security for self-employed must be improved
JHL/Trunf - Helsinki (06.05.2011 - Heikki Jokinen, Juhani Artto)
A fairly new item on the agenda of the Trade Union for the Public and
Welfare Sectors JHL is safeguarding the interests of those who are
But before delving deeper into this, we should note some basic facts
concerning the situation of the self-employed in Finnish society today. Some
160,000 people earn their living as self-employed persons, which makes up
seven per cent of the total labour force - far less than in many other EU
member states. In the last two years the number of self-employed in Finland
has grown by 20,000.
Only a few years ago not many trade unions paid much attention to the
interests of the self-employed but more recently an increasing number of
organisations have begun to elaborate their policy on safeguarding the
interests of this heterogeneous group. The reasons for this are obvious
enough, as those engaged in self-employment have managed to penetrate
most industries in one way or another.
Clearly, the pattern of self-employment has changed. In the past,
self-employed people used to be professionals and specialists, but in the
last few years we have witnessed an increase in the number of self-employed
operating in industries such as construction, catering and hairdressing. And
this phenomenon or development has also reached into the public
welfare sector, mainly due to the outsourcing policy of municipalities and
In-between in the social legislature and low incomes
The major problem for self-employed is this: Finnish labour and social
security legislation is built around a binary distinction between employees
and entrepreneurs. Self-employed persons are defined as entrepreneurs, even
in cases where they are completely dependent on only one contractor.
The legislation, as it stands, makes no real provision for the self-employed
when they fall on hard times. The self-employed are responsible for
their own pension contributions and other work related social security
contributions. They are not entitled to receive benefits from the employees'
unemployment funds, which puts the self-employed in a seriously
disadvantaged position when they find themselves without work. The growing
number of self-employed people means an increase in
the amount of working people left outside the work-related social
Another major problem is the fact that the income level of the self-employed
is often low. According to Statistics Finland, in 2009, 17 per cent of those
registered as self-employed belonged to the low-income group. Among wage and
salary earners the figure was only 3 per cent. The threshold value used for
low income is 60 per cent of disposable median income per person.
Trade unions have claimed that in many cases self-employment is a
consequence of employers' effort to minimise their expenses and risks. Often
the former employer has remained the only customer of the new self-employed
person and thus the new self-employed individual has remained completely
dependent on just one contractor.
Employers may also be motivated by the differences in working hour
regulations. Labour legislation and collective agreements do not
restrict the working hours of entrepreneurs, whereas working hours for wage
and salary earners are carefully regulated. Thus, self-employment may offer
the employer a practical way to circumvent working hour regulations, and, in
terms of a company’s own operations, get rid of unpleasant working hours.
Self-employment issues for the next government programme
Päivi Niemi-Laine, the director of research and social policy at the Trade
Union for the Public and Welfare Sectors JHL, demands an end to the use of
self-employment as a way to circumvent employer obligations.
The political development in the public sector encourages this kind of
disguised employment. "The public service production is crumbling due to use
of service vouchers. Citizens become customers when they can buy
health and other services from private providers with these self-same
vouchers", Niemi-Laine explains. The vouchers, are it should be remembered,
issued by the municipalities.
In the future, public sector organisations may encourage their employees to
become self-employed, even to the extent of promising future contracts. "In
that case scenario they would do the same work as before and the work could
take place at municipal premises. They would have tenure with the
municipality but would not have the wage or salary and social benefit
entitlements they had when being employed by the municipality."
However, there is no guarantee that contracts would be given to former
employees. The competition legislation stipulates that public sector
subcontracts must be tendered. "Destia - the state owned road maintenance
company - encouraged its employees to become entrepreneurs and made them
attractive promises. However, they did not win a single tender."
"We demand that the next government programme include a clear statement
which will effectively improve this group's social situation. As far as
social security rules go there is clearly a need for the self-employed to be
separated and dealt with separately from entrepreneurs. This would create a
new group of wage and salary earners." (Political parties have begun to
prepare the next government programme and are due to finalise it in the
coming weeks in May or June. The Parliamentary elections were held on April
"The self-employed should be allowed to join employees' unemployment funds
and have the right to receive adjusted unemployment allowances in the same
way as part-time unemployed employees do. The right to be involved in
collective bargaining and to have collective agreements is also important
for the self-employed. Right now they do not have this right. Trade unions
should be allowed to take class action lawsuits, as the self-employed,
depending on their contractors, may not dare to take disagreements with
their contractors to court."
Cooperation with other union organisations
Trade unions have close mutual cooperation when developing their work to
safeguard the interests of their self-employed rank and file members. For
this purpose, JHL has formed a joint coordinating group with several other
trade union organisations.
Until now, the
participants in this group have been the Central Organisation of Finnish
Trade Unions SAK, the Finnish Confederation of Professionals STTK, the
Finnish Musicians' Union (a SAK affiliate), Akava Special Branches (a Akava
affiliate) and the Union of Journalists in Finland (independent). The union
confederation of highly educated people Akava and the Service Union United
PAM (a SAK affiliate) have decided to join the group and are soon to
participate in the work.
These organisations want the next government to make a comprehensive survey
on the problems facing those who are self-employed. The survey should cover
both labour market and social security issues. And the government should
translate findings of the survey into positive action. The union
organisations wish to spell out in no uncertain terms that
entrepreneurship must always be a genuinely voluntary choice, not something
which is forced on people.