The results in figures 13a and 13b confirm that respondents prefer a more targeted subsidy system rather than one that benefits the rich and the poor equally, this could take the form of targeted cash assistance rather than universal subsidies. However, since the survey sample was relatively small (300), these findings cannot be extrapolated to the wider population. Nevertheless, they demonstrate the need for increased data collection through household surveys conducted by the Office of National Statistics.
Analysis of the cost and affordability of universal basic income in Algeria
There is a limited amount of available research on UBI in the Algerian context. However, more general studies into the feasibility of UBI have demonstrated a number of potential wider benefits. According to the Institute for Policy Research at the University of Bath, social protection reforms that consider the implementation of UBI have numerous and significant advantages over conventional – i.e. means-tested, contributory and conditional – social security systems. This is due to their simplicity, adaptability, impact on poverty and inequality, as well as their positive impact on labour market outcomes. Finally, UBI can be a useful tool to address future challenges such as automation and the changing nature of work. With automation and artificial intelligence expected to displace jobs in the coming years, UBI can provide a safety net for workers who are displaced by technological change.
Conceptual analysis of UBI
UBI is an income paid by the government to each individual citizen regardless of their labour participation, wealth and income, and independently from household characteristics. Some types of UBI target a specific range of the population with a UBI programme. In fact, some proposals have suggested targeting specific groups such as low-income households, people with disabilities or those who have lost their jobs due to automation or other factors. This approach is referred to as a ‘targeted basic income’ or a ‘partial basic income’ – concepts that are contentious but affordable in many countries according to the International Labour Organization.
This paper argues that in light of Algeria’s socio-economic challenges, UBI could be a potentially transformative policy intervention in order to effectively address poverty and inequality, improve social protection and promote economic development. Furthermore, this section shows how UBI can be incorporated within the existing social protection system or used as an alternative to existing programmes.
In research studies, the UBI concept has been variously proposed as a solution to reducing poverty, inequalities and job insecurity, or as a way to improve the general well-being of households. While some proponents support the implementation of UBI, others disagree with the proposal due to economic, political and social reasons, arguing that UBI lacks the capacity to reduce poverty and inequality or to encourage people into employment. Critics point to the cost of UBI as the major obstacle to its implementation. However, it should be noted that UBI systems vary significantly in terms of levels of benefit, objectives, cost, mode of financing, social services they would replace as well as the expected impact on the well-being of beneficiaries. UBI is also often confused with other social protection programmes, such as social protection floors – the first level of protection in a national social system – and cash transfer schemes. It is worth mentioning that while some supporters of UBI perceive it as a complementary programme that enhances social protection of the population, neo-liberal or libertarian studies propose it as a means to replace the welfare state with a minimum safety net.
The cost of UBI depends on the level of benefit offered, which varies in different contexts. While some researchers propose that UBI be set at the equivalent of the national poverty line, others propose that it should cover only a proportion of that amount. Proposals further differ in terms of benefit provided to children: while some are against providing benefits to children on the grounds that they are already covered by other programmes, others propose providing children with the same benefits as adults, or as a proportion of the adult benefit. Ortiz et al. estimated the cost of UBI for 130 countries using two scenarios: the first scenario assumes a UBI at 100 per cent of the national poverty line for all adults and children, while the second proposes a UBI at 100 per cent of the national poverty line for adults and 50 per cent to children up to 15 years. The results showed that, for the MENA region, the UBI would cost up to 20 per cent of GDP in the first scenario and 17 per cent of GDP in the second. While the study did not estimate costs for Algeria, it did calculate costs for comparable countries. For Egypt, it was estimated at 16.4 per cent of GDP in scenario one and 13.7 per cent in scenario two; for Morocco it was at 13 per cent and 11 per cent, respectively, while for Tunisia, it was 17 per cent and 15 per cent, respectively.
The arguments against UBI in Algeria tend to focus on cost and affordability, as well as the negative impact it could have on labour participation rates, especially among women, for which participation is already low, at 17.3 per cent in 2019. Another constraint would be the potential increase of inflation, especially in a country like Algeria, which imports a significant percentage of goods and where local production is insufficient to meet demand, leading to increased inflation and a decrease in the value of the local currency. The advantages, however, would be a more comprehensive system that does not exclude eligible poor people and reduces inequality in wealth distribution. Finally, Algeria could consider UBI as a way to reform energy and food subsidies that currently disproportionately benefit wealthier segments of society.
Methodology and the cost of UBI in Algeria
The following section uses the International Labour Organization’s methodology and the World Bank’s updated poverty lines ($2.15 per day and $3.65 per day) and applies them to Algeria, calculating costs by multiplying the UBI amount by the total population (adult and children) according to the following formula: