Monsieur Faible Takes on the Self-Employed

French unemployment heads for an all-time record — 4.7 million are registered as work-seekers — Socialist President François Hollande’s popularity ratings plumb icy depths, and now l’Express pops up to label him Monsieur Faible.

Under attack from all sides the government makes the self employed a target for the dole.

Can it get any worse for Mr Feeble?  Well yes it  seems it can. The President would probably be the first to admit he is trapped in a perfect storm.

Coming to office just under 11 months ago on a platform promising Social Democracy in 60 simple steps  —  Les «60 engagements pour la France — he finds himself facing the reality of an EU flagellated by and floundering under a German-wielded Merkelian whip of   ‘austerianism”.

Politically tormented at home by the worst scandal of his short presidency —  Budget Minister Jérôme Cahuzac’s  “tissue  of lies” about a Swiss bank tax avoidance scheme — the President thus finds himself in an dangerously destructive bind without easy solutions and with his hands stayed anyway by a wider and deepening European sovereign debt crisis.

Worse, the tribal citizens of a disgruntled and disunited European Union —  up in arms over moves to confiscate their meagre savings held in deposit accounts in a banking system they eye suspiciously and with fears for its stability —  now have even more reason for disquiet.

For Germany’s five wise men  —  the  Council of Economic Experts  — have according to Zero Hedge:  “just confirmed a wealth tax is coming…. Germany warns that states in trouble must pay more for their own salvation, arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. They further added that targeting deposit-holders is also a mistake, since the ‘resourceful rich just move their money to banks in northern Europe and avoid paying,’ preferring instead taxes on property or other less-mobile assets, ‘for example, over the next 10 years, the rich should give up a portion of their assets’ … the implications of a wealth tax – implicitly impacting the pro-euro Southern European uber-rich – raises the specter of EU breakup once again.”

With so much to worry about then, is this really a good time for Monsieur Faible to be picking a fight with a small but thrusting entrepreneurial sector —  the self-employed?  Apparently presidential advisers think it is.

For government, finding itself under pressure from a powerful lobby of artisans and craftsmen, has turned its fire on the self-employed or auto-entrepreneurs and is preparing to kill a goose that, according to Grégoire Leclercq, president of FEDAE- Fédération des auto-entrepreneurs, or the Auto-entrepreneurs Federation, last year laid a golden 5.64 billion euro egg of revenue on which taxes were paid.

Small businesses plying their trade under the auto-entrepreneur scheme could now face a five-year ceiling that forces them to switch to a more advanced and expensive-to-run business set-up.

Sylvia Pinel, minister for artisans and commerce, said the existing simplified regime would still be available ‘without any time limit’  if it related  to a ‘secondary activity’ – but would change if the business was a self-employed person’s ‘principal’ activity.

She said consultations would be held in the coming weeks with various organisations  including artisans and the self-employed and a final report would be tabled by the summer.

The self employed are promising to resist any changes and the fight back has begun on Fedae’s facebook page

FEDAE, an umbrella organisation that speaks for the sector, recently published the results of a survey of 700 entrepreneurs that showed: 33% reported earnings  up to 1000 euros  in 2012; 24%  between 1000 and 5000 euros; 13% between 5000 and 10,000 euros; 31% more than 10 000 euros.

In terms of sectors of activity it showed: 22% were engaged as craftsmen in civil construction; 33%  in business services; 25%  in services to  people; 19% in trade.

Among those reporting revenues of more than 10 000 euros in 2012, 77% said they would not have set up a business without the auto-entrepreneur scheme; 91% opposed government attempts to  restrain it;  52% said they would close up shop, or work on the black, if government went ahead with planned changes. Among the self-employed aged 20 – 30 years, 20% say the scheme was an alternative to the dole; 48% said they used the auto-entrepreneur scheme to test the market for their business plan; 77% said they would not have started up a business at all without the auto-entrepreneur regime.

On the popular radio station RMC website RMCTalk there were, at the time of writing, 211 reactions to a report about the plans and some 750 people had responded to a poll by the radio station asking visitors to vote for or against the move to restrict the number of years a self-employed person could use the scheme:

As the image above shows the outcome of the poll at the time of writing was quite close  — 55% opposed to any restriction and 45% in favour.

Among commenters reacting to the story and leaving their views on the site, a majority appeared to be clearly opposed to restrictions.

Many regarded the plan as a self-inflicted wound, that would stifle attempts at encouraging an entrepreneurial spirit in France. Those in favour of changes decried the scheme for allowing people to compete unfairly with artisans who were obliged to register under less favourable regimes and meet heavy social charges. Yet others recognised the difficulty of balancing the interests of the various pressure groups in the debate.

Jose Garcia of Maureilhan blamed the Socialists for the debacle. Adding his comment  to  the website on April 14, 2013 he wrote:  “With nearly a million self-employed entrepreneurs in France today that is nearly a million people who are not presently in the queue outside the job centre! These brave and fearless entrepreneurs have become an intolerable obsession for the Socialists.”

Serge Parin of Epinal wrote on April 14, 2013 –  “Instead of addressing the auto-entrepreneur issue government should deal with companies that are bringing in  Polish and Romanian workers on wages of 700 euros a month!  They should tax employment agencies that promote and encourage this working underclass!”

Beatrice ARRUE of St. Oblas wrote April 15, 2013 –  “Auto-entrepreneur status should certainly not be touched! To do so would just legalise “moonlighting”. The scheme helps develop the entrepreneurial spirit and reduces the number of unemployed. The free market regulates itself and nobody should be afraid of competition.”

Viva Marxism, the great leveller wrote Olivier Tardy of Nérac on April 12, 2013 –  “The biggest problem with the auto-entrepreneur status is that it was set up by Sarkozy. The fact that changing it will ruin perhaps hundreds of thousands of people and further inflate  unemployment statistics does not seem to be a problem (for those behind the plan) — Viva Marxism! the great leveller where everyone is poor and envy is not a problem”.

Gino Carducci of Challes-les-Eaux wrote April 13, 2013 –  “This is a delicate question. On the one hand the scheme  promotes employment, on the other it brings unfair competition to SMEs (micro firms) who pay taxes and social charges. The ideal would be to align these small businesses and the self-employed in one scheme …”

Story: Ken Pottinger

(Declaration of interest: the writer is an auto-entrepreneur)

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