Government presents sought-after support package: here is how your situation as a sole entrepreneur will be made easier

Suomen Yrittäjät still calls for more direct support, but thanks the government for its decision to ease single-person businesses’ situation.

Today, 20 March, the Finnish government presented actions to ease businesses’ financial predicament. The support package, which totals €15 billion, includes faster lay-off procedures and a temporary reduction in private employment pension contributions. Unemployment benefits will also temporarily include entrepreneurs and freelancers. The measures will be funded through additional government borrowing.

Prime Minister Sanna Marin said in the government’s press conference, “Our primary concern is not how much more the government will have to borrow.”

Suomen Yrittäjät welcomes the government’s proposals but does not consider them sufficient.

Suomen Yrittäjät CEO Mikael Pentikäinen says, “The package should have been structured in a way that saw the state and social insurance institutions taking responsibility for entrepreneurs’ and employers’ social contributions immediately. We’re in a deep crisis at the moment. We can’t afford to keep the biggest bazooka in storage.”

Suomen Yrittäjät welcomes the government’s expansion of unemployment insurance for entrepreneurs.

“It’s really necessary,” Pentikäinen says. 

In practice, entrepreneurs who have lost their turnover can get unemployment benefit without having to wind up their businesses. This is particularly helpful for single-person businesses.

“This is really necessary. The government has listened to cries for help from single-person businesses. We’re grateful for that. There are now tens of thousands of business-owners whose income has evaporated because of the coronavirus crisis. They need help, and fast. This measure needs to be implemented very quickly,” Pentikäinen says.

“What makes single-person businesses’ situation more difficult is the fact that many of them had it tough even before this crisis.”

There are about 260,000 businesses in Finland that employ under ten people. Of these, 200,000 are run by sole entrepreneurs. 

Suomen Yrittäjät proposed an entrepreneurial support package specifically aimed at sole entrepreneurs on Wednesday. The government’s model for the most part matches the Suomen Yrittäjät proposal.

“Entrepreneurs need direct support, not just credit”

Suomen Yrittäjät thinks that the government’s rescue package contains several good proposals for tackling businesses’ cashflow crisis. Pentikäinen proposes supplementing it with further measures to benefit all entrepreneurs.

“Entrepreneurs need direct support, not just credit. To avoid a wave of mass bankruptcies, the government should pay entrepreneurs’ and employers’ social contributions during the crisis – YEL, TyEL and MYEL, as well as unemployment insurance and social security payments.”

This proposal from Suomen Yrittäjät would cost about €1.5 billion a month.

“I give the government complete credit for quickly improving entrepreneurs’ unemployment security.”

Pentikäinen is disappointed about the use of the “EMU buffer funds”. These are two funds which have been amassed in the employment pension system and unemployment insurance system. The labour market partners agreed on the establishment of these buffer funds in 1997.

“I’m disappointed with how these buffers are being used. The proposal for lowering organizations’ employment pension contributions is just tinkering around the edges. Now, if ever, is the time to use the employment insurance companies’ and employment funds’ buffers to save companies and jobs.

“The buffers should be used robustly now and then replenished when the situation improves. Now, we’re penny-pinching in the wrong place. It’s likely that the government will have to draw on the buffer funds in any event,” Pentikäinen says.

Lowering of capital requirements welcomed

Suomen Yrittäjät thinks it is important that the government has announced that the Finnish Financial Supervision Authority is lowering lenders’ capital requirements.

“Lowering the capital requirements significantly strengthens the banks’ ability to finance businesses. This is extremely important,” Pentikäinen says. 

Suomen Yrittäjät is also thankful to the government for its promise to offer all businesses funding, regardless of the type of company. 

“This is fair towards different types of entrepreneurs.” 

Changes lobbied by Suomen Yrittäjät to be seen in employment legislation

The government has also announced several changes to employment legislation which Suomen Yrittäjät proposed as early as last week. One change is the reduction of the notice period for lay-offs from the current 14 days to five. It will also be possible to lay off workers on fixed-time contracts.

“The changes will come into force retroactively from 16 March. This is an important decision,” Pentikäinen says.

The government has decided that companies that are governed by the Act on Co-operation within Undertakings and with at least 20 staff can start lay-off negotiations faster than is currently possible. Suomen Yrittäjät proposed easier lay-off and redundancy negotiation procedures to the government last week.

“It’s critical for companies to be able to lay staff off quickly in the current conditions. A significant reduction in the statutory lay-off notification period is extremely important.

Pentikäinen thinks that companies should be allowed to observe the statutory lay-off notification period if it is shorter than the period in the collective bargaining agreement.

“Otherwise, there will be confusion. We now need clear, simple solutions,” Pentikäinen says. 

Suomen Yrittäjät is also satisfied with the government’s measures to strengthen the position of employees. 

“It’s right and fair that employees who are laid off can get unemployment benefits without a waiting period. Now, it’s important to bring these legislative changes to Parliament without delay and enact them quickly and retroactively. We will also need additional reforms,” Pentikäinen says.

Pauli Reinikainen

pauli.reinikainen (at) yrittajat.fi