The classification of uber drivers as employees mostly means they have to pay more tax and less money goes to drivers and uber. People will argue employees have more rights and this is good for them, but the primary benefit of someone being an employee is to the state and the benefit is financial. If too many people become self-employed, the state can't finance itself anymore. The line between 'employee' and 'self-employed' is vague and this kind of reclassification is not limited to Uber. If you try contracting as a coder for example, you are likely to get reclassified as an employee. And then you have to prove you are not. Which you aren't going to be able to, because a self-employed working through a brokerage isn't radically different from a consultant working through a consultancy. So in that case you are going to have to pay a lot of back taxes. The point is: if too many people start working for exchange sites, they will also get sued and be classified as employees, just so the state can get its dues.
> The classification of uber drivers as employees mostly means they have to pay more tax and less money goes to drivers and uber.
You forgot to disclose the fact that they are getting many perks like properly funding their public pensions while working for Uber AND getting access to regular unemployment funds. The advantages absolutely out-weight the drawbacks in France. And they are guaranteed a minimum wage, legal contract framework which means that Uber cannot fire them on the spot and so on and so forth. The only loser here is Uber, not the driver, if Uber were to chose to continue doing business in France.
First, you say "more rights" as if that was just a detail. But paid vacations, sick/paternity/family leave, minimum wage, pensions, social security, right to strike, unemployment benefits and the like are not just a minor thing.
> If you try contracting as a coder for example, you are likely to get reclassified as an employee.
I have worked as a freelance through some brokerages/exchanges (e.g. Upwork) and there you set your own rates, your own conditions, and your own clients. I think it's a pretty different framework than Uber.
The issue is not brokerage/exchange or not, it's who controls the terms of the labour done.
It is a 'detail' not to us but from the perspective of the government.
You are still pretty likely to get pursued by the tax services for 'freelancing'. At least where I live. I hope you manage to slip through the net though :)
Employees get a lot more benefits than self-employed. Health care insurance, sick days, vacations and pensions.
I do not know about France, but in Germany, employees only pay half of their healthcare insurance fees. And only their wage is subject to the healthcare insurance "tax", while self-employed people need to pay the tax on all incomes, including investment incomes
>> If too many people become self-employed, the state can't finance itself anymore.
This is not the case in France. Self-employed people still pay personal income tax and/or a tax on company profits.
The increased taxes on employees as compared to the self-employed is mainly due to paying for the infrastructure and cost of providing extra benefits to employees, like unemployment insurance, vacation pay, better pensions, etc. The term for these taxes are “charges sociales”, meaning they’re used for providing social services. The increased taxes are not used for building roads, paying for the armed forces, or things like that. Other taxes pay for that.
If everyone in France were self-employed, a very few government services providing social services (like Pole Emploi) might cease to exist, but most government services would be entirely unaffected.
Same here. It turns out west Europe doesn't differ that much on these issues. In fact your answer only strengthens my conviction this is a major underlying reason. You think the French government would take it on the chin and just accept for example not being able to pay pensions?
From what I can gather off frenchproperty.com the 'social charges' tax rate employees pay is very very big (29% employee, 50% employer, total would be something like 65%) while self employed pay 12% to 23%.
> From what I can gather off frenchproperty.com the 'social charges' tax rate employees pay is very very big (29% employee, 50% employer, total would be something like 65%) while self employed pay 12% to 23%.
Exactly how much someone will pay in social charges is complex, because it depends on their line of work, how their business is set up if self-employed and how much they’re making.
But here’s one example:
A typical white collar salaried employee, for example a computer consultant, who’s netting 50000 euros will be costing his employer 100000 euros after social charges are taken into account. This worker will be paying into two different pension plans and is also paying for unemployment insurance.
A typical white collar self-employed contract worker who’s billing 100000 euros will have perhaps 5000 euros or so of business expenses and perhaps 30000 to 35000 euros of social charges. It varies mostly on how good their pension plan. So they’re netting 60000 to 65000 euros.
The difference between these two cases is mostly that the salaried worker (currently) has a better pension plan and also has much better unemployment insurance coverage (but which is also expensive).
If you’re not worried about finding work, being self-employed is a bit more profitable in this case, but not hugely so.
The 12% and 23% numbers that you saw is for a what’s called a “microentreprise”. In that case, the social charges are based on total income, not profits (so no deductions).
12% is for when you’re selling goods, not services, and you don’t get to deduct the cost of the goods.
23% is for when you’re selling a service, which is great, but you can’t bill more than 70000 euros (not counting sales tax) in a year and and still be a “microentreprise”.
The idea of the “microentreprise” was to allow very small businesses to get started, with lower social charges and much simple accounting procedures. It’s great for part-time or side projects or low paid work, but it’s not suitable for full-time well paid work.
I forgot to add that between the two cases that I mentioned, the salaried employee also has 5 weeks or more of paid vacation. The self-employed worker just bills for days that they works. Vacation is unpaid or more accurately needs to be factored in as a cost in order to compare apples with apples and not oranges.
No, the French government would not accept not being able to pay pensions. But the French government would still be able to pay pensions, even if everyone were self-employed. The self-employed do already pay into pensions.
Additionally, while there are currently 42 different pension plans in France, depending on your line of work, under Macron there's an evolution towards having just one government pension plan for everyone. The new system will be based on building up points which can be cashed in on retirement. It will probably start for those who retire starting in 2035. So in the future the pension plan will be the same for everyone, self-employed or employee.
Maybe I'm mistaken. I thought a pay it forward system like what we have here is pretty unique. So workers do not pay for pensioners directly then? At any rate it can't be much what they're paying because the rates are too low.
I don’t follow your reasoning, but just for information the state pension plans of both the Netherlands and France work on a “pay as you go” basis.
Throughout your career, you build up the right to a certain pension in each of the different pension plans you’ve been paying into. When you retire, those who are still working and paying into that plan pay for your pension (as you did when you were working).
I can’t vouch that it works this way for all 42 different plans, as I haven’t checked, but I’ve worked both as an employee and as a freelance consultant and it works that way for the 4 different pension plans that I’ve paid into. And, as I said, in the future there will be only one state plan for everyone (plus various private plans as well, of course).
So I see no problem with everyone in France being self-employed and France continuing to pay out pensions.
Yes. Some (mostly) very low tax places won't have this problem. But there are reasons for it. There is the underlying principle that government likes to incentivice new business creation over just taking a job someone else could have gotten. There is also the issue that dodging tax is easier for one man business than employees so if you want to tax them at all you have to be a bit lenient.
