19.3.2020 08:35
News

Suomen Yrittäjät proposes extensive toolkit to government with support for entrepreneurs at heart – this is how it would work

Suomen Yrittäjät is proposing an entrepreneurial support programme, and an extensive financing and employment legislation package to the government. “It’s particularly important to look after the smallest companies and single-person businesses who rarely have large financial buffers,” Mikael Pentikäinen says.

The coronavirus pandemic has hit small and medium-sized enterprises (SMEs) hard. Some companies’ sales have evaporated entirely as order books have emptied and customer traffic has stopped.

Suomen Yrittäjät hopes that the government will therefore take swift, strong action. You can read the entire proposal from Suomen Yrittäjät to the Finnish government here.

Suomen Yrittäjät CEO Mikael Pentikäinen says, “We’re proposing an extensive finance and employment legislation package which includes the an entrepreneurial support programme which is a first-aid kit for single-person businesses.

“The situation in SMEs is extremely difficult. There is a big risk and fear that we are going to see a wave of bankruptcies. We want to give the government the tools to overcome this crisis and help businesses. Compared to our last proposal, this package is considerably broader and contains more elements to supplement the ones the government has already decided on.”

The proposals include several steps to prevent businesses from facing a cashflow crisis.

“One new proposal of ours is expanding income-based VAT and the tax credit for household expenses. We also call on public landlords such as the state, municipalities, the companies they own, Metsähallitus and employment pension companies to reduce businesses’ rents. Furthermore, we would like to see large private property companies that own shopping centres reduce rent and show flexibility on opening hour conditions for their tenants.”

Pentikäinen points out that the fewer business fail, the faster country as a whole will recover.

“The last few days have thrown up a wide range of problems. Entrepreneurs have been in close contact with each other and have been proposing solutions. In our opinion, we have built a good package that the government can use to go forward. 

“It’s particularly important to look after the smallest companies and single-person businesses who rarely have large financial buffers. Many of them are seeing their incomes under threat,” he says. 

Entrepreneurial support for everyone who has YEL cover

Since the start of 2018, someone who starts running a business as a jobseeker can receive unemployment benefit for four months while working as an entrepreneur. If the jobseeker has income from business activities, this income is considered when paying unemployment benefit.

Suomen Yrittäjät proposes extending this provision to all entrepreneurs who have YEL (entrepreneur’s pension insurance) coverage.

“They could apply for and receive the benefit without winding up their businesses,” Pentikäinen says.

Suomen Yrittäjät proposes that the amended rule be in force for a fixed four months and that it could be continued if necessary. The recipient would receive the benefit from Kela in the form of basic unemployment benefit or labour market support. Child supplements would also be possible.

A person would not need to apply for jobs to receive the benefit. If an entrepreneur has income from his or her business operations, these would be taken into account when setting the amount of unemployment benefit using the current adjustment rules.

Basic unemployment benefit and labour market support are currently €724 a month. There were 207,000 entrepreneurs with YEL coverage in 2018. The maximum cost of the change to the state would be around €600 million.

“Clearly, only some entrepreneurs would apply for this entrepreneurial support. If businesses remain operational and entrepreneurs remain active, the cost would be lower, giving the state’s functional capacity a significant boost. If businesses are functional, that will help the economic recovery post-crisis,” Pentikäinen says. 

Proposals for saving jobs

On Wednesday, Suomen Yrittäjät proposed a finance and jobs package to the government. It contains several proposals on employment legislation and easing businesses’ financing.

Suomen Yrittäjät proposes measures such as increased workplace-specific agreements, shortening the lay-off notice period to three days, enabling lay-offs of fixed-term workers and scrapping the qualifying period for employees’ unemployment benefit. 

The list also includes the speeding up of redundancy negotiations and allowing annual leave to be taken outside the leave period. 

“Our package is powerful and balanced. It would ease employers’ and employees’ predicament. It could be temporary for the duration of this crisis,” Pentikäinen says. 

Lower rents and electricity transmission bills

Suomen Yrittäjät also presents several steps to ease businesses’ access to finance. The list contains a proposal for the state and employment pension insurers to take temporary responsibility for paying entrepreneurs’ and employers’ social contributions. For employers’ pension contributions, the “EMU buffer funds”. The monetary impact would be about €1.5 billion a month. In taxation, Suomen Yrittäjät proposes that the Tax Administration returns tax payments already made this year to entrepreneurs.

Suomen Yrittäjät thinks banks need to hire more staff to help businesses. The organization has received messages from around the country saying that the banks’ and Finnvera’s service capacity is not enough in the current crisis. 

The organization calls on the state to require electricity transmission companies to lower their rates for the duration of the crisis, and for the state and municipalities to make public procurements in a front-loaded way. That would secure many businesses’ operations and keep the market running during the crisis. 

A focus on Finnvera

Suomen Yrittäjät has already demanded that the government act to ease the situation of SMEs struggling as a result of coronavirus. It has also presented the measures it considers necessary as a finance and employment legislation package.

Mika Kuismanen, Chief Economist at Suomen Yrittäjät, has stressed that fast, flexible finance from Finnvera and the banks is “extremely important” to avoid a wave of bankruptcies.

“Difficult situations are now arising and challenging companies at a rapid rate. Finnvera should be able to award as much of its own, direct financing as possible. It is a guardian angel in very difficult cases,” Kuismanen says.

Read the coronavirus-related information package put together by Suomen Yrittäjät here.

Photo: Markus Sommers

Pauli Reinikainen

pauli.reinikainen (at) yrittajat.fi