Potential impact of "universal basic income" on compensation policy

Macro change in monetary regime of the global politics inevitably brings about reshaping and resizing of labor relations and compensation structure of the market. As witnessed through industrial revolution and market penetration in the early 20. century, competitive market pressures under Gold standard system resulted in an understanding of “minimum wage salary.” In other words, with the reinforced development of labor rights since French revolutions, incremental regulations on working hours and government’s intervention in market economy, the concept of minimum wage salary has been established as a sign of legitimacy for state towards fair treatment of labor in the market. The perception of state in the eyes of the Western community in terms of managing unemployment rates besides allocating social welfare policy to public in the aftermath of the Second World War was highly popular. That regulatory feature of state was in fact a peculiar sign of sovereignty and mediator role of the government between social parties, as such labor and capital negotiations. The first expiry date of those Golden years was 1970’s oil crisis compounded with regional wars and unsurprising breakdown of Bretton Woods. The rise of neo-liberal monetarism implicitly lessened state’s main actor role in the social and economic life via generating an unending debt crisis. Despite, such a shift the global system many countries continued their obsolete and “aged” (archaic) policy of minimum wage salary to keep state’s relatively decreased role in economy to a certain extent for sovereignty and historical legitimacy. 

Starting with the end of Cold war and frequent financial turbulences in the capitalist system realized with regional and global crisis of 1990s and 2000s, we are entering into a different phase of political economy. Either we call it as “surveillance capitalism”, “techno capitalism” or post-truth finance capitalism”, tectonic shift in the earthquake is intensifying its impact with the catalyst of “pandemic”. Under these circumstances, high level of sticky unemployment, increasing level of indebtedness, and radical change in labor market in terms of reskilling and upskilling needs, continuous stagflation may lead to critic for concept of minimum wage salary. Ineffective and inefficient role of state in employment and economy transfer that responsibility to private companies with a shared accountability. It is in that context that, universal basic income will probably replace unemployment insurance pay and minimum wage salary. Well-known contradiction between free time and wage will change its equation. Given the fact that employment will be temporary, seasonal, individualized and on-demand based, the companies together with state will be funding a certain budget to provide limited amount of consumption power to ambiguous, volatile labor force. In that context, universal basic income will be new solution to manage structural and irreversibly sticky unemployment for both governments and companies. Technological follow-ups on individuals in terms of consumption behavior and present situations will be main drivers in the usage of universal basic income.

It is highly foreseeable that job contracts will be more flexible and fragile, corporate payroll and long-term employment will be an exception as well as retirement will be a dream in the fallacy of social security system. However, it is not easy for universal basic income to compensate all these losses and archaic monetary regime’s testimony in the short run. Regarding compensation and benefit policies of the companies, remote working benefits via segmentation and hourly-based wage with a certain bottom line could be major trends in the mid-run.

Consequently, universal basic income may have three main impacts on compensation and salary structure of the market. Firstly, it will replace minimum wage and its level will be calculated in between unemployment insurance and minimum wage level. The amount probably will be segmented and depended on consumption behavior and social discipline of the individual followed by digital network. Secondly, governments and companies will be funding that budget which implicitly transfer state’s remaining regulatory role in the labor market to companies. The companies, therefore, will re-structure labor cost via variable, seasonal and temporary based contracts until the end of defined projects. That may require higher base salary and aggressive bonus and remote working benefits during the contract’s validation. That also leads to lessening total labor cost for companies at the expense of publicizing part of that cost to government and community. Thirdly, negotiation power of labor will probably decline because of drastic balance shift in employment market.

Accordingly, despite the fact that universal basic income could be marketised as more leisure time for private life, its real impacts and actual dynamics could be defining consumption and saving treats, normalizing sticky unemployment and controlling individuals (labor force) unilaterally via digital process. Simply because there is no free lunch. By the way next and other question could be what about universal variable income, if any thought above basic.