Enterprising spirit

He has been hailed around the world as the President who will, enfin, rescue the French economy from mounting unemployment and ballooning costs for employers. In many parts of France, however, Emmanuel Macron’s plan to modernise and streamline labour laws have provided the perfect excuse for a good old grève (happily, the timing has the advantage of extending the vacances d’été).

Last night, with mild hyperbole, Le Front Social urged all Lyonnais to join their manifestation against Macron’s plan de destruction sociale massive. Tempting though it was in the 33º heat to join a load of angry French people protesting against, amongst other things, extending potential Sunday opening hours, I managed to resist the urge to install my bales of hay in the public streets.

Back in the UK I tended to read the small print whenever anyone seeking election talked about tax breaks for innovation and enterprise. Don’t get me wrong: I’m all for a bit of get up and go, but frequently such talk is used to bring in concessions for the sort of “entrepreneurs” who have already attracted billions to them rather than for your average painter-decorator, or indeed freelance journalist, who is struggling to pay their bills each month.

France, however, is a totally different bouillore de poisson. Anyone with half a brain can see that the system here is not set up to favour small-scale endeavours. Charges are so high that employing someone on a permanent contract here costs the employer double what they pay their employee in salary. If you happen to be rolling in it, like l’Etat, or BNP Paribas, tant pis, but if you are a small business, you have to think hard before taking anyone on. No surprise then that young people are struggling to get even a CDD (short-term contract), let alone a CDI (permanent contract).

From the outside, this all seems insane. I think it’s insane, and my family benefits enormously from it, Eadred being one of those lucky people whose CDI entitles him to over 40 days off each year, not to mention help with his transport costs, childcare vouchers and chèques de vacances which we can spend on, well, vacances: all at his employer’s expense.

Recently, however, I have had more personal reasons for wanting a President who is prepared to tackle the system. Some of the work I do here is freelance and, to work freelance, I had to set up my own company (cue labyrinthine paperwork). Once it had been established, I had to start to pay my cotisations. Everyone with a job in France pays these prélèvements sociaux, the major part of which go towards healthcare costs. And so I jolly well should too, I said to myself, when the issue first reared its head.

The trouble is that, whereas if you are employed by someone else, you pay 20% of your income in such charges, if you are self-employed, the percentage that you pay is much higher. This is presumably because you do not have, behind you, an employer who is quietly matching what they pay you in charges paid to the State. It’s quite difficult to work out how much I have to pay out for the privilege of employing myself because – évidemment – the money goes to no fewer than four separate entities, all of which have different payment terms. On the basis of our last tax return, however, I worked out that last year I paid out about 40% of what I earnt in charges. Double what I pay when I am employed by someone else.

Oh! Did I forget to mention that this 40% levy was before income tax? Although everyone pays their social charges, only 46% of French workers pay income tax. Unfortunately, because tax is paid per family rather than per individual, and because Eadred has his aforementioned cushy CDI, this includes us. As well it should, I thought…

Except that, gulp, all this makes the fiscal régime rather punitive as far as my freelance endeavours are concerned. I earn about 750€ this way each month, for about five full day’s work. That’s 18.75€ gross per hour. Deduct the 40% that goes out to the RSI, Urssaf, Cipav, and in Taxe foncière des entreprises (ground rent on the space in which you work), and I am already down to 450€, or 11.25€ per hour (before tax). Deduct the further 30% that we will pay in income tax at the end of the year, and I am down to 315€. Do the maths and I am paid 7.88€ per hour net. Less than half of the amount I started out with.

So yes, although I am very keen to pay my dues, I am all for the abolition of the RSI; the streamlining of the agencies to whom entrepreneurs pay their charges; and the proportionality of charges on the self-employed. And no, thank you very much, I do not wish to manifeste against any Président of any stripe who is willing to try to sort this mess out…

23 thoughts on “Enterprising spirit

  1. I am with you all the way on this, I am more than happy to pay my social charges and taxes as well I should be, like everyone else we have great healthcare and a great lifestyle here and I don’t want to freeload off the system, but yes it needs an overhaul and yes am in total agreement with you. x

    1. That’s it: I want to pay my share, and I am happy that we should pay more as a family if we earn more. However, paying more just because I am self-employed is really rather frustrating. And we can afford it, however much I dislike it. There are many who can’t, and who don’t have the happy lifestyle that we do.

  2. But slightly more remunerative than teaching postgraduates. The University pays for class-contact time, which is fine in principle. Trouble is, I reckon that if I’m to do it properly, a one-hour class requires at least four hours prep – so I end up getting less per hour than the National Minimum Wage.

    Fortunately, I enjoy doing it – and the Civil Service Pension Scheme is a wonderful institution…

    1. Yes, you are right, Frank. Teaching should not be paid in classroom hours because it’s impossible to do well without loads of prep… But yes, there is your pension…

  3. Could not agree more! So-called social charges are hidden taxes. Why should you pay into a healthcare scheme as an independent when you are already covered by regular employment and/or as your husband’s dependent? This is the big issue I have with the French system. Call a spade a spade – or a tax a tax – and I’ll pay it. Let’s have a fair income tax system where everybody pays and reduce the bloody charges for all the various csg, crds, sécu….ad infinitum. If any government should be able to do it, it will be this one. But despite Macron’s superstar start, I am skeptical about the French capacity for sweeping social change. The only way to do this will be to change the constitution – ie le 6ème république. And we will enjoy plenty of strikes before that happens!

    1. Precisely. The inability to call a tax a tax is quite astonishing. And yes, I am also paying several times over for my healthcare – via Eadred and via regular employment… And I am perfectly happy to pay a “solidarity charge” for the unemployed, up until the point where I have a friend who CHOOSES not to go back to work because they can claim 1,800 euros per month in unemployment benefit, when I am earning less than half that amount as a freelancer, and paying over 50% of it out again for many things, amongst them the 1,800 claimed by my friend. Yes, I want to pay tax. Yes, I want to pay a fair share, based on a sliding scale of relative wealth, but no I don’t want to have to pay multiple times for the same thing, or pay more just because I happen to have the initiative to work on my own account. RANT RANT RANT. And yes, like you, I wish Macron well, but if the Front Social is already striking, I share your pessimism about what will actually change in the end.

    2. I’m also a freelancer with my own company. My husband had a CDI until the boss/owner embezzled the business into bankruptcy; he hasn’t found a new job (too young to retire but too old to hire). He had chomage for three years, now zip. So we are 100% dependent on my extremely unreliable income.
      Anyway, the point about paying for healthcare is that it’s based on your income, not your health needs. Which I think is the right way. Nobody says, hey, I want to get cancer so I can get lots of expensive medicine from those fools paying their taxes. Otherwise, why wouldn’t a couple with two high-income CDIs say that one shouldn’t pay in because they’re covered by the other? Everybody should pay in. The question is how much.
      OTOH, I see bigger problems on the other side, where the government pays out. A couple of neighbors go for a weeklong spa “cure” every year, paid by taxpayers because they get a prescription for it from their doctor. They are completely healthy but they say they have the “right” to the “cure.” When lots of people do that, there’s either no money left for cancer treatments or the cotisations have to go up. There are plenty of abuses that could be cut. Also, any time my kid was a little sick, as kids are now and then, the other mothers would be aghast that I wasn’t hauling her to the doctor. But if it’s viral, you just have to wait it out. I would keep her home a day and see how it went–usually it went away. But imagine all those kids, several times a year, waiting to see a doctor about something that just requires “watchful waiting.” Why do they go? Because it’s “free”–the system reimburses 2/3 and the other 1/3 is covered if you have supplemental insurance. Just having to pay a small amount that isn’t ever reimbursed would keep some of these “just check it out” people out of the doctor’s office and lighten the burden.
      The one that rankles me is URSSAF. Yes, people might need help with housing, help with food costs, but as somebody who hasn’t bought new clothes (including for my kid), whose car is long overdue for a tuneup and who cuts my own hair because work is slow at the moment, I am not happy about writing a check to URSSAF so that families where nobody works (on the books) can go buy new clothes and school supplies for their kids (and often the money gets diverted to a new big-screen TV, if you watch the grandes surfaces at the period when those subsidy checks go out). I want to help low-income families with the basics, but I don’t think they should live better than people who work.

      1. I agree that this is a complicated landscape. My point is that it is stupid that the self-employed should pay proportionally more per head than the employed and, I guess, by extension, that working people who are on a lower monthly income than the out-of-work people shouldn’t pay more to get less. Like you, I want to pay my share and if I earn more I’m totally on board with my share being bigger than the less-well-off, but I don’t want to pay MORE than my share for earning very little. Argh. Thanks for dropping by. I like it when people get into debates in the comments.

      2. It must be awful struggling to get by and having to pay into benefit schemes. I’ve been there before and can appreciate how frustrating it is. That said, when I lost my job a few years ago, I took full advantage of the deal offered by Pole Emploi to collect unemployment while starting my new business – I probably would not have done so when I first arrived but after so many years, if they’re going to chuck money at me, I won’t say no. Still, I chose to base my business on the Swiss side not just because that’s where my clients are but also because I’ve learned to be very wary of the French administration — the less I have to do with the URSSAF and others the better.

        However, I do believe that services should be paid for on an equal value basis: same healthcare when cancer strikes, same fee for everyone. Let them make up the difference for public services in income and value-added tax — a percentage of my earnings or what I spend.

        As for the welfare state, well…reforms are needed for sure. And incentives that reward hard-working people, while maintaining help for those who truly need it.

  4. As an AE, I’m all too familiar w/the cotisations and I totally agree with you. The system needs to change.

  5. When taxes are used to support those who are vulnerable, weak and as a society provide well being then nobody minds. If they are unaffordable or unfair this needs to be addressed. #PoCoLo

  6. Gosh, that’s a big difference between those who are self-employed, and those who are employed by others. It does seem unfair. I was so thrilled when Macron beat the far-right. It restored my faith in humanity. #AllAboutFrance

  7. I was surprised at the number of people who were against any kind of change in French labor law – it seems pretty clear to me that some things need to change. I love all the benefits I got from the French system but things like those CDI laws get really out of hand. There needs to be a balance for everything to work. I’m really shocked at all the charges they take from you as a freelancer! It sounds terribly discouraging. I’m all for everyone paying their fair share, but it sounds like freelancers get the (very) short end of the stick. #AllAboutFrance

  8. Ah, yes – maintaining tax laws that put a stranglehold on small business initiators and innovators is absurd (if a government truly aims to benefit as many people as possible at every income level). As Mr. Wonderful (Kevin O’Leary) says so often on one of my favorite TV programs: “Stop the madness!”

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