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Social security of an entrepreneur

Suomen Yrittäjät wants to fix the system of social security for an entrepreneur. An entrepreneur is entitled to almost all the same social benefits (such as daily sickness allowance, unemployment benefit, parental allowance etc.) as a wage earner. However, there are still differences in social security. Some of these cannot be removed due to the nature of entrepreneurship. However, many defects can be addressed.

 

Key needs for change:

 

Pension insurance: As a rule, the entrepreneur must pay for statutory, obligatory pension insurance (YEL) him- or herself. However, at the lowest YEL insurance levels, the entrepreneur does not qualify for earnings-related social security; any benefits remain at the level of basic social security benefits. A quarter of entrepreneurs base their YEL insurance on an annual income of less than €10,500. When the income is less than €10,500, the daily allowance in the case of illness is no higher than the minimum daily allowance. With an income of less than €12,500, no daily allowance is paid under unemployment security. At the lowest level of income, an entrepreneur almost has to work for decades before the employment pension exceeds the guaranteed pension; even with an income of €18,000, this takes almost 20 years. Therefore, Suomen Yrittäjät proposes that the entrepreneur and his or her family members must get value for the insurance premiums they pay. The minimum limit of the obligatory social insurance for an entrepreneur, i.e. the minimum limit of the obligatory YEL pension insurance, must be raised to a level at which the entrepreneur gets something in return for insurance premiums.

Unemployment security: Becoming an entrepreneur still causes problems for family members living in the same household with the entrepreneur when they seek social benefits. Part of the reason for this is that bureacuracy does not always understand the nature of entrepreneurship. Another reason is that the status of a family member in terms of social insurance may change from a wage earner to an entrepreneur without him or her realizing it.

The Unemployment Security Act was overhauled significantly at the start of 2013 and 2014, making it easier for both the YEL-paying entrepreneur, and the entrepreneur’s family member who is considered an entrepreneur in the unemployment security system, to get unemployment benefit. More needs to be done to ease the position of family members living in the same household as the entrepreneur who work for his or her company. They are considered employees in all other legislation, are often members of a trade union and insure themselves through a wage-earners’ unemployment fund. However, when their employment ends, they do not receive unemployment benefit due to their status as an entrepreneur. Because of this, Suomen Yrittäjät demands that the concept of an entrepreneur be standardized to correspond to the definition in the Self-Employed Persons’ Pensions Act, including in terms of unemployment security. Alternatively, at the very least, the family members who do not own a share of the company should be excluded from the definition of an entrepreneur in terms of unemployment security.

Combining entrepreneurship and parenthood should be made easier. Only 54% of entrepreneurs have been able to take family leave when they have a child. This was revealed by a questionnaire done by Suomen Yrittäjät in autumn 2016. Due to this, Suomen Yrittäjät calls for more flexible ways to combine entrepreneurship and childcare while receiving children’s allowance. In terms of maternity allowance and parental allowance, the Health Insurance Act should be reformed to allow an entrepreneur to share and spread out the benefits more flexibly and over a longer period of time.