Unemployment insurance coverage to be extended to self-employed

In March 2004, the Austrian government proposed legislation extending unemployment insurance coverage to self-employed people on a voluntary basis, starting from January 2005. In principle, employers' organisations and trade unions support this plan, albeit for different reasons. Whereas business representatives believe that the move will minimise the risks of entrepreneurship, organised labour wants to bring 'economically dependent self-employed workers' under the terms of 'standard' labour law and social security.

In mid-March 2004, the Minister of Economy and Labour Affairs, Martin Bartenstein, presented a draft bill on 'labour market reform' (Arbeitsmarktreformgesetz). This includes a proposal which provides for the possibility for all categories of self-employed people to opt for voluntary insurance against the risk of unemployment. According to the draft, from 1 January 2005 all 340,000 or so self-employed people in Austria would be entitled voluntarily to contribute some 6% of their gross income to the unemployment insurance fund, which would (after a minimum one-year period of contributions) grant them eligibility to receive unemployment benefit on losing their jobs.

After a period during which experts from all interest organisations concerned may comment on the draft, it is planned that the new law will be passed by parliament in late spring 2004. Mr Bartenstein stated that this would be the first statutory regulation in the EU providing for an extension of unemployment insurance coverage from employees to self-employed people.

This issue has become a matter of interest for both business and organised labour. Against the background of a growing number of bankruptcies in recent years, the possibility to opt for an unemployment insurance scheme has assumed importance from the perspective of small-scale craft producers and 'one-person companies'. The thinking is that all self-employed people who are forced to give up their business (eg for economic, health or private reasons) might benefit from the extension of the public unemployment insurance scheme and thus avoid the risk of becoming destitute. The Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) employers' organisation sees the Minister’s plans as an appropriate means of minimising the risks of entrepreneurship and therefore supports them.

For their part, given the growing number of so-called 'economically dependent self-employed workers', most representatives of organised labour also approve the planned extension of the unemployment insurance system. 'Economically dependent self-employed workers' are formally self-employed in terms of labour law but do not employ other people and often work for only a single client (TN0205101S). Their working situation resembles to a great extent that of standard (dependent) employees (AT0309201N). Their legal employment status is that of a 'contract for work' (Werkvertrag) or a 'free service contract' (freier Dienstvertrag). Although both categories of workers have partially been covered by Austria’s social insurance system (including health services - but not sickness benefit - and state pensions) since 1998, they have been denied (obligatory) unemployment insurance so far (AT0205201N). This is because the legislator still classifies this group of 'atypical' workers as self-employed people, whereas the trade unions and the Chamber of Labour (Arbeiterkammer, AK) have begun to consider them as employees and to include them in their representational domain since the late 1990s.

For this reason, the issue of a possible extension of unemployment insurance coverage to (formally) self-employed people has become a matter of concern for organised labour. However, beyond and in contrast to both the Minister’s draft bill and WKÖ’s position, the unions and AK are demanding an obligation on self-employed people to enter the unemployment insurance scheme. The argument is that only an obligatory scheme, based on the principle of solidarity, will be fair and effective. Moreover, in the case of people employed under a 'free service contract' who are insured under the terms of the General Social Insurance Act (Allgemeines Sozialversicherungsgesetz, ASVG), which applies to all employees, the planned unemployment insurance contributions should, it is claimed, be equally shared between the employer and the 'quasi-employee' (as is usual for standard employment relationships). However, since both the responsible Minister and WKÖ oppose these demands, at present they seem unlikely to be met.

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