There is already a first proposal from the Government to move towards the contribution of self-employed workers according to their real income. The Minister of Social Security, José Luis Escrivá, met this afternoon with the three most representative organizations of self-employed workers, ATA, UATAE and UPTA, to explain their plans to begin the transition to the new contribution model from 2021, in a “very progressive” manner, which would mean that the vast majority of the self-employed continue to contribute as they have been up to now, or even that their contribution is reduced in cases of lower income, and that the rise in fees would affect above all “about 700,000 freelancers” with work income of more than 25,000 euros per year, as explained to elDiario.es in freelance organizations.
AIReF proposes to maintain the flat rate for freelancers until there is a contribution system according to income
The initial proposal of the Government, as already advanced by the Minister of Social Security, proposes a system of contribution tranches according to income, but sources of the negotiation point out that this Wednesday has not gone into depth on these “steps” in the contribution . The new contribution mechanism would not affect all self-employed workers, with the exclusion of self-employed collaborators, religious, those of the module system and, surely, self-employed companies.
The Ministry has transferred the self-employed groups that most workers will not see their Social Security contributions rise with the new system, which aims to reduce contributions to those who earn very little, although it will mean an increase for “some 700,000 freelancers “with work income above 25,000 euros a year, confirm this medium in the three organizations.
The president of ATA, the organization of the self-employed within the CEOE employer, has again today expressed his opposition to implementing the real income contribution system given the crisis caused by the pandemic. On the other hand, the progressive organizations of the self-employed UATAE and UPTA have celebrated that the Government finally decides to take this step, since it has been a demand of the groups for years and was left in the pipeline in the past single-color Government of Pedro Sánchez.
The heads of UATAE and UPTA, María José Landaburo and Eduardo Abad, have stressed that this system will be “fairer”, while the president of ATA, Lorenzo Amor, has argued that now “is certainly not the time” to apply this change , which it does not consider “fair”, as it applies only to some self-employed workers and leaves out other groups of self-employed workers.
Contrary to what happens with salaried employees, the self-employed can currently choose their contribution base to Social Security and 85% contribute for the minimum, according to 2019 data. This 2020, the minimum base is set at 944 , 40 euros, like last year, although there are some different minimums, for example, for self-employed workers over 48 years old, it is 1,018.50 euros. This causes that there are freelancers with very little income who have a hard time paying their quota (the minimum amount is 286.15 euros per month, which results from applying the contribution rate to the base) while others with higher income are contributing for a very limited part regarding your earnings.
Contributing for the minimum also means minimum benefits and translates into a substantial difference in the social protection that employees have, who contribute for what they earn. A clear example is pensions, with a 40% gap between the average pension of the self-employed and that of employed workers, as well as the ‘unemployment’ benefits for cessation of activity that have been implemented in this pandemic and that they are calculated according to what the worker contributes.
The Ministry of Inclusion, Social Security and Migration has highlighted in a statement that the Executive’s initial proposal would mean that “new self-employed workers choose their contribution base based on the expected returns they will have.” Minister Escrivá has proposed “a flexible system that can be modified throughout the year and that is regularized a year later, even with the possibility of returning the excess contributions paid by the worker,” the note adds.
Many freelancers earn less than the minimum wage
According to the crosses made by the Ministry of Inclusion with the Tax Agency, in 2018 there were “2.2 million self-employed with income from economic activities (RAE)” and “more than half of them in 2018 had income lower than salary minimum interprofessional (SMI), so their contribution to Social Security would be less than the current one with the new system “. That is, more than a million workers than with the new system proposed by the Executive whose minimum contribution would be lower than the current one.
At the meeting, the Government has not transferred its plans on the flat rate, which the Independent Authority for Fiscal Responsibility (AIReF) has recommended this Wednesday that it be maintained until the new listing system is created. Sources of the negotiation explain to this medium that “44%” of the people who contribute for the flat rate have returns for their work higher than the minimum interprofessional salary and “16%”, above 20,000 euros per year.
The Ministry has transferred its idea of negotiating this new contribution system with the representatives of the self-employed, so from now on the parties begin a process of dialogue to try to reach a common point.