New measures to promote independent entrepreneurship
The Social and Economic Council and the Dutch cabinet recognise the importance of the increasing numbers of self-employed individuals without employees for economic growth. They have therefore adopted measures to create a favourable business climate in order to reduce obstacles for these entrepreneurs. Together, they are working towards lowering the administrative burden borne by self-employed individuals and creating good facilities for independent entrepreneurs. Special insurance schemes have for example been developed and people currently on benefits can more easily make the transition to the entrepreneurship.
For many years now, the number of self-employed individuals without employees has been increasing steadily. Most of them are self-employed individuals without employees (Dutch acronym: ZZPs) who support themselves. ZZPs contribute towards flexibility in the job market and economic growth – increasingly participating in networks with other ZZPs. ZZPs are generally successful in business. Since March 2010, ZZPs have been represented in the Social and Economic Council (Sociaal Economische Raad, SER), an advisory body that consists of the social partners and independent members appointed by the Crown (NL1004019I). The SER issued its first recommendation on independent entrepreneurs in October 2010. The SER now considers such individuals as entrepreneurs and more attention will be paid to the challenges they face. The SER recognises that as service providers, and like employees, ZZPs also run occupational risks. Together with the Dutch cabinet, the SER is in favour of introducing measures to support independent entrepreneurs.
According to cabinet, entrepreneurship offers opportunities for citizens themselves to achieve their goals, set up their working lives as they see fit, to better utilise their skills and to develop them further. Despite the fact that cabinet genuinely values and stimulates entrepreneurship, in its response to the SER’s recommendation in October 2010, it is clear that government minimises its intervention in terms of the choices made by ZZPs. Cabinet has adopted the following position: a choice for entrepreneurship is taken solely under the individual’s own responsibility. ZZPs are excluded from the social security system and are themselves responsible for arranging their social insurance and pension schemes. Cabinet sees no reason to revise the structure of responsibility. The individual responsibility carried by ZZPs will remain the basic premise in cabinet policy in the years ahead.
Specific facilities for ZZPs
Despite cabinet emphasising the ZZPs’ own responsibility, it recognises their importance for economic growth in the Netherlands. This is precisely why government has teamed up with the SER and tax authorities to take a number of measures directed at removing unnecessary obstacles for ZZPs and therefore stimulating entrepreneurship. Reducing administrative charges and providing good facilities for independent entrepreneurs are essential ingredients for creating a favourable business climate. Government will be reducing the administrative burden by 10% in 2012 and by a further 5% in the years that follow. Cabinet wants to make it possible for independent entrepreneurs to compete for assignments by lowering the requisite turnover threshold and no longer requiring businesses to join forces to compete (NL1011019I).
Additionally, ZZPs who meet certain requirements can take advantage of tax deductions that serve to lower their taxable profit. They are then required to pay less income tax. In order to be eligible for this deduction, the individual concerned must at least spend 1,225 hours working for his/her company. However, as a result of the economic crisis ZZPs may have fewer assignments, making it difficult to meet the hour criterion. For this reason, hours spent on acquisition, training and administration may be counted as well. Government sees independent entrepreneurship as a form of reintegration too.
People on benefits wishing to start their own business receive government support. Unemployed people can for example retain benefits while securing their first assignments and they can more easily apply for credit facilities. Of all self-employed individuals, around 10% start off from a position of receiving benefits and around 70% succeed in making a living thereafter.
Social security for ZZPs
Although ZZPs are excluded from the general social security system for employees, a number of insurance schemes have been developed for them to fall back on. Safety net insurance is specially intended for self-employed start-ups who become occupationally disabled. There is also a scheme for self-employed, pregnant women (ZEZ). Based on this scheme, self-employed women who are pregnant are eligible for a minimum of 16 weeks’ benefits of no more than the minimum monthly wage of €1,335 gross. This scheme only applies to women who are self-employed and who worked at least 1,225 hours during the previous year. Finally, there is a decree on benefits for self-employed persons (BBZ). Such benefits provide financial support to self-employed people who fail to achieve adequate results as a result of the economic crisis. BBZ payments then supplement their income up to the benefit level.
Petri van Vuuren, University of Amsterdam, HSI