The Union of Free Trade Unions of Slovenia (ZSSS) has criticised an increase in funding by the Ministry of Labour, Family and Social Affairs for workers who want to become self-employed. The ZSSS claims that the ministry is promoting a precarious form of work, and that the ministry needs to focus on training for self-employed people. It also argues that the ministry is allowing the practice of bogus self-employment, which is rife in the construction sector, to go unchecked.
Background
In March 2011, the Employment Service of Slovenia (ZRSZ), which is responsible for the unemployed and employment policy, temporarily stopped grants to the newly self-employed. It said that funds earmarked for this had dried up because there were too many applicants. However, at the end of August 2011, the ZRSZ was given a cash injection of €9.5 million, which meant that it could fund 2,110 new applicants. However, the Association of Free Trade Unions of Slovenia (ZSSS) attacked this policy of encouraging self-employment.
Self-employment programme
The aim in providing support for self-employment is to help the unemployed and those who are likely to lose their jobs. Applicants must first complete a business plan at their local Labour office (a branch of the ZRSZ). They must also attend a consultation interview where their business idea is assessed and attend a training workshop for self-employment. Grants for self-employment in 2007 totalled €2,100 per person. From 2008 onwards this increased to €4,500. The person receiving the grant must agree to remain self-employed for a minimum of two years.
The scheme is cofinanced by the EU from the European Social Fund which contributes 85% of the funds. The remaining 15% comes from the state budget. The ZRSZ says that this policy is one of its most successful programmes, with more than 85% of those who receive the grant remaining self-employed for at least two years.
Other data from the ZRSZ show how the number of people getting these grants has increased:
- 2007 – 417 people;
- 2008 – 1599 people;
- 2009 – 4,330 people:
- 2010 – 5,148 people;
- in the first seven months of 2011 – more than 3,500 people.
There are very few job openings and the unemployment rate is increasing in Slovenia. On 12 November 2011, there were only 1,261 job vacancies for 110,905 persons seeking a job.
In mid-2011, Slovenia had a population of 2,052,496. According to Eurostat figures, in 2008, the unemployment rate in Slovenia was 4.4%, in 2009 it was 5.3% and in 2010 it rose to 7.3%.
Many workers are faced with self-employment as the only work option, placing them in a precarious position in the labour market. The problem with the self-employment policy is that it tends to undermine workers’ rights, and increase poverty and social exclusion. Newly self-employed persons find themselves without adequate social protection and without adequate knowledge of their rights and obligations.
Criticism by the ZSSS
The ZSSS is critical of the policies promoted by the Ministry of Labour, Family and Social Affairs (MDDSZ) to boost self-employment. It claims that although the MDDSZ has increased the amount of money intended to support self-employment, there is no training programme for self-employed people, and money earmarked for this training is therefore lying unused. The union says the MDDSZ has ignored requests from the social partners to form a training fund, and that the ZRSZ has not provided adequate training.
The ZSSS claims that the MDDSZ’s motive in promoting self-employment is, in reality, to make the unemployment figures ‘look better’.
Some cases of abuse
Cases taken from the ZSSS website underline the problem.
A truck driver who could not get work was persuaded by a counsellor at the Labour office to apply for the self-employment grant and take on the status of a sole trader. He then worked 18 hours a day but was not paid because the company he worked for had liquidity problems. He is still formally a sole trader because he would be obliged to repay his grant if he left self-employment after less than a year.
A worker employed in a state-owned company says that he is working alongside more than 100 self-employed people. Although this group (who tend, on average, to be younger than their workmates) do the same hours and work on the company premises as those permanently employed there, the company can avoid giving them staff entitlements such as a light meal, transport to work, sick leave, and the ‘13th month’ and Christmas bonus payments paid to employees on permanent contracts. The company can also dismiss these self-employed persons whenever it wants.
A journalist was sent an anonymous letter claiming that some companies (probably subcontractors) involved in building a new sports stadium in Ljubljana, were persuading applicants for jobs on the project to obtain self-employed status at the ZRSZ. In this way the ZRSZ would pay their health and pension insurance contributions. However, a self-employed man working at the stadium for construction company Primorje (SI1202019I) was paid only for one month’s work when Primorje ran into financial difficulties. His contributions were not paid by the ZRSZ, and he was obliged to pay tax on the money the company owed him. The ZSSS claims that there are other self-employed people who were not paid by the construction companies they worked for, and who were sacked if they complained.
Bogus self-employment
Bogus self-employment exists when a worker registered as self-employed is, in fact, dependent on one contractor to tell him what to do, where to work or when and how to do it. Such workers do not derive any protection or rights from the employment relationship.
The EU Member States have adopted a different strategies to deal with this problem. Some treat dependent self-employed workers as employees so that they are covered by employment protection legislation, extending protection to specific categories of self-employed workers and listing criteria that enable a worker to be classed as either an employee or an economically dependent worker.
The European social partners in the construction sector have issued a joint text to help tackle bogus self-employment, a practice that puts workers at risk and creates unfair competition in the market. The text recommends actions such as establishing common European criteria for guidelines to determine the nature of workers’ employment status, and suggests the creation of a social security identity card that defines employment status (EU1003041I). The partners state that sanctions are vital to discourage and punish fraudulent practices, recommending adequate inspections, swift action where fraudulent practices are uncovered, and effective penalties.
The IRSD, in response to the ZSSS’s concerns, said the subcontracting relationship is not a labour relationship and that the IRSD is therefore not responsible for such cases. It said the ZSSS should go through the courts to seek justice.
ZSSS proposals
The ZSSS proposes that, together with social partners, the state:
- determines the criteria for differentiating between those who are employed, and those who are self-employed;
- provides better training for those applying for a self-employment grant;
- determines a clear definition of independent work and tighten the conditions to acquire this status,
- increases the rights of those who are self-employed and other persons with precarious forms of work.
Commentary
The problem is that self-employed persons, especially economically dependent ones (those who fall between the categories of employed and self-employed persons) are poorly organised and are therefore not able to fight effectively for their rights. However, trade unions in several EU Member States have been active in establishing organisations targeting economically dependent workers.
Štefan Skledar, Institute of Macroeconomic Analysis and Development