Some improvement of playing field between employment and contract forms with corresponding effects on competition and factor allocation Some improvement of stabilisation function of social protection upholding aggregate demand by providing counter-cyclical spending during economic downturns vs. contributions, taxes or lower wages in the case of NSE if employers pass on the cost of their contributions Possible trade-off between NSE and SE labour demand if the rate of self-employed enrolling is low Slightly higher risk of some reduction in employment through possible adverse effects on labour demand and supply including after labour market transitions Partial de-segmentation of labour market, reducing somewhat inequality, by incentivising the wider use of standard employment. Improved transferability and transparency as well as reduction in coverage differences strongly facilitate labour market transitions and thereby, improve matching of people with jobs. Partial removal of obstacles that may discourage employees from taking on the risks associated with improving factor allocation via contributions, depending on financing choices) and some cost for improving transparency Limited increase in social security contributions. Possible financial burden to introduce administrative reforms. safety nets. PACKAGE C More pronounced increase in the cost of managing fluctuations in production in line with more pronounced cost increase of NSE. Marked improvement of labour market dynamism (depending on the rate of opting-in) Marked improvement of playing field between employment and contract forms with corresponding strong effects on competition and factor allocation Marked improvement Limits to the freedom of choice and possibly inefficient overinsurance of the self-employed through mandatory social security schemes. Depending on financing choices, more pronounced redistribution within the newly covered, as affected unequally by Marked reduction of number of self-employment and non-standard workers at risk of poverty, when the social risk materialises, including after labour market transitions De-segmentation of labour market, reducing inequality, by incentivising the wider use of standard employment. High cost of extending coverage (to be borne by public authorities, i.e. taxpayers, or the concerned groups via contributions, depending on financing choices), and high cost of changes in existing system to move to personal accounts Possible financial Increase in social security contributions. Possibly more pronounced reduction of the expenditure on last resort safety nets.
aggregate demand by providing counter-cyclical spending during economic downturns Some improvement of playing field between employment and contract forms with corresponding effects on competition and factor allocation Not possible to quantify Partial de-segmentation of labour market by incentivising the wider use of standard employment Not possible to quantify Higher taxable basis if the adjustments in social security contributions steer a movement from forms of employment which have a simplified taxation system to standard employment and more highly taxed employment contracts Not possible to quantify Possibly some reduction of the expenditure on last resort safety nets. Not possible to quantify Partial removal of obstacles that may discourage employees from taking on the risks associated with improving factor allocation Not possible to quantify II. Overview of costs – Preferred option Citizens/Consumers Businesses Administrations One-off Recurrent One-off Recurrent One-off Recurrent Formal coverage Direct costs None Limited decrease in disposable income for a more sizeable group (previously uncovered and for whom the risks do not materialise) – through contributions, taxes or lower wages in the case of NSE if employers pass on the cost of their contributions None Possible increase of labour cost Possible financial burden to introduce reforms. None
(Depending on the financing of social security schemes). Indirect costs None Slightly higher risk of some reduction in employment through possible adverse effects on labour demand and supply. None None None None Effective coverage and Direct costs None None None None Possible financial burden to introduce reforms. None Indirect costs None None None None None None Direct costs None None None None Possible financial burden to introduce reforms. None Indirect costs None None None None None None The SME Test – Summary of results (1) Preliminary assessment of businesses likely to be affected The initiative will apply to all employers. It will, however, particularly affect all employers of non-standard employees and, to less extent, companies working with The data used are from the ESDE 2015 and allow determining to which extent the companies use these typologies of contracts. The self-employed with and without employees work mainly with micro enterprises (1-9 employees), and much less with SMEs and large companies. On the other hand, non-standard employees are particularly used by the public administration (28%) and SMEs and to a less extent also by large and micro enterprises. (2) Consultation with SMEs representatives SME's representatives have been consulted through the two social partners' consultations and also through dedicated hearings. The results of these consultations have been presented in Annex 10. Moreover, a survey has been carried out by Open Evidence interviewing a total of 612 employers across 10 Member States, the results of which are (See Annexes11 and 16)
limiting effective coverage for non-standard workers and the self-employed (table A.6 and A.7). The same goes for transferability (table A.8). As regards transparency, the target could be: all MS should provide individualised information within three years after the publication of the recommendation (currently, almost half MS do not provide such information, see table A10). Table A.15: operational objectives and monitoring strategy Specific objective Operational objective Indicators* Source Formal coverage Decrease in share of employees who have no formal coverage a) Categories of employees who have no formal coverage, by social security branch, by country (allowing evaluation, on the basis of the mapping present in Annex 6) b) Number of employees in these categories a) MISSOC b) EU-LFS, where necessary complemented by national sources. Decrease in share of who have no formal coverage a) Categories of who have no formal coverage, by social security branch, by country (allowing evaluation, on the basis of the mapping present in Annex 6 and a later update) b) Number of in these categories a) MISSOC provides information on access to social security of by branch. b) LFS can provide estimation on the number of self-employed in each country and per occupations or economic sector. Effective coverage Ensure that rules governing contributions and entitlements do not restrain the possibility to accumulate and access adequate entitlements on the basis of type of employment relationship Length of qualifying period, waiting period (if relevant) by employment status, by branch and by country Replacement rate; and duration of benefits by MISSOC provides information on qualifying period, working period, waiting period, calculation and duration of benefits and material scope by employment