to finance the remaining cost

of €36 billion. A wide diversity of measures has been suggested by proponents of basic

income and there has been considerable progress of how basic income can be financed. Due

to a focus on providing improved estimations of basic income proposals and the implied

cost savings, a discussion of the diverse measures as well as a concrete assessment of how

the remaining cost gap can be financed is beyond the scope of my paper. However, I would

like to briefly discuss the administrative efficiency argument, which is brought up routinely

by proponents, and the tax-increasing measures, which are naturally considered the

primary measures in closing the cost gap. (Raventos, 2007)

Cost savings realized by administrative efficiency

Besides the cost savings realized by the replacement of social benefits, proponents of basic

income turn to cost savings which are the product of administration efficiency. As opposed

to social benefits which are conditional in nature, basic income is unconditional. Under

basic income, there is no longer the need to verify whether an individual is eligible or not,

leading to a simplification of the administration process. The extent of the cost savings,

however, depends on the one hand on the initial administrative (in)efficiency of the social

protection system and on the other hand on the implied efficiency of a specific basic income

proposal. (De Wispelaere & Stirton, 2011)

On the one hand, the Belgian social protection system is relatively inefficient in comparison

to a scheme of basic income mainly due to three reasons. First, the current responsibilities

of the social protection system are spread over the different government levels, varying

from the federal level to the three communities (Flemish, French, and German speaking)

and the Common Community Commission of the Brussels Capital Region (FPS Social

Security, 2015, p. 13). With the introduction of basic income, basic income can be simply

organized at the federal level. Second, the organization of the social protection system is

made possible by a significant number of institutions. There are currently 15 ‘central

institutions’ and these are only the “institutions that are responsible for one or more

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branches of a specific system” (FOD Sociale Zekerheid, 2012, p. 59-61). There are thus

additional institutions, called ‘primary institutions’, which are responsible for the specific

branches. A scheme of basic income will lead to the replacement of many social benefits

and a number of these institutions will be made redundant as a consequence. Third, as

mentioned in part D of the appendix that is dedicated to an analysis of social benefits, there

exists a great variation in the level of social benefits due to a wide range of criteria due to

which the amount may differ. With basic income, these criteria are no longer enforced.

Overall, this leads to the insight that the efficiency gains are more significant if one were to

departure from an inefficient social protection system. (De Wispelaere & Stirton, 2011)

On the other hand, the implied efficiency of basic income depends on the type of basic

income scheme. Schemes of the type ‘basic-income-to-substitute-everything’ are naturally

more cost efficient than schemes leanings towards the type of ‘basic-income-purely-as-a-

complement’ (Melzochová & Špecián, 2015, p. 554). The cost efficiency namely depends on

how many social benefits are retained. For example, in the case of the proposal by Raventos

et al., there are efficiency gains due to the complete replacement of a number of social

benefits. However, at the same time, the efficiency gains are limited due to the fact that a

number of social benefits are partially being maintained. (De Wispelaere & Stirton, 2011)

The administrative efficiency argument is valid to a certain extent. However, when

assessing the extent of the cost savings, one should account for the initial administrative

(in)efficiency of the social protection system and the (limited) efficiency gains as a result of

a specific basic income scheme. Furthermore, while a scheme of basic income may be

comparatively more efficient than the current social protection system, it is important to

recognize that the implementation of basic income is also paired with administration costs.

There is a need to carefully assess the extent of efficiency gains based on the specific type of

basic income scheme. (De Wispelaere & Stirton, 2011)

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Taxes

In all basic income proposals, the method that is primarily responsible for closing the cost

gap is a reform of the taxes (Monnier & Vercellone, 2014, p. 72). A number of tax proposals

given by Belgian proponents of basic income will be discussed.

Jan Cornillie (2015), director of the research department of sp.a, suggests reforming the

personal income tax by abolishing the income tax exemption, the martial quotient, and a

number of other deductions that he, unfortunately, does not specify. He estimates an

increase of tax revenues worth €16.6 billion for the year 2015.

Philippe Defeyt (2016, p. 9), adopts a similar approach and also suggests abolishing the

income tax exemption and the martial quotient. The additional tax-exempt income for

dependent children and the tax deduction of childcare expenses for children less than 12

years are also annulled. These measures are estimated to generate €14.5 billion for the

year 2016. Furthermore, he proposes a taxation of capital income (€4 billion), the abolition

of the company car scheme (€3.4 billion), and a decrease of 50% for the tax reductions of

pensions and replacement incomes (€2.4 billion).9

Andreas Tirez (2015b) also suggests putting an end to the income tax exemption, which

was at €7090 in the tax year 2016 (SBB, n.d.). A simulation by the static micro-simulation

model Flemosi (n.d.) estimates the revenues at €10.2 billion for the year 2012 and €11.2

billion for the year 2014.10

In a TV broadcast by Panorama (2014), three Belgian proponents of basic income, Cate

Pierre Catelin, Axelle de Brant, and Ismaël Daoud, suggested the following tax measures for

the year 2014 with the revenues correspondingly reported: “an average increase of the

VAT from 21% to 25% (€16 billion), an increase of the real estate registration fees from

10-12.5% to 25% (€5.3 billion), a wealth tax of 25% (€29.2 billion), a capital gains tax of

9 Note that this is a non-limitative list of Defeyt’s suggestions of measures to finance basic income. The

measures that are mentioned are the most tax increasing. 10

There are larger revenues for the year 2014 due to the higher level of the income tax exemption.

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25% (€3 billion), an adjustment of the personal income tax (€22.9 billion), an adjustment

of the corporate tax (€4.2 billion), an adjustment of the withholding tax (taxes on savings,

dividends, securities) from 6% to 25% (€2.8 billion)” (Panorama, 2014, own translation).

Note that their suggestions are rather extreme because they want to finance a generous

scheme of basic income that monthly grants every adult €1500 and every minor €200.

The financing of the remaining cost gap of €36 billion can be technically achieved according

to these proposed measures. The proponents suggest generating government revenues in a

manner that is justifiable due to the fact that the citizens receive a basic income (Defeyt,

2016; Panorama, 2014). Ideally, the large cost of basic income should be carried by an

abundant amount of measures instead of a few extreme measures in order to enhance

political and economic feasibility. The need to increase taxes is thus a practically inevitable

course of action when finding ways to finance basic income. However, it is imperative to

ensure that the increased taxes are sustainable for the economy.

3.5.4 Sustainability

Recall that the basic income proposals that have been discussed allocate only modest

amounts of basic income to Belgian citizens. The highest basic income that was taken into

consideration is at the level of the poverty threshold (€973 per month). The reason why I

have limited myself to lower levels of basic income instead of grand levels, for example,

€1500 and €2000 per month, is due to an important insight identified by Van Parijs (1995,

p. 38-41): the sustainability of a basic income scheme for the Belgian economy. Whether

the Belgian economy can sustain a scheme of basic income depends on the exact manner in

which it is financed. However, higher levels of basic income evidently become more

challenging to finance, increasing the need to turn to higher taxes. Optimally, Van Parijs

(1995, p. 38) advises to “select the structure of taxation that can durably generate the

highest yield, and [to pitch the] tax rates at a level corresponding to the peak of the

associated Laffer hyperplane”.

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As is illustrated in Figure 13, the Laffer curve is an inverse U-shaped curve. The peak of the

Laffer curve is said to be the optimal tax rate, “that durably generates the highest tax yield”

(Van Parijs, 1995, p.38). The inverse U-shaped curve has two implications. First, increases

in tax rates preceding the optimal tax rate lead to an increase in tax revenues. Second,

increases in tax rates higher than the optimal tax rate lead to a reduction in tax revenues

(Krugman & Wells, 2009, p. 177). This implies that higher tax rates do not always lead to an

increase in tax revenues so when deciding to increase the tax rates to finance basic income,

we should be careful to not find ourselves on the downward-sloping part of the Laffer

curve. Although Van Parijs’ advice is difficult to apply, his insight is nevertheless

enlightening and should be taken into account. For this reason, I have only covered

proposals that grant moderate levels of basic income as they are naturally more

sustainable than basic income proposals that adopt higher levels.

Allow me to present a basic income proposal that illustrates why high levels of basic

income are (or at least presently) unsustainable. In a TV broadcast of Panorama (2014),

three Belgian proponents of basic income, Cate Pierre Catelin, Axelle de Brant, and Ismaël

Daoud, took up the challenge to finance a basic income scheme that grants every adult

€1500 per month and every minor €200 per month. The scheme additionally includes a

number of ‘personal all-in insurances’, such as health insurance. The cost of the

unconditional basic income alone is estimated at €163 billion and the grand total cost,

Figure 13: The Laffer curve

Source: Adopted from Laffer, (2004).

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including the insurances, is estimated at €187 billion. After accounting for the cost savings

on social benefits and administration, the remaining cost to be financed is €91 billion.

Catelin, de Brant, and Daoud proposed to finance this grand amount by increasing taxes

accompanied by a tax shift which is to bring about a balance between the tax on capital and

of the tax on labor. The exact proposed tax measures were discussed in the previous

subsection. Allow me to rephrase what this concretely means, Catelin, de Brant, and Daoud

suggest to implement “additional taxes that amount nearly a quarter of the GDP. This

would be politically and economically totally unfeasible” (Tirez, 2014a, own translation).

Not to mention, the large behavioral effects brought about by the increased taxes. It also

would not be unimaginable that the increased tax rates are on the downward-sloping part

of the Laffer curve, leading to a decrease in tax revenues instead of an increase (Decock,

2015).

Lastly, I would like to point out that basic income, as well as every single measure

implemented to finance basic income, will inevitably have important consequences. The

issue of sustainability was addressed but there are also behavioral effects, the issue of

whether the measure is considered to be politically or economically feasible, implications

on inequality, progressivity, and redistribution… For this reason, the consequences of basic

income, as well as every suggested measure, should be carefully considered. In this regard,

static back-of-the-envelope calculations do poorly and it becomes necessary to turn to

micro-simulation models and basic income experiments. In the next section, I will

acknowledge the limitations of the static approach and suggest an alternative approach for

further research. (Tirez, 2014a)

3.6 Topics for further research

The financing of basic income is twofold, being mainly achieved via the cost savings from

the replacement of social benefits by basic income and the extra revenues generated by tax

reforms.

72 | P a g e

The cost savings were assessed by applying the criterion of Raventos et al. that entirely

replaces social benefits of a lower level than basic income and partially replaces social

benefits of a higher level than basic income (Arcarons, Raventos Pañella & Torrens Mèlich,

2014). There are four aspects that can be improved. First, in order to determine which

social benefits are entirely and partially replaced, I compared the average level of social

benefit that each beneficiary receives to the level of basic income. However, as pointed out

in part D of the appendix, there is a tremendous amount of variation in the level received

not only across the different types of social benefits but also across different beneficiaries

who receive the same type of social benefit. An improved analysis would be to compare the

social benefit that each beneficiary receives individually instead of the average to the level

of basic income. Alternatively, a comparison can also be made for different ranges of

levels.11 However, the former requires precise data on what every single individual

receives from social benefits and the latter requires the number of beneficiaries for the

different level ranges of social benefits. Therefore, these improvements can only be

realized if there is a representative sample of recipients of social benefits or if the specified

datasets are available. Second, an analogous argument applies to the duration over which

the beneficiaries receive social benefits. As I have also employed the average number of

months or assumed that beneficiaries receive certain types of social benefits throughout

the year (e.g. retirement pensions, benefits for disabled persons). Third, aside from the

combination of retirement pensions and the income guarantee for the elderly (IGO), and

the combination of retirement pensions and survivor’s pensions, I made the assumption

that every beneficiary only receives one type of social benefit due to a lack of data. In

reality, however, there are recipients who receive more than one type of social benefit. For

example, on 1 January 2011, 82,308 out of 99,149 beneficiaries of IGO additionally received

a retirement pension (FOD Sociale Zekerheid, 2011, 2012, 2013; RVP, 2011, p. 259). Once

more, if more data were to be available in the different combinations of social benefits a

more accurate cost estimation can be made. Fourth, the number of recipients of social

benefits is given the conditions of the social protection system of 2010. If basic income, as

well as the corresponding tax reforms, were to be implemented, given the behavioral

11

For example, the datasets would include the number of beneficiaries that receive a specific type of social benefit which are within the ranges, €100 - €299, €300 - €499, €500 - €699…

73 | P a g e

effects and the consequences on income, the question should be addressed of whether the

number of recipients of social benefits will remain unchanged. Overall, the availability of

comprehensive datasets on social benefits and the knowledge of behavioral effects will

enable improved estimations of the cost savings.

After obtaining estimations of the cost savings, the next step is to finance the remaining

cost gap. The most typical approach is to generate extra revenue through tax reforms. In

Belgium, proponents of basic income have only adopted static back-of-the-envelope

calculations to assess how much tax reforms would yield. There is much space for

improvement in this regard and the following suggestions by the literature should be

applied to obtain a reliable assessment. First, it is desirable to analyze the distributional

effects of basic income and the proposed tax reformation. A micro-simulation model, which

employs data of the income distribution and tax payers, makes a static analysis possible

(Raventos, 2007, p. 157). Second, a dynamic approach can be adopted to predict the

behavioral effects, such as the labor effects, that occur due to the introduction of basic

income and the tax reforms (Melzochová & Špecián, 2015, p. 557). This is an important

aspect in the discussion of financial feasibility as the unemployment rates indirectly impact

the government revenues, the main source of funding basic income, through personal

income taxes. With personal income taxes being the predominant tax instrument in the

European Union, the impact of the decreased incomes caused by higher unemployment

rates on the tax revenues is not to be underestimated (Verbist & Figari, 2014).

Taking all contributions of the financial feasibility of basic income in Belgium into account,

there are yet many questions that remain unanswered. The distributional and the

behavioral effects of basic income and the corresponding tax reforms, for example, are yet

to be addressed. While static back-of-the-envelope calculations are the first step towards

assessing the financial feasibility, it is time for basic income proponents to distance

themselves from these calculations. I appeal to proponents to provide more transparency

of how their estimates were obtained and to take up the challenge to also adopt the highly

endorsed micro-simulation models in order to provide a better picture of the consequences

of basic income and the corresponding tax reforms.

74 | P a g e

4. Conclusion

The financial feasibility of basic income was taken under scrutiny in this paper, assessing

the costs as well as the cost savings on the social protection system which are implied by

the introduction of basic income.

The costs of granting every citizen an equal monthly income are dependent on the specifics

of the basic income proposal; though the costs are generally considerable in magnitude

when compared to the social protection expenditures. Five basic income proposals were

presented, starting with the proposal by B.U.B. (2016) which is of the extreme ‘basic-

income-to-substitute-everything’. The scheme was concluded to be the most financially

feasible; however, the scheme is also the least socially desirable as the complete

abolishment of the social protection system would lead to a deterioration of those receiving

social benefits of a higher level. More socially desirable schemes and thus also more costly

schemes were introduced that partially retained the social protection system, such as the

proposal by Vivant (n.d.) and the proposal by Defeyt (2016). Finally, bringing us closer to

the extreme ‘basic-income-as-a-complement’, the proposal by Raventos et al. (Arcarons,

Raventos Pañella & Torrens Mèlich, 2014) was introduced which ensured that recipients of

social benefits would be just as well off under the scheme of basic income. In comparison to

the other schemes, this proposal is the most socially desirable, but also the least financially

feasible. For this reason, a modified version was suggested, adjusting the level of basic

income downwards, finding a balance between financial feasibility and social desirability.

(Melzochová & Špecián, 2015)

The financing of basic income mainly occurs through cost savings and extra revenues

brought about by tax reforms. The cost savings of the modified proposal were assessed by

applying the simple but socially desirable criterion by Raventos et al., having basic income

entirely replace social benefits of a lower level and partially replace social benefits of a

higher level. The application of this criterion led to the comparison between the average

level of 35 different social benefits and the level of basic income. The conclusion to this

regard is that while the costs of basic income may be enormous, the resulting cost savings

75 | P a g e

are also significant in magnitude and largely contribute to financing basic income.

According to the calculations of basic income proponents in Belgium, the remaining cost

gap can technically be financed. However, proponents should additionally take into account

that basic income, as well as these suggested tax reforms, should be sustainable, address

the implications on redistribution, and account for behavioral effects.

This paper is the first step in establishing a cost analysis considering the current climate

with regards to social benefits as well as establishing a balanced proposal that entails

moderate characteristics. The next step would be to fine tune the proposal by looking into

all characteristics in detail. Some social benefits could potentially be lowered. For example,

considering that all working people receive basic income on top of their wage when

temporarily losing their job, maybe unemployment benefits do not have to be as high as

they are currently. Perhaps when taking into account all possible advantages and

disadvantages of implementing basic income, the amount in this proposal might be deemed

insufficient and an even larger cost gap would need to be financed. Furthermore, there are

also topics that go beyond the scope of a theoretical paper. The labor effects caused by

basic income and tax reforms, for example, can only be assessed to a certain extent with the

help of models as these are unreliable when faced with extreme values, calling the need to

also experiment with basic income. Basic income and the corresponding tax reforms will

affect our economic output and therefore influence the financing of basic income.

To truly complete the picture of addressing the financing feasibility of basic income in

Belgium, we must forego back-of-the-envelope calculations and address these issues and

calculations in a credible and transparent manner, only then can we have a valid

discussion. I hope this dissertation can be a first step in accomplishing that.

76 | P a g e

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http://www.demorgen.be/economie/600-euro-voor-iedereen-is-daar-het-belgische-

basisinkomen-b6f69cd9/

Van Parijs, P. (1995). Real freedom for all. Oxford: Clarendon Press.

86 | P a g e

Van Parijs, P. (2001). A basic income for all. In J. Cohen & J. Rogers (Eds.), What’s wrong

with a free lunch? (pp. 3-26). Boston: Beacon Press.

Van Parijs, P. (2004). Introductory chapter: A basic income for all: A brief defence to secure

real freedom, grant everyone a subsistence income. In L.F.M. Groot (Ed.), Basic Income,

Unemployment and Compensatory Justice. (p. 11-23). Dordrecht: Kluwer Academic

Publishers.

Verbist, G., & Figari, F. (2014). The Redistributive Effect and Progressivity of Taxes

Revisited: An International Comparison across the European Union. FinanzArchiv / Public

Finance Analysis, 70(3), 405-429.

Vivant. (n.d.). Het Vivant Programma. Retrieved July 21, 2016, from

http://www.Vivant.org/files/programma.pdf

Vlaams Parlement. (n.d.) Hervorming kinderbijslag. Retrieved August 15, 2016, from

https://www.vlaamsparlement.be/dossiers/hervorming-kinderbijslag

Vlaanderen. (n.d. a). Leefloon. Retrieved July 5, 2016, from

http://www.vlaanderen.be/nl/gezin-welzijn-en-gezondheid/leefloon

Vlaanderen. (n.d. b). Werkloosheidsuitkering. Retrieved July 11, 2016, from

http://www.vlaanderen.be/nl/werk/werk-zoeken/werkloosheidsuitkering

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http://www.vlaanderen.be/nl/ondernemen/indexcijfers

87 | P a g e

Appendices

Part A - Figures

Figure A1: Slope of the linear functions: total expenditures on social protection and the

cost of the basic income based on the social integration income, in million euro, Belgium,

2000-2013

Calculation:

* (Total social expenditures)

* (Cost of basic income)

Note: As the slope of the total social expenditures is greater than that of the cost of basic income, it is

steeper and has a larger growth. The slope of the linear functions also reflects the average yearly

increase of the total expenditures on social protection and the cost of the basic income proposal based

on the social integration income over the years.

Source: Based on De Schepper, (2015, p.31); Eurostat (2016b, 2016c, 2016d); FOD

Economie, K.M.O., Middenstand en Energie (2011); POD Maatschappelijke Integratie

€ 0

€ 20,000

€ 40,000

€ 60,000

€ 80,000

€ 100,000

€ 120,000

€ 140,000

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Mill

ion

eu

ro

Total expenditures on socialprotection (ESSPROS)

Linear function of totalexpenditures on socialprotection (ESSPROS)

Cost of basic income basedon the social integrationincome

Linear function of the cost ofbasic income based on thesocial integration income

€ 64,537

€ 49,605

€ 118,423

€ 85,581

+ € 4,145.04

+ € 2,767.38

4,145.04* > 2,767.38*

88 | P a g e

(2016); and Steunpunt tot bestrijding van armoede, bestaansonzekerheid en sociale

uitsluiting, (2016).

Part B – Tables

Table B1: Gross domestic product (GDP), total general government expenditures, total

general government revenues, total expenditures on social protection (ESSPROS), in

million euro (current prices), Belgium, 2000-2013

Year

Gross domestic product (GDP)

Total general government

expenditures

Total general government

revenues

Total expenditures on social protection

(ESSPROS)

2000 252,543 126,663.70 126,478.10 64,537.19

2001 259,803 130,736.00 131,192.70 68,701.91

2002 268,620 136,175.40 136,300.00 72,145.85

2003 276,157 143,338.00 138,360.60 76,332.77

2004 291,287 146,167.90 145,695.40 80,493.96

2005 303,435 160,200.20 152,188.30 83,551.42

2006 318,829 158,237.30 158,933.8 86,792.24

2007 335,815 166,280.30 166,492.2 90,470.79

2008 346,375 177,993.60 174,066.7 98,240.38

2009 340,669 188,832.70 170,036.4 104,598.54

2010 355,791 194,553.10 180,054.0 107,312.02

2011 369,258 206,287.20 190,709.0 112,532.67

2012 375,852 216,255.90 199,950.1 115,891.83

2013 382,692 218,293.30 206,396.2 118,422.71

Source: Eurostat, (2016b, 2016c, 2016d).

89 | P a g e

Table B2: Monthly social integration income for the category of single persons and the

calculated yearly social integration income of single persons, in euro, Belgium, 2000-2013

Since

Monthly social integration income for

single persons

Year

Calculated yearly social integration

income for single persons

01/12/1994 498.34 2000

(498.34*8)+(539.44*4) = 6,144.48

01/09/2000 539.44 2001 (539.44*5)+(550.22*7) = 6,548.74

01/06/2001 550.22

2002

(572.22)+(583.66*8)+(583.66*3)

= 6,992.48

01/01/2002 572.22 2003 (583.66*5)+(595.32*7) = 7,085.54

01/02/2002 583.66 2004 (595.32*9)+(613.33*3) = 7,197.87

01/10/2002 583.66 2005 (613.33*7)+(625.60*5) = 7,421.31

01/06/2003 595.32 2006 (625.60*9)+(644.48*3) = 7,563.84

01/10/2004 613.33 2007 (644.48*3)+(657.37*9) = 7,849.77

01/01/2005 613.33

2008 (683.95*4)+(697.61*4)+(711.56*4)

= 8,372.48

01/08/2005 625.60 2009 (711.56*5)+(725.79*7) = 8,638.33

01/10/2006 644.48 2010 (725.79*8)+(740.32*4) = 8,767.60

01/04/2007 657.37

2011 (740.32*4)+(755.08*4)+(770.18*4)

= 9,062.32

01/01/2008 683.95

2012 (770.18)+(785.61*10)+(801.34)

= 9,427.62

01/05/2008 697.61 2013 (801.34*8)+(817.36*4) = 9,680.16

01/09/2008 711.56

01/06/2009 725.79

01/10/2010 740.32

01/05/2011 755.08

01/09/2011 770.18

01/02/2012 785.61

01/12/2012 801.34

01/09/2013 817.36

Note: The calculated yearly social integration income for

single persons is simply the summation of the monthly social

integration income. Notice that the social integration income

may differ in level throughout the year as it is indexed

regularly.

Source: POD Maatschappelijke Integratie, (2016);

Steunpunt tot bestrijding van armoede,

bestaansonzekerheid en sociale uitsluiting. (2016);

and my own calculations.

90 | P a g e

Table B3: Calculation of the yearly cost of the basic income proposal based on the yearly

social integration income of single persons, Belgium, 2000-2013

Year Yearly social integration

income (€)

Number of

Belgians ≥ 18

years

Yearly cost of basic

income proposal (€)

2000 6,144.48 8,073,056 49,604,731,130.88

2001 6,548.74 8,101,958 53,057,616,432.92

2002 6,992.48 8,145,996 56,960,714,110.08

2003 7,085.54 8,190,878 58,036,793,704.12

2004 7,197.87 8,229,047 59,231,610,529.89

2005 7,421.31 8,275,919 61,418,160,433.89

2006 7,563.84 8,331,936 63,021,430,794.24

2007 7,849.77 8,396,748 65,912,540,547.96

2008 8,372.48 8,472,359 70,934,656,280.32

2009 8,638.33 8,547,468 73,835,849,248.44

2010 8,767.60 8,625,750 75,627,125,700.00

2011 9,062.32 8,720,225 79,025,469,422.00

2012 9,427.62 8,790,313 82,871,730,645.06

2013 9,680.16 8,840,838 85,580,726,374.08

Note: (1) To recapitulate, this particular basic income scheme endows the social integration income of

the category single persons to every Belgian eighteen years or older. (2) The yearly cost of basic income

proposals is naturally the product of the yearly social integration income and the number of adults

Source: FOD Economie, K.M.O., Middenstand en Energie, (2011); POD Maatschappelijke

Integratie, (2016);Steunpunt tot bestrijding van armoede, bestaansonzekerheid en sociale

uitsluiting, (2016); and my own calculations.

91 | P a g e

Part C - The key figures on social protection expenditures

This part of the appendix presents an elaborate overview of the social protection

expenditures and the corresponding number of beneficiaries for the years 2009 and 2010,

as provided by the publication of ‘Key figures’ by the Federal Public Services (FPS) Social

Security of Belgium (FOD Sociale Zekerheid, 2011, 2012, 2013). The categorization of

expenditures occurs via the social risks aforementioned in figure 7: “(1) Health care;

(2) Incapacity to work, physical injuries and disability; (3) Old age; (4) Survivors;

(5) Family/children; (6) Unemployment; (7) Labor market and employment policy; and

(8) Social expenditures not elsewhere classified” (FOD Sociale Zekerheid, 2011, p. 4-5).

The layout and subdivision provided by the 2011 publication of “Key figures” by the FPS

Social Security of Belgium are adopted. The data itself, however, is consulted from three

editions of ‘Key figures’: 2011, 2012 and 2013. Data that was found to be lacking or

inaccurate in the 2011 publication was adopted from later publications, with the

assumption that the figures of the later editions are more reliable as the data for the year

2010 has been published for a longer period of time. (FOD Sociale Zekerheid, 2011, 2012,

2013)

Besides enabling an understanding of what the social expenditures are exactly composed

of, the main purpose of this overview is to make use of these figures when calculating the

cost estimations of the basic income proposals. For example, as will become clear during

the discussion of basic income proposals, the proposal by Raventos et al. requires

knowledge on the following figures because a cost estimation of his proposal requires a

comparison between the level of current social benefits and the level of basic income. The

proposal by Raventos et al. namely requires that “the BI would replace ‘any existing public

cash benefit of a lesser quantity’ and ‘must be topped up to an equal quantity’ when the

‘public cash benefit is of a greater amount’ ”(Arcarons, Raventos Pañella & Torrens Mèlich,

2014, p. 82). Based on the data provided in this section, more accessible statistical figures

of the social benefits which are necessary for the comparison are generated in part D of the

appendix. (Arcarons, Raventos Pañella & Torrens Mèlich, 2014; Melzochová & Špecián,

2015, p. 553)

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(1) Health care

Table C1: Expenditures in the context of health care, in euro, 2009-2010

Expenditures 2009 2010

Physicians and clinical biology

4,382,454,000 4,748,430,000

Dentists 733,995,000 756,408,000

Nurses 1,283,528,000 1,378,421,000

Physiotherapists 549,049,000 580,007,000

Paramedical caregivers 781,548,000 834,888,000

Pharmaceutical benefits 4,120,388,000 4,249,222,000

Hospitalization 4,709,407,000 4,833,925,000

Other stays 1,970,072,000 2,105,340,000

Maximum billing 304,212,000 326,335,000

Other expenditures 1,032,100,000 1,104,064,000

Total expenditures 22,121,948,000 22,826,873,000

Source: FOD Sociale Zekerheid, (2011, p. 13).

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(2) Incapacity to work, physical injuries and disability

Table C2: Expenditures for incapacity to work, physical injuries and disability,

in euro, 2009-2010

Expenditures 2009 2010

Primary incapacity and invalidity

4,382,454,000 4,748,430,000

Primary incapacity

(Number of people)

(Number of compensated

days)

1,275,066,000

(403,354)

(31,329,688)

1,353,987,000

(411,045)

(32,845,261)

Invalidity

(Number of people)

3,107,388,000

(264,668)

3,394,443,000

(278,071)

Disability

(Number of people)

1,710,500,000

(152,198)

1,761,400,000

(161,167)

Accidents at work

(Number of people)

275,145,361

(236,478)

287,118,628

(240,334)

Occupational diseases 192,643,435 210,464,626

Permanent incapacity

for work

(Number of benefits)

187,705,934

(57,926)

204,835,040

(56,401)

Temporary incapacity

for work

(Number of benefits)

4,937,501

(430)

5,629,586

(454)

Total expenditures 6,560,742,796 7,007,413,254

Source: FOD Sociale Zekerheid, (2011, 2012, 2013).

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(3) Old age

Table C3: Expenditures for old age, in euro, 2009-2010

Source: FOD Sociale Zekerheid, (2011, 2012, 2013).

Expenditures 2009 2010

Retirement pensions

incl. pension bonus and other corresponding benefits

(Number of beneficiaries)

24,062,289,166

(1,656,240)

24,997,821,487

(1,668,445)

Income guarantee for the elderly (IGO – GRAPA)

(Number of beneficiaries)

407,107,863

(98,758)

415,122,707

(99,149)

Annuities

(Number of beneficiaries)

165,767,547

(566,576)

157,491,435

(531,986)

Total expenditures 24,635,164,576 25,570,435,628

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(4) Survivors

Table C4: Expenditures for survivors, in euro, 2009-2010

Source: FOD Sociale Zekerheid, (2011, 2012, 2013).

Expenditures 2009 2010

Survivor’s pensions

(Number of

beneficiaries with a

combination of

retirement pensions

and survivor pensions)

(Number of

beneficiaries with

survivor pensions but

without retirement

pensions)

6,251,243,898

(283,480)

(245,101)

6,334,459,881

(280,802)

(244,179)

Yearly compensation to entitled individuals as a consequence of a victim’s death caused by an accident at work

(Number of entitled individuals)

28,080,000

(26,520)

27,038,000

(25,348)

Yearly compensation to entitled individuals as a consequence of a victim’s death caused by an occupational disease

(Number of entitled individuals)

62,049,495

(12,897)

61,241,729

(12,539)

Total expenditures 6,341,373,393 6,422,739,610

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(5) Family/Children

Table C5: Expenditures for family/children, in euro, 2009-2010

Expenditures 2009 2010

Family benefits

(Number of benefits)

4,750,230,117

(2,653,916)

4,855,647,491

(2,682,854)

Maternity fee

& Adoption fee

(Number of benefits)

114,202,524

(118,921)

115,498,660

(120,759)

Maternity leave, paternity leave, work removal of pregnant women, adoption leave, parental leave

639,397,790

696,548,393

Maternity leave

(Number of people)

(Number of days)

425,402,610

(87,893)

(7,279,302)

429,190,654

(87,035)

(7,355,302)

Work removal of

pregnant women

(Number of people)

(Number of days)

65,600,293

(30,311)

(1,942,649)

102,857,374

(35,511)*

(2,335,545)

Paternity leave

(Number of people)

(Number of days)

35,550,511

(57,790)

(392,314)

36,711,043

(59,652)*

(402,648)

Adoption leave

(Number of people)

(Number of days)

995,134

(361)

(11,676)

1,099,781

(384)*

(12,281)

Parental leave

(Number of people)

(Number of days)

111,849,242

(44,389)

(13,072,021)

126,689,541

(51,944)

(15,370,373)

Total expenditures 5,503,830,431 5,667,694,544

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Note: Due to missing data, the number of people indicated by an asterisk (*) is a self-

calculated estimation, based on data of the years 2007, 2008 and 2009. It is based on

calculating the average number of days leave taken per person, by dividing the number of

days by the number of people, for work removal, paternity leave, adoption leave, for the

years 2007, 2008 and 2009. After calculating the average for each year, another average is

taken of the three averages. Lastly, by dividing the number of hours by the last calculated

average number of days leave taken per person, I obtain an estimation for the number of

people who have received a benefit for leave from work.

Work removal of pregnant women (in euro)

Average of 2007: (1,919,878/28,573)= 67.19

Average of 2008: (1,946,101/29,475)= 66.03

Average of 2009: (1,942,649/30,311)= 64.09

Average of 2007, 2008, 2009: (67.19+66.03 +64.09)/3 = 65.77

Estimated number of people for 2010: 2,335,545/65.77= 35,510.58 → 35,511

Paternity leave (in euro)

Average of 2007: (386,759/57,452) = 6.73

Average of 2008: (413,069/61,247) = 6.74

Average of 2009: (392,314/57,790) = 6.79

Average of 2007, 2008, 2009: (6.73+6.74+6.79)/3=6.75

Estimated number of people for 2010: 402,648/6.75=59,651.56 → 59,652

Adoption leave (in euro)

Average of 2007: (8,663/267) =32.45

Average of 2008: (8,342/268) =31.13

Average of 2009: (11,676/361) =32.34

Average of 2007, 2008, 2009: (32.45+31.13+32.34)/3= 31.97

Estimated number of people for 2010: 12,281/31.97=384

Source: FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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(6) Unemployment

Table C6: Expenditures for unemployment, in euro, 2009-2010

Source: FOD Sociale Zekerheid, (2011, 2012, 2013).

Expenditures 2009 2010

Compensated unemployed

(Number of benefits)

(Number of compensated days)

6,783,030,930

(683,148)

(194,754,225)

6,909,694,202

(683,380)

(194,824,791)

Temporary unemployed

(Number of people)

(Number of compensated days)

1,052,998,907

(210,864)

(18,905,837)

872,801,584

(173,286)

(15,389,969)

Tide-over benefits for seafarers

(Number of benefits)

(Number of compensated days)

1,667,000

(130)

(33,193)

1,435,000

(111)

(28,198)

Bankruptcy insurance for the self-employed

(Number of cases)

(Number of compensated months)

6,186,636

(768)

(6,564)

5,637,920

(834)

(5,822)

Total expenditures 7,843,883,473 7,789,568,706

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(7) Labor market policy and activation policy

Table C7: Expenditures for labor market policy and activation policy, in euro, 2009-2010

Expenditures 2009 2010

Labor market policy 2,140,070,584 2,247,925,618

Career interruption 204,578,377 201,187,014

Diminution of labor

performance

(Number of employees)

174,780,377

(65,220)

175,168,139

(65,882)

Full halt to labor

performance

(Number of employees)

29,798,000

(7,029)

26,018,874

(6,326)

Time credit 399,331,027 416,744,322

Diminution of labor

performance

(Number of employees)

349,212,718

(118,740)

369,911,447

(123,922)

Full halt to labor

performance

(Number of employees)

50,118,309

(9,006)

46,832,876

(8,397)

Early retirement 1,502,467,909 1,591,884,042

Full-time early

retirement

(Number of early retirees)

Ages 50y-59y

Ages ≥ 60y

1,499,322,951

(117,529)

(40,198)

(77,331)

1,588,732,091

(120,322)

(39,102)

(81,220)

Part-time early

retirement

(Number of early retirees)

2,563,958

(582)

2,783,951

(624)

100 | P a g e

Source: FOD Sociale Zekerheid, (2011, 2012, 2013).

Ages 50y-59y

Ages ≥ 60y

(344)

(238)

(366)

(258)

Early retirement for

seafarers

(Number of early retirees)

581,000

(42)

368,000

(32)

Leave for medical assistance

(Number of employees

working part-time)

( Number of employees

that stopped working)

32,822,284

(6,373)

(1,445)

37,228,260

(7,297)

(1,579)

Leave for palliative care

(Number of employees

working part-time)

( Number of employees

that stopped working)

870,987

(62)

(165)

881,980

(59)

(169)

Activation policy 1,491,421,498 1,826,479,952

Activation of the unemployed

(Number of activated

unemployed )

291,707,138

(64,134)

430,699,153

(79,746)

Activation of persons entitled to social integration and integration income

(Number of entitled

persons)

148,673,627

(22,279)

164,405,799

(23,574)

Grants for service checks 1,051,040,733 1,231,375,000

Total expenditures 3,631,492,082 4,074,405,570

101 | P a g e

(8) Social expenditures not elsewhere classified

Table C8: Expenditures for social integration and social assistance, in euro, 2009-2010

Note: The expenditures for social integration and social assistance belong to the category

“social expenditures not elsewhere classified”. Due to a lack of data, it is not known what

other ‘social expenditures not elsewhere classified’ are besides expenditures due to social

integration and social assistance.

Source: FOD Sociale Zekerheid, (2012).

Expenditures 2009 2010

Grants given to the OCMW for social integration

(Average number of monthly beneficiaries – social integration income)

560,406,000

( 91,115 )

618,820,000

( 95,465 )

Expenditures given to beneficiaries of social assistance

(Average number of monthly beneficiaries – financial assistance)

240,714,000

( 19,562 )

308,612,000

( 24,280 )

102 | P a g e

Part D – Statistical figures of social benefits

A brief description, as well as a number of statistical figures for the year 2010, will be

presented of the most prevalent social benefits granted by the Belgian government. This

part of the appendix is an extensive evaluation of the social benefits included in part C, the

key figures on social protection expenditures. Altogether these social benefits cover

€55,627 million (59%) of the total expenditures of the Belgian social protection system in

2010. (FOD Sociale Zekerheid, 2011, 2012, 2013)

Only the averages will be reported as there exists a tremendous amount of variation in the

level of social benefits. There is a wide range of criteria due to which the amount received

may differ, such as but not limited to (1) the individual’s type of occupation with different

systems for salaried persons, self-employed persons, and civil servants (FPS Social

Security, 2015, p.7); (2) the individual’s household situation in which three categories are

identified: cohabitants, single persons, or persons living together with a dependent family

(FPS Social Security, 2015, p. 159); (3) the individual’s previous paycheck (FPS Social

Security, 2015, p. 61); (4) a person’s age (FPS Social Security, 2015, p.59); (5) the duration

of how long the individual has been receiving the social benefit, with many benefits being

digressive of nature (FPS Social Security, 2015, p. 61).

Regarding the cost estimation of the basic income proposal by Raventos et al., an

appropriate analysis thereof requires a case-by-case comparison between the level of the

social benefits and the level of basic income that every individual receives. This is, however,

a rather extensive approach due to the wide diversity of the social benefit levels (Arcarons,

Raventos Pañella & Torrens Mèlich, 2014; Melzochová & Špecián, 2015, p. 553). Due to a

lack of data that reports the number of recipients of the different levels of social benefits

and as a matter of simplification I will limit my comparison to only the average amount of

social benefits monthly received by beneficiaries. This comparison will occur in part E of

the appendix, ‘Cost estimations of the basic income proposals’, in the context of the

proposal of Raventos et al.

103 | P a g e

Primary incapacity and invalidity

“If a person becomes unfit for employment due to an illness, accident or a physical

condition, this person is considered to be incapacitated for work” (FOD Sociale Zekerheid,

2011, p. 20). During this period of incapacitation, this person receives a social benefit in the

scheme of ‘primary incapacity’ in the first year and a social benefit in the scheme of

‘invalidity’ for the years thereafter. (FOD Sociale Zekerheid, 2011, p. 20)

Table D1: Statistical figures for primary incapacity, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

1,353,987,000 411,045 32,845,261

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of days/months

of primary incapacity

3294.01 41.22 / 1071.80 80 days / ± 3 months

Note: The amount of this benefit is calculated daily and it is granted 6 days a week (FPS Social Security,

2015, p.106). Per month, a beneficiary receives on average 26 daily allowances (RVA, 2016).

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D2: Statistical figures for invalidity, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

3,394,443,000 278,071 77,356,570

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of days/months

of invalidity

12,207.11 43.88 / 1140.89 278 days / ± 11 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013); (RIZIV, 2011, p.12).

Own calculations.

104 | P a g e

Disability

Disabled persons, who are incapable of providing themselves an income high enough to

cover their needs, are able to receive a benefit which grants them an income. (FPS Social

Security, 2015, p. 151).

Occupational diseases

An occupational disease is acknowledged when “the disease is on the list of occupational

diseases and the victim works in a sector in which he is exposed to a risk that may cause

this disease” (FPS Social Security, 2015, p. 123). Employees are legally insured for the

consequences of occupational diseases and may thus receive an allowance from FBZ (Fonds

voor de beroepsziekten, Funds for the occupational diseases) if they were to become

temporary or permanent incapacitated for work (FOD Sociale Zekerheid, 2013, p. 16). On

the one hand, a daily allowance is granted by FBZ in the case of temporary incapacity for

work (FBZ, 2015, p. 22). On the other hand, a yearly compensation is granted by FBZ in the

case of permanent incapacity for work (FBZ, 2015, p. 22-23).

Table D3: Statistical figures for disability, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average benefit per beneficiary

per month/year (€)

1,761,400,000 161,167 910.75 / 10,929.04

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D4: Statistical figures for occupational diseases, permanent incapacity for work,

Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (received once a year)(€)

204,835,040 56,401 3631.76

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Table D5: Statistical figures for occupational diseases, temporary incapacity for work,

Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days*

5,629,586 454 119,856*

Average allowance per

beneficiary (€)

Average compensation

per day/month* (€)

Average number of

days/months of incapacity*

12,399.97 47* / 1429.58* 264 days* / ± 9 months*

Note: FBZ pays a daily allowance which is based on 90% of the basic salary. This allowance is paid

every calendar day during which the person is incapacitated for work due to an occupational disease.

Due to lacking data of the monthly/daily average allowance per beneficiary, I have personally chosen a

daily allowance of the level €47. The generated statistics which make use of this estimation is indicated

with an asterisk (*) and should be used with caution. This number is taken considering the average

daily compensation for primary incapacity is €41.22, the average daily compensation for invalidity is

€43.88, the average daily compensation for occupational diseases based on the minimum and

maximum basic salary of the private sector is €52.72. (FPS Social Security, 2015, p. 116)

Calculation: The minimum- and maximum basic salary of the private sector. (FAO, 2016)

Basic salary (2010) → Minimum: €5,948.76 – Maximum: €36,809.73

90% of the basic salary → Minimum: €5353.88 – Maximum: €33,128.76

Daily allowance → Minimum: €14.67 – Maximum: €90.76 – Average: €52.72

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Accidents at work

Accidents at work include “every accident occurring to an employee during and because of

the execution of his labor contract [which] has caused an injury [as well as] accidents on

the way from and to work” (FPS Social Security, 2015, p. 115). Victims of ‘accidents at

work’ are entitled to indemnities for loss of income. Within the context of indemnities, a

distinction is made between temporary and permanent incapacity for work. The insurance

of the employer is responsible for paying these indemnities. The Belgian government,

however, does pay out allowances, compensations and annuities to victims with permanent

injuries once a year. (FPS Social Security, 2015, p. 115-121; Groep P&V, 2014, p.14)

Table D6: Statistical figures for accidents at work, allowances and compensations for

victims with permanent injuries, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average allowance and

compensation per beneficiary

(received once a year) (€)

70,647,000 84,043 840.60

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D7: Statistical figures for accidents at work, annuities for victims with permanent

injuries, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average annuity per beneficiary

(received once a year) (€)

210,227,616 156,291 1345.10

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Retirement pensions

Retirement pensions are benefits that are obtained by persons who have reached a certain

age, the legal pension age of 65 years old, after being formerly employed for a certain

period of time (FPS Social Security, 2015, p. 70). The level of a retiree’s pension is

determined by the length of the retiree’s career and the corresponding indexed earnings of

the retiree (FOD Sociale Zekerheid, 2011, p. 39).

Table D8: Statistical figures for retirement pensions Belgium, 2010

Total expenditures (€) Number of beneficiaries Average pension per beneficiary

per month/year (€)

24,997,821,487 1,668,445 1248.56 / 14,982.71

Note: In order to simplify, an assumption was made that all 1,668,445 retirees received a retirement

pension every month for the whole year. This implies that retirees who just turned 65 years old during

2010, those who have received their retirement pension less than twelve months are overlooked. This is

not very problematic as they are small in number relative to the total number of retirees. In comparison to

2009, there were 12,205 additional retirees in 2010, which is an increase of 0.7% retirees (FOD Sociale

Zekerheid, 2011, p. 40).

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Income guarantee for the elderly (IGO – GRAPA)

The income guarantee for the elderly (IGO) is a minimum-income scheme that is similar to

the social integration income, however, IGO is only granted to the elderly who are 65 years

old or older (FPS Social Security, 2015, p. 160). The income guarantee for the elderly is

independent of a person’s career and is paid by the government once a year. The

guaranteed amounts of income on 1 July 2010 were “€7,186.77 for married or cohabiting

persons (€598.90 per month) and €10,780.16 for single persons (€898.35 per month)”

(FOD Sociale Zekerheid, 2010c, p. 71, own translation). On 1 January 2011, 83% (82,308) of

the beneficiaries of IGO received a retirement pension additional to IGO (RVP, 2011, p.

259).

Table D9: Statistical figures for income guarantee for the elderly, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary per month/year (€)

415,122,707 99,149 348.90 / 4186.86

Note: The same assumption was made as under retirement pensions.

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Old age annuities

The old age annuities are granted to retirees who carried out pension payments during

their career before the year 1968. The annuity is paid once a year in combination with the

retirement pension. This means that out of the 1,668,445 retirees who receive retirement

pensions, 531,986 additionally receive an annuity in 2010. (Federale Pensioendienst,

2016)

Survivor’s pensions

A survivor’s pension is a benefit that persons of the age 45 years and older can obtain after

the decease of a spouse who had the right to a retirement pension (FPS Social Security,

2015, p.70). Out of the 524,981 beneficiaries who received a survivor’s pension in 2010,

280,802 beneficiaries received one in combination with their own retirement pension.

(FOD Sociale Zekerheid, 2011, p. 44)

Table D10: Statistical figures for old age annuities, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average annuity per beneficiary

(received once a year) (€)

157,491,435 531,986 296.04

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D11: Statistical figures for survivor’s pensions, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary per month/year (€)

6,334,459,881 524,981 1005.51 / 12,066.07

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Yearly compensation to entitled individuals as a consequence of a victim’s death

“If a person were to pass away due to an accident at work or an occupational disease, then

the surviving spouse may receive a life-long [or temporary] annuity” (FOD Sociale

Zekerheid, 2012, p. 45, own translation)

Table D12: Statistical figures for yearly compensation to survivors whose spouse has

passed away due to an accident at work, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (received once a year)(€)

27,038,000 25,348 1066.67

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D13: Statistical figures for yearly compensation to survivors whose spouse has

passed away due to an occupational disease, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (received once a year) (€)

61,241,729 12,539 4884.10

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Family benefits

Family benefits are granted monthly, financially supporting families with children. The

family benefit is unconditional until the child becomes 18 years old. After the age of 18, up

until the age of 25, family benefits may still be granted however, there are conditionalities

attached. The monthly amounts of family benefits on the 1st of July 2010 were €83.40 for

the first child of salaried persons, €78 for the first child of self-employed persons, €154.33

for the second child, and €230.42 for the third child and successive children. (FOD Sociale

Zekerheid, 2010c, p. 24; FOD Sociale Zekerheid, 2011, p. 47)

Table D14: Statistical figures for family benefits, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary per month/year(€)

4,855,647,491 2,682,854 150.82 / 1809.88

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D15: Age structure of eligible children, Belgium, 2010

Age Number of eligible children In percentages (%)

0-5 years

6-11 years

12-17 years

18-24 years

+25 years

758,702

716,635

724,113

459,659

23,744

28.28%

26.71%

26.99%

17.13%

0.89%

Source: Data obtained from Rijksdienst voor Kinderbijslag voor Werknemers, (2011a, p.

17; 2011b, p. 46), FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Maternity leave, work removal of pregnant women, paternity leave, adoption leave,

and parental leave

Pregnant women have the right to obtain a paid maternity leave before and after child-

bearing (FPS Social Security, 2015, p. 109). Furthermore, pregnant women who are advised

by their doctor to stop working during pregnancy due to the involvement of health risks

also have the right to receive benefits during their work removal (CM, n.d.). The fathers of

the child may also take up a paid paternity leave (FPS Social Security, 2015, p. 113). In the

case of adoption, a similar paid leave is also granted (FPS Social Security, 2015, p. 140).

Parents may additionally take up a parental leave following the birth or adoption of a child.

This parental leave can be taken any time between birth or adoption up until the child has

reached the age of 12 years old. (FOD Sociale Zekerheid, 2012, p. 52).

Table D16: Statistical figures for maternity leave, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

429,190,654 87,035 7,355,302

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months of leave

4931.24 58.35 / 1774.85 85 days / ± 3 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D17: Statistical figures for work removal of pregnant women, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

102,857,374 35,511 2,335,545

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months of leave

2896.49 44.04 / 1339.55 66 days / ± 2 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Table D18: Statistical figures for paternity leave, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

36,711,043 59,652 402,648

Average compensation

per beneficiary (€)

Average compensation

per day (€)

Average number of days of

leave

615.42 91.17 7 days

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D19: Statistical figures for adoption leave, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

1,099,781 384 12,281

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months of leave

2864.01 89.55 / 2723.86 32 days / ± 1 month

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D20: Statistical figures for parental leave, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

126,689,541 51,944 15,370,373

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months of leave

2438.96 8.24 / 250.71 296 days / ± 10 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Maternity fee and adoption fee

Families receive a maternity fee or an adoption fee when giving birth or adopting a child.

(FOD Sociale Zekerheid, 2011, p. 47)

Tide-over benefits for seafarers

Tide-over benefits are foreseen for seafarers for the duration between two voyages (FOD

Sociale Zekerheid, 2011, p. 28).

Table D21: Statistical figures for maternity fee and adoption fee, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (received once) (€)

115,498,660 120,759 956.44

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D22: Statistical figures for tide-over benefits for seafarers, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

1,435,000 111 28,198

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months

12,927.93 50.89/ 1547.91 254 days / ± 8 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Unemployment benefits

The unemployed have the possibility to obtain unemployment benefits given that they

meet the conditionalities which are attached to these benefits, such as previously having

worked as an employee for a certain number of days (Vlaanderen, n.d. b).

Table D23: Statistical figures for compensated unemployment, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

6,909,694,202 683,380 194,824,791

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months of unemployment

10,111.06 35.47 / 1078.76 285 days / ± 9 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D24: Statistical figures for temporary unemployment, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated days

872,801,584 173,286 15,389,969

Average compensation

per beneficiary (€)

Average compensation

per day/month (€)

Average number of

days/months of unemployment

5036.77 56.71/ 1725 89 days / ± 3 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Bankruptcy insurance for the self-employed

In the case of bankruptcy, self-employed persons have the right to obtain “a monthly

allowance during a maximum [period] of 12 months” (FPS Social Security, 2015, p. 137).

The monthly amounts on the 1st of July 2010 were €920.62 and €1213.44 for self-

employed persons who have a person who is dependent on them (FOD Sociale Zekerheid,

2010c, p. 60).

Table D25: Statistical figures for bankruptcy insurance for the self-employed, Belgium, 2010

Total expenditures (€) Number of beneficiaries Number of compensated months

5,637,920 834 5,822

Average compensation

per beneficiary (€)

Average compensation

per month (€)

Average number of months

6760.10 968.38 ± 7 months

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Social integration and social assistance

The right to social integration is guaranteed to persons who do not have the means to make

ends meet. One of the manners in which social integration is granted is through a social

integration income. There are, however, conditionalities attached to such a social

integration income. Individuals who do not meet these conditionalities may request for

social assistance. Similar to social integration, social assistance can be implemented

through different ways, one of which is financial aid. (FOD Sociale Zekerheid, 2012, p. 56)

Table D26: Statistical figures for social integration income, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (per month) (€)

618,820,000 95,465 6482.17 (540.18 )

Source: Data obtained from FOD Sociale Zekerheid, (2012). Own calculations.

Table D27: Statistical figures for social assistance (financial aid), Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (per month) (€)

308,612,000 24,280 12,710.54 (1059.21 )

Source: Data obtained from FOD Sociale Zekerheid, (2012). Own calculations.

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Early retirement pensions

Full-time early retirement pensions are benefits that the elderly may receive in the case of

dismissal. These unemployed seniors receive unemployment benefits combined with a

supplement from the company. Part-time early retirement pensions are benefits given to

the elderly active in the private sector who have switched from a full-time regime to a part-

time regime. Seafarers may go on early retirement and receive the corresponding benefits

provided that they completed the minimum required years of service. (FOD Sociale

Zekerheid, 2012, p. 37; FPS Social Security, 2015, p. 66; RVP, 2012)

Table D28: Statistical figures for full-time early retirement pensions, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary per month/year (€)

1,588,732,091 120,322 1100.33 / 13,204

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D29: Statistical figures for part-time early retirement pensions, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary per month/year (€)

2,783,951 624 371.79 / 4461.46

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D30: Statistical figures for early retirement pensions for seafarers, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary per month/year (€)

368,000 32 958.33 / 11,500

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Career interruption and time credit

Individuals who want to dedicate more time to their personal lives may request to

temporary diminish or put a halt to their labor performance. During this period, called

career interruption in the public sector and time credit in the private sector, individuals

receive benefits. (FOD Sociale Zekerheid, 2012, p. 35)

Table D31: Statistical figures for career interruption, Belgium, 2010

Diminution of labor performance

Total expenditures (€) Number of beneficiaries

Average compensation per

beneficiary (€)

175,168,139 65,882 2658.82

Full halt to labor performance

Total expenditures (€) Number of beneficiaries

Average compensation per

beneficiary (€)

26,018,874 6,326 4113.01

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D32: Statistical figures for time credit, Belgium, 2010

Diminution of labor performance

Total expenditures (€) Number of beneficiaries

Average compensation per

beneficiary (€)

369,911,477 123,922 2985.03

Full halt to labor performance

Total expenditures (€) Number of beneficiaries

Average compensation per

beneficiary (€)

46,832,876 8,397 5577,33

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Leave for medical assistance

Individuals who want to take care of a seriously ill family member may take time off work,

called leave for medical assistance, during which they receive benefits. (FOD Sociale

Zekerheid, 2013, p. 44).

Leave for palliative care

Individuals who want to take care of a person who is suffering from a terminal disease may

take a leave for palliative care, during which they receive benefits. (FOD Sociale Zekerheid,

2013, p. 44-45)

Table D33: Statistical figures for leave for medical assistance, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (€)

37,228,260 8,876 4194.26

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Table D34: Statistical figures for leave for palliative care, Belgium, 2010

Total expenditures (€) Number of beneficiaries Average compensation per

beneficiary (€)

881,980 228 3868.33

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Part E – Cost estimations of the basic income proposals

The calculations concerning the static cost estimations of the discussed basic income (BI)

proposals for the year 2010 are elaborated upon in this part of the appendix. An

explanation of how the amounts of basic income are revised for the year 2010 in Belgium

for the different basic income proposals is also included. This can be found in the before

last sub-section of this part of the appendix: Revised amounts over time. The calculations

are based on raw data provided by multiple sources and data which has already been

modified throughout the preceding parts of the appendix. An overview of these sources,

categorized by the type of data, can be found in the last subsection of this part of the

appendix, which is named Data references.

(1) The B.U.B. proposal

Social integration income (Average of €730.63/month) (2010)

Yearly cost of BI per adult * Number of adults = Yearly cost of BI

€8,767.60 * 8,625,749 = €75,627,116,932.40

Poverty threshold (€973.20/month in January 2010) (2010)

Yearly cost of BI per adult * Number of adults = Yearly cost of BI

€11,678.40 * 8,625,749 = €100,734,947,121.60

Level of BI, given a breakeven between social expenditures and the cost of BI (2010)

Current social expenditures / Number of adults = Yearly level of BI

€94,246,677,673 / 8,625,749 = €10,926.20 (Yearly level of BI)

€10,926.20 / 12 = €910.52 (Monthly level of BI)

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(2) The Vivant proposal

Vivant 2002

Unconditional basic income for minors (ages 0-17y) (€135/month) (2002)

Yearly cost of BI per minor * Number of minors = Yearly cost of BI for minors

€1620 * 2,163,729 = €3,505,240,980

Unconditional basic income for young adults (ages 18-24y) (€400/month) (2002)

Yearly cost of BI per young adult * Number of young adults = Yearly cost of BI for young

adults

€4800 * 887,592 = €4,260,441,600

Unconditional basic income for adults (ages 25 – 64y) (€540/month) (2002)

Yearly cost of BI per adult * Number of adults= Yearly cost of BI for adults

€6480 * 5,512,012 = €35,717,837,760

Unconditional basic income for the elderly (ages 65+)12 (€800/month) (2002)

Yearly cost of BI per senior * Number of seniors = Yearly cost of BI for seniors

€9600 * 1,746,392 = €16,765,363,200

Total cost of unconditional basic income (2002)

€3,505,240,980 + €4,260,441,600 + €35,717,837,760 + €16,765,363,200

= €60,248,883,540

12

The age of the elderly is determined by the legal pension age of 65 years old, after which retirees can receive retirement pensions (FPS Social Security, 2015, p. 70).

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Vivant 2010

Unconditional basic income for minors (ages 0-17y) (€162.65/month) (2010)

Yearly cost of BI per minor * Number of minors = Yearly cost of BI for minors

€1951.80 * 2,214,156 = €4,321,589,680.80

Unconditional basic income for young adults (ages 18-24y) (€481.93/month) (2010)

Yearly cost of BI per young adult * Number of young adults = Yearly cost of BI for young

adults

€5783.16 * 929,428 = €5,375,030,832.48

Unconditional basic income for adults (ages 25 – 64y) (€650.60/month) (2010)

Yearly cost of BI per adult * Number of adults= Yearly cost of BI for adults

€7807.20 * 5,836,162 = €45,564,083,966.40

Unconditional basic income for the elderly (ages 65+) (€963.85/month) (2010)

Yearly cost of BI per senior * Number of seniors = Yearly cost of BI for seniors

€11,566.20 * 1,860,159 = €21,514,971,025.80

Total cost of unconditional basic income (2010)

€4,321,589,680.80 + €5,375,030,832.48 + €45,564,083,966.40 + €21,514,971,025.80

= €76,775,675,505.48

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(3) The proposal by Defeyt

Unconditional basic income proposal by Defeyt (€600/month for adults, €300/month for

minors) (2016)

(Yearly cost of BI per adult * Number of adults) + (Yearly cost of BI per minor * Number of

minors) = Yearly cost of BI

(€7200 * 8,982,329) + (€3600 * 2,285,581) = €72,900,860,400

Unconditional basic income proposal by Defeyt (€542.07/month for adults,

€271.04/month for minors) (2010)

(Yearly cost of BI per adult * Number of adults) + (Yearly cost of BI per minor * Number of

minors) = Yearly cost of BI

(€6504.84 * 8,625,749) + (€3252.48 * 2,214,156) = €63,310,615,232.04

(4) The proposal by Raventos et al.

To recapitulate, Raventos et al. proposes a basic income scheme in which “persons who

presently receive higher social benefits than the proposed basic income, would allow to

keep this ‘surplus’ and therefore would receive a higher basic income grant” (Melzochová &

Špecián, 2015, p. 553). (Arcarons, Raventos Pañella & Torrens Mèlich, 2014)

A cost estimation of the basic income proposal by Raventos et al. is thus more complicated

than the previous proposals, as it now becomes necessary to compare the level of current

social benefits to the level of basic income, to determine which social benefits are retained

and which social benefits are replaced by basic income. While accounting for the financial

feasibility and the social desirability of a basic income proposal, such a comparison is made

possible by Table E1, E2, and E3. These tables give an overview of the most prevalent social

benefits and the average amount monthly received by beneficiaries for these benefits for

the year 2010. The tables were constructed based on information provided by part C and

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part D of the appendix. These social benefits are the outcome of social protection

intervening in a number of occurrences, providing individuals with a “substitution income,

supplementary income, and assistance allowances” (FPS Social Security, 2015, p. 9). An

elaborate overview of these social benefits was already shown in the previous part of the

appendix, Part D: ‘Statistical figures of social benefits’. (Arcarons, Raventos Pañella &

Torrens Mèlich, 2014; FOD Sociale Zekerheid, 2011, 2012, 2013; Melzochová & Špecián,

2015, p. 553)

Table E1 and Table E2 contain social benefits that are received on a regular basis, which is

typically once a month. Table E3 contains exceptional one-time recurring benefits and

social benefits that are received once a year. The social benefits are split up into different

tables as the manner in which they will be compared to the level of basic income is

different. While Raventos only suggested preserving social benefits that exceed basic

income at their current levels and replacing social benefits that fall short of basic income by

basic income, he does not provide specific guidelines in the manner this comparison should

take place. This leads to questions such as whether the levels of the social benefits are to be

compared to that of basic income on a monthly or a yearly basis. For this reason, I have

decided to administer the following comparison while accounting for financial feasibility,

social desirability, and Raventos’ guidelines. (Arcarons, Raventos Pañella & Torrens Mèlich,

2014)

The social benefits included in Table E1 will be compared to basic income on a monthly

basis: the average amount monthly received of the social benefit will be compared to the

monthly level of basic income. Keeping social benefits which exceed the level of basic

income on a monthly basis is socially desirable as most of these benefits are either

substitution incomes or supplementary incomes to guarantee an income of subsistence

level. Moreover, the odds are that the social groups, who currently receive these benefits,

the retired, the unemployed, the disabled, and the sick, would fall into poverty if their

current benefits were to be replaced by a benefit of a lower level, basic income. (FOD

Sociale Zekerheid, 2011)

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The monthly comparison is performed by the following two remarks. First, I assume that

each individual only receives one social benefit. There are, however, two exceptions in

which I consider individuals to receive two social benefits thanks to additional data: (1)

82,308 seniors receive a retirement pension and an income guarantee for the elderly (IGO)

(RVP, 2011, p. 259) (2) 280,802 seniors receive a retirement pension and a survivor’s

pension (FOD Sociale Zekerheid, 2011, p. 44). For these exceptions, I will compare the

summation of the two social benefits to the level of basic income. If the level of basic

income is lower than the summation, both social benefits will be retained even though the

monthly level of the social benefits separately are lower than basic income. With the level

of retirement pensions solely exceeding the level of basic income, the summation evidently

also exceeds the level of basic income. Thus the combination of social benefits is retained

for both exceptions. Second, the average amount monthly received of the social benefit will

be compared to the monthly level of basic income of the respective age category of the

social benefit. For example, minors as well as young adults, receive family benefits. The

comparison with basic income at the level of the social integration income will require

comparing €146 to €151 for minors and €731 to €151 for young adults. This is indicated

in Table E1 by an asterisk.

The monthly comparison in Table E1 shows that the average level of monthly social

benefits is relatively high compared to the monthly basic income level at the social

integration income and the poverty threshold. For this reason, the majority of the social

benefits are retained at their respective levels, as is indicated by (O). For the first basic

income scheme at the level of the social integration income (SI), 14 out of the 17 social

benefits are retained. For the second basic income scheme at the level of the poverty

threshold (PT), 10 out of the 17 social benefits are retained. A separate cost estimation will

be made for beneficiaries who receive retained benefits.

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Table E1: Regular recurring social benefits, comparison on a monthly basis, in euro,

Belgium, 2010

Social benefits (SB) Average monthly benefit

SI 730.63

(146.13*)

PT 972.20

(194.64*)

Family benefits* 150.82 O* / X X* / X

Benefits for primal incapacity 1071.80 O O

Benefits for invalidity 1140.89 O O

Benefits for disability 910.75 O X

Benefits for temporary incapacity to work due to an occupational disease

1429.58 O O

Full-time early retirement pension 1100.33 O O

Part-time early retirement pension 371.79 X X

Early retirement pensions for seafarers

958.33 O X

Tide-over benefits for seafarers 1547.91 O O

Compensated unemployment benefits 1078.76 O O

Temporary unemployment benefits 1725 O O

Bankruptcy insurance for the self-employed

968.38 O X

Social integration income 540.18 X X

Social assistance (financial aid) 1059.21 O O

Retirement pensions 1248.56 O O

Income guarantee for the elderly 348.90 X X

Survivor’s pensions 1005.51 O O

Note: (1) SI = Social integration income, PT = Poverty threshold, O = Social benefit retained (BI < SB),

X = Social benefit replaced by BI (BI > SB) (2) The asterisk indicates that the level of basic income for

minors should be compared to the level of family benefits.

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

Min

ors

* &

Y

ou

ng

ad

ult

s

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The comparison of basic income and the social benefits included in Table E2 and in Table

E3 will occur on a yearly basis: the average compensation per beneficiary for these social

benefits will be compared to the yearly level of basic income. This yearly comparison will

occur due to a primacy of financial feasibility over social desirability for these social

benefits. Considering the social consequences of giving a lower monthly benefit, but

nevertheless at least as high when the benefit is spread over the whole year, are not as

problematic compared to the situation in which the same was applicable to social benefits

in Table E1. Furthermore, the social benefits belonging to Table E2 are only received

temporarily as they are tied to a temporary leave from work and the social benefits

belonging to Table E3 are exceptional one-time occurring benefits or benefits that are only

received once a year. It is thus justifiable to replace these social benefits, which are after

accumulation lower than the yearly basic income level, by basic income.

As a consequence of the comparison on a yearly basis, assuming that each individual only

receives one social benefit, the yearly level of basic income for the social integration

income and the poverty threshold is consistently higher than the social benefits of Table E2

and Table E3. Implying that all social benefits mentioned in Table E2 and Table E3 are

replaced by a scheme of basic income and are thus disregarded in the cost estimations.

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Table E2: Regular recurring social benefits, taking time off work, comparison on a

yearly basis, in euro, Belgium, 2010

Social benefits Average compensation per beneficiary

SI

8,767.56

PT

11,678.4

Maternity leave 4931.24 X X

Work removal of pregnant women

2896.49 X X

Adoption leave 2864.01 X X

Parental leave 2438.96 X X

Paternity leave 615.42 X X

Career interruption:

Diminution of labor performance

2658.82 X X

Career interruption:

Full halt to labor performance

4113.01 X X

Time credit:

Diminution of labor performance

2985.03 X X

Time credit:

Full halt to labor performance

5577,33 X X

Leave for medical assistance

4194.26 X X

Leave for palliative care 3868.33 X X

Note: (1) The average compensation per beneficiary is what every beneficiary receives on average over

the whole duration of their leave. (2) SI = Social integration income, PT = Poverty threshold,

O = Social benefit retained (BI < SB), X = Social benefit replaced by BI (BI > SB)

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

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Table E3: Exceptional one-time and yearly recurring social benefits, comparison on a

yearly basis, in euro, Belgium, 2010

Social benefits Average compensation

per beneficiary

SI

8,767.56

PT

11,678.4

Occupational disease:

Yearly compensation for victims with permanent incapacity to work

3631.76 X X

Occupational disease:

Yearly compensation to survivors whose spouse has passed away

4884.10 X X

Accident at work:

Annuities for victims with a permanent injury

1345.10 X X

Accident at work:

Allowances and compensations for victims with a permanent injury

840.60 X X

Accident at work:

Yearly compensation to survivors whose spouse has passed away

1066.67 X X

Old age annuities 296.04 X X

Maternity fee and adoption fee 956.44 X X

Note: SI = Social integration income, PT = Poverty threshold,

O = Social benefit retained (BI < SB), X = Social benefit replaced by BI (BI > SB)

Source: Data obtained from FOD Sociale Zekerheid, (2011, 2012, 2013). Own calculations.

131 | P a g e

Raventos et al. – Social integration income

This is the cost estimation of the proposal by Raventos et al. for the social integration

income.

Unconditional basic income (€730.63/month for adults, €146.13/month for minors) (2010)

(Yearly cost of BI per adult * Number of adults) + (Yearly cost of BI per minor * Number of

minors) = Total yearly cost of BI

(€8767.56 * 8,625,749) + (€1753.56 * 2,214,156) = €79,509,427,297.80

Social benefits (Costs of social benefits in excess of the level of the basic income) (2010)

(Total cost of basic income and retained social benefits)13 – (Cost unconditional basic

income) = Total cost of social benefits

(€100,046,383,540.64) – (€79,509,427,297.80) = €20,536,956,242.84

Total cost of unconditional basic income, social benefits and health care (2010)

Total cost of basic income + Total cost of social benefits + Total cost of health care = Grand

total cost of the reformed social protection system

€79,509,427,297.80 + €20,536,956,242.84 + €22,826,873,000 = €122,873,256,541

13

This is calculated in Table E4

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Raventos et al. – Poverty threshold

This is the cost estimation of the proposal by Raventos et al. for the poverty threshold.

Unconditional basic income (€973.20/month for adults, €194.64/month for minors) (2010)

(Yearly cost of BI per adult * Number of adults) + (Yearly cost of BI per minor * Number of

minors) = Yearly cost of BI

(€11,678.4 * 8,625,749) + (€2335.68 * 2,214,156) = €105,906,507,007.68

Social benefits (Costs of social benefits in excess of the level of the basic income) (2010)

(Total cost of basic income and retained social benefits)14 – (Cost unconditional basic

income) = Total cost of social benefits

(€117,320,378,667.15) – (€105,906,507,007.68) = €11,413,871,659.47

Total cost of unconditional basic income, social benefits and health care (2010)

Total cost of basic income + Total cost of social benefits + Total cost of health care = Grand

total cost of the reformed social protection system

€105,906,507,007.68 + €11,413,871,659.47 + €22,826,873,000 = €140,147,251,667

14

This is calculated in Table E5

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(5) A modification of the proposal by Raventos et al.

The cost estimation will be realized in the same manner as the previous basic income

proposal by Raventos et al. Just like Raventos et al., this proposal also retains social benefits

of a higher level and replaces social benefits of a lower level. A comparison of the average

level of social benefits to basic income at the monthly level of €600 for adults and €150 for

minors leads to the replacement and retention of the same social benefits as by the scheme

provided by Raventos et al. for the social integration income (previously shown in Table

E1, E2, E3). (Arcarons, Raventos Pañella & Torrens Mèlich, 2014)

Unconditional basic income (€600/month for adults, €150/month for minors) (2010)

(Yearly cost of BI per adult * Number of adults) + (Yearly cost of BI per minor * Number of

minors) = Yearly cost of BI

(€7200 * 8,625,749) + (€1800 * 2,214,156) = €66,090,873,600

Social benefits (Costs of social benefits in excess of the level of the basic income) (2010)

(Total cost of basic income and retained social benefits)15 – (Cost unconditional basic

income) = Total cost of social benefits

(€91,414,043,595.47) – (€66,090,873,600.00) = €25,323,169,995.47

Total cost of unconditional basic income, social benefits and health care (2010)

Total cost of basic income + Total cost of social benefits + Total cost of health care = Grand

total cost of the reformed social protection system

€66,090,873,600 + €25,323,169,995.47 + €22,826,873,000 = €114,240,916,595

15

This is calculated in Table E6

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Revised amounts over time

In this subsection, I explain how I have revised the values given in a certain basic income

proposal for the year in question to an equivalent value for the year 2010 for Belgium. It is

equivalent in the sense that the purchasing power of the amount of basic income given in

the proposal of the corresponding year is approximately equivalent to the revised amount

of basic income for the year 2010.

I have adopted the following two approaches. First, if the basic income proposal refers to a

certain measure, such as the social integration income and the poverty threshold, it is

relatively straightforward to find data on the measure over time. For this reason, I will

report the value of the applicable measure based on data for the year 2010. Second, in

cases which the basic income proposal does not refer to a certain measure and merely

discloses a number, such as the basic income proposal by Defeyt (2016), I have made an

approximation by applying a formula which incorporates the health index.

(1) The B.U.B. proposal

The first approach is adopted for the B.U.B. proposal. The level of the social integration

income was on average €731 per month in 2010 and the monthly level of the poverty

threshold was at €973 in January 2010. (FOD Economie, K.M.O., Middenstand en Energie,

2016; POD Maatschappelijke Integratie, 2016)

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(2) The Vivant proposal

The first approach is also adopted for the proposal of Vivant. The amounts of basic income

are expressed by Vivant in certain percentages of the minimum net wage for the year 2002.

The minimum wages, however, are determined at the gross level. Furthermore, given an

equal gross wage, two individuals may still find themselves with a different net wage as the

latter is obtained after a number of deductions (contributions) from the gross wage and the

magnitude of these deductions are partially determined by an individual’s specific

circumstances, such as their household situation. For these reasons, I will express the

percentages in function of the minimum gross wage instead of the unstable minimum net

wage. (FOD Werkgelegenheid, Arbeid en Sociaal Overleg, n.d.; Vivant, n.d.)

The gross monthly average minimum wage was €1152 for the year 2002 and €1388 for the

year 2010 (Eurostat, 2016f).

Unconditional basic income for minors (2002, 2010) (11.72%)

Unconditional basic income for young adults (2002, 2010) (34.73%)

Unconditional basic income for adults (2002, 2010) (46.89%)

Unconditional basic income for the elderly (2002, 2010) (69.47%)

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(3) The proposal by Defeyt

The revisions of the amounts given by the proposal of Defeyt occur via the second

approach, as he does not explicitly explain how he arrived at the chosen levels of basic

income. He merely discloses that the level of €600 per month for every adult “is chosen

with reference to the social integration income for cohabitating persons” (Defeyt, 2016, p.

8, own translation).

The following formula using the health index is adopted, considering the indexation of

numerous social benefits occurs via a variant of the health index. (Vlaanderen, n.d. c)

16

The arrows are functional in indicating that the time period of the final index corresponds

to that of the indexed amount and that the time period of the initial index corresponds to

that of the amount which is yet to be indexed. (Vlaanderen, n.d. c)

The second formula is applied as the amount to be indexed is unknown. The figures in

Defeyt’s proposal are applicable for the year 2016 and the indexed amount is thus known.

The indexed amounts are €600, €300, and €250 (Defeyt, 2016). The equivalent figures in

terms of purchasing power are not known for the year 2010, explaining why the amount to

be indexed is unknown. The health indices can be found in a dataset provided by Statistics

16 This formula is originally applied in the context of the indexation of alimony which uses the consumption index. However, the formula is also applicable in this context. (Vlaanderen, n.d. c)

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Belgium (2016b). Using the base year of 200417, the final health index, which is for the year

2016, is 124.81 and the initial health index, which is for the year 2010, is 112.76 (Statistics

Belgium, 2016b). All of this information is inserted in the second formula and the following

equivalent amounts for the year 2010 are obtained.

Unconditional basic income for adults (2010)

Unconditional basic income for minors (2010)

Incentive premium for the unemployed ineligible for unemployment benefits (2010)

(4) The proposal by Raventos et al. (Catalonia → Belgium)

The first approach is adopted for the proposal by Raventos et al. The level of the social

integration income was on average €731 per month in 2010 and the monthly level of the

poverty threshold was at €973 in January 2010. (FOD Economie, K.M.O., Middenstand en

Energie, 2016; POD Maatschappelijke Integratie, 2016)

(5) A modification of the proposal by Raventos et al.

There is no need to revise the amounts of the last discussed basic income proposal as the

amounts are personally suggested.

17

The choice of base year is irrelevant for the estimation. The differences are at most one eurocent for the following calculations.

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Data references

These calculations are principally based on data provided by the following sources.

Table E7: List of references, categorized by the type of data

Data on the social security expenditures FOD Sociale Zekerheid, (2011, 2012, 2013).

Data on the number of beneficiaries per social benefit

FOD Sociale Zekerheid, (2011, 2012, 2013).

Data on the population and age structure of Belgium

Statistics Belgium, (n.d.; 2016a).

Data on the monthly level of the social integration income of single persons

POD Maatschappelijke Integratie, (2016); and Steunpunt tot bestrijding van armoede, bestaansonzekerheid en sociale uitsluiting, (2016).

Data on the calculated yearly level of the social integration income of single persons and the corresponding monthly average.

Appendix: Part B – Tables, Table B2.

Adapted from POD Maatschappelijke Integratie, (2016); and Steunpunt tot bestrijding van armoede, bestaansonzekerheid en sociale uitsluiting, (2016).

Data on the poverty threshold FOD Economie, K.M.O., Middenstand en Energie, 2016; Steunpunt tot bestrijding van armoede, bestaansonzekerheid en sociale uitsluiting, 2016

Data on the health index Statistics Belgium, (2016b).

Data on the minimum wage Eurostat, (2016f).

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Declaration on word of honor

I hereby declare that I know what plagiarism entails, namely to use another’s work and to

present it as my own without attributing the sources in the correct way.

I acknowledge that copying someone else's assignment or essay, or part of it, is wrong, and

declare that this is my own work.

I have used the American Psychological Association (APA) as the convention for citation

and referencing. Each significant contribution to, and quotation in, this

essay/report/project/… from the work, or works of other people has been attributed and

has cited and referenced.

This Master’s thesis is my own original work and has not yet been handed in at any other

university, nor had it been published.

I am aware of the consequences of fraud as stated in the exam regulation of the University

of Antwerp.

Date ……………………………………………………..……….

Name …………………………………………………………….

Signature ……………………………………………………….