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Economy

ORIGINAL FRENCH ARTICLE: La grande précarité des autoentrepreneurs

by Marion Perrier

The Precariousness of Auto-entrepreneurs

Translated Friday 5 October 2012, by Lydia Hawkins and reviewed by Henry Crapo

According to a recent study by the INSEE, auto-entrepreneurs are struggling to sustain their activity. Those who do manage bring in a very low income, even after three years.

This is a harsh realisation for pioneers of auto-entrepreneurship. Three years after this status was established in 2009, an INSEE study describes the often chaotic journey of the first 328,000 auto-entrepreneurs. Only 79,000 have succeeded in generating a steady positive income within the following three years. For 90% of them, their income has remained below the French minimum wage.

This status, implemented by the Economic Modernisation Act of 2008, was part of an ongoing policy to reduce unemployment and work towards growth, according to its promoters. The objective was to remove the "structural and regulatory blockages" of the French economy.

In practice, setting up a business and paying for both income tax and social security contributions have been simplified and alleviated for auto-entrepreneurs, the prerequisite of these advantages being to achieve a turnover below a threshold based on the business sector.

While this scheme has resulted in a rocketing number of start-ups, the latest data from the INSEE gives reason to doubt its benefit for growth. "Public authorities have opted for entrepreneurship as a solution to unemployment, at the risk of creating sub-companies and working against the objective of competitiveness", had already noted researchers Nadine Levratto and Evelyn Serverin in 2009. Hence, few auto-entrepreneurs are able to sustain their activity. Only 58% are still considered economically active after three years. Others have either abandoned this status or failed to maintain a minimum turnover of 1 euro. "Only few have moved on from auto-entrepreneurship to a more conventional type of self-employment" points out the INSEE. Therefore, rare are those whose business has grown enough to require a change in status. Yesterday’s small auto-entrepreneurs have not become today’s successful businesses.

Above all, the auto-entrepreneur’s income remains low. In 2009, they earned an average of 4,300 euros per year, and by 2011, 92% still had an income 30% below that of the average for their sector. This can only add fuel to the criticism of a scheme which is known for being abused by employers seeking to evade social security contributions. These figures establish that by prompting employees to adopt an auto-entrepreneur status, employers put them in a very precarious position.


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