Many business owners without unemployment security

The Entrepreneur Fund says insufficient knowledge is one reason.

Statistics Finland data show that of working-aged people in Finland in 2022, around 353,600 (13.5%) were full- or part-time business owners. Only a small proportion of them had insured themselves against unemployment via the Entrepreneur Fund unemployment fund.

“There’s a persistent belief in Finland that the self-employed are not entitled to unemployment security. A survey we conducted in 2022 found that 42% of business owners did not know that they were entitled to unemployment security,” director of the Entrepreneur Fund Merja Jokinen says.

The difference between employees and business owners is large. Among employees, 85% are members of an unemployment fund, while among business owners the corresponding figure is around 10%. This is based on the assessment of the Finnish Centre for Pensions and Mela, the Farmers’ Social Insurance Institution, of the number of holders of YEL entrepreneur’s insurance and MYEL farmer’s insurance policy holders.

Part of the reason is the Entrepreneur Fund’s membership fees, which are higher than in employee unemployment funds. This is due to the funds’ different funding bases: earnings-linked unemployment benefit in Finland consists of basic daily allowance and an earnings-linked part. In the Entrepreneur Fund, the entire earnings-linked part of unemployment benefit is funded by the Fund’s members. For this reason, membership of the Entrepreneur Fund is slightly more expensive.

“In employees’ unemployment funds, the earnings-related part is funded by employers’ unemployment insurance contributions, as well as by the funds’ members’ unemployment insurance payments and membership fees,” Merja Jokinen explains.

The Entrepreneur Fund has reduced its membership fees significantly this year. It starts from just over nine euros a month.

Problems with membership in the wrong fund

Jokinen is concerned that many people are insuring themselves via the wrong fund.

“This has come up in discussions with business owners. The rule of thumb is that the Entrepreneur Fund is for business owners and the self-employed, while employees’ funds are for people employed by someone else. However, some self-employed people do not consider themselves self-employed, even though they would be viewed as self-employed under unemployment security rules.”

Jokinen says that people, regrettably, realize they have been members of the wrong fund when they become unemployed. A self-employed person might then apply for unemployment benefit from an employees’ fund and be disappointed when their application is refused.

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