Social Security of an Entrepreneur
The Federation of Finnish Enterprises wishes to remedy the defects related to the social security of an entrepreneur. An entrepreneur is entitled to almost all the same social benefits (such as daily sickness allowance, unemployment security benefits, parental allowance etc.) as a wage earner. However, there are still differences in the social security position. 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 social security him/herself. However, at the lowest YEL insurance levels, the entrepreneur does not reach earnings-related social security, but the benefits remain at the level of basic security benefits. A quarter of entrepreneurs base their YEL insurance on an annual income of less than EUR 10 500. When the income is less than EUR 10 500, the daily allowance of a sickness insurance is no higher than the minimum daily allowance. With an income of less than EUR 12 500, no daily allowance is paid under the unemployment security. In the lowest level of income, an entrepreneur has to work almost for decades before the employment pension exceeds the guaranteed pension; even with an income of EUR 18 000, this takes almost 20 years. Therefore, the FFE proposes that the entrepreneur and his or her family member must receive value for the insurance premiums that they pay. The minimum limit of the obligatory social insurance for an entrepreneur, i.e. the minimum limit of the obligatory pension insurance, must be raised to a level where the entrepreneur does not pay insurance premiums for nothing.
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 the administration 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 this.
Significant reforms were introduced to the Unemployment Security Act at the start of 2013 and 2014, making it easier for both the YEL entrepreneur and the entrepreneur's family member who is considered to be an entrepreneur in the unemployment security system to obtain unemployment benefit. More allowances would still be required for family members living in the same household with the entrepreneur who are employed by the enterprise. 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. Due to this, the FFE demands that the concept of an entrepreneur is standardized to correspond to the definition in the Self-Employed Persons’ Pensions Act also in terms of unemployment security. Alternatively, at least the family members who do not own a share of the enterprise should be excluded from the definition of an entrepreneur in terms of unemployment security.
Combining entrepreneurship and parenthood should be made easier. Only 54 percent of entrepreneurs have been able to take family leave in connection with the birth of their child. This was shown by a questionnaire conducted by the FFE in autumn 2016. Due to this, the FFE demands more flexible ways to combine entrepreneurship and taking care of a child while receiving parental allowance. In terms of maternity allowance and parental allowance, the Health Insurance Act should be reformed so that an entrepreneur can share and divide the benefits more flexibly and over a longer period of time.