COVID-19 Response: Call for EU & UK Coordinated Approach to Support the Self-Employed Microbusinesses
Economic recovery packages should help Etsy sellers weather short and long-term threats of the pandemic
COVID-19 is continuing to impact almost all aspects of our lives and the broader economy. Last week, we mobilised our seller community to influence the US stimulus bill. Today, I sent individual letters addressed to the leaders of the European institutions, as well as EU and UK finance ministers, urging them to take a swift and coordinated approach to ensure that microbusinesses and the self-employed are a key part of economic recovery packages across the EU and UK.
European governments are working on national economic recovery measures to help struggling workers and businesses. The problem? They’re on the large part considering solutions for employees and traditional small businesses, but not the self-employed microbusinesses who make up the majority of Etsy sellers. Etsy is urging EU and UK lawmakers to take action and include our community. I invite you to read the letter and stand with European microbusinesses:
Dear President von der Leyen,
In the face of the rapid spread of COVID-19, lawmakers and EU leaders are rightly focused on sending immediate aid and support to our most vulnerable businesses and workers. Yet one vulnerable group — microbusinesses and the self-employed — are largely absent from the conversation. When action has been taken, measures vary widely across Member States. We therefore call on the European Commission and Member States to take a swift and coordinated approach to ensure that financial support reaches all types of SMEs, including microbusinesses, and all types of workers, including the self-employed.
Etsy represents 2.7 million creative entrepreneurs, 83% of whom are women and nearly all of whom run one person businesses out of their homes. As sole traders, they do not always qualify for many social safety net programs, including unemployment insurance, disability insurance, or paid leave. Neither will they benefit from much of the important relief some EU Member States have already promised to workers and small business owners, including low-interest rate loans, emergency leave, or expanded unemployment protection. Yet, these businesses are among our most vulnerable to this current crisis, as they lack the financial resources to weather an unexpected decline in sales, and have no way to run their business should they get sick.
Etsy sellers are not alone. The McKinsey Global Institute estimated that 20 to 30% of the working age population in the US and the EU engage in work outside of, or in addition to, traditional employment arrangements. A new report from the European Commission shows that self employment grew significantly since 2002, while full time employment remained roughly the same, suggesting that non-standard work has reduced unemployment and inactivity. Together, this type of work comprises the emerging gig economy. These microbusiness, independent contractors, and self-employed individuals need an economic recovery package to help stem hardship due to COVID-19. Unfortunately, many of the proposals currently under discussion would not help these entrepreneurs.
To meet this urgent need, we urge the Commission and EU Member States to ensure that microbusinesses and the self-employed are a key part of any economic recovery package through the following means:
Tax and debt deferral — We fully support the initiatives of certain Member States of providing tax and debt relief for businesses affected by COVID-19 to defer payment of contributions and taxes. To this end, we call on all EU countries to follow suit and expand that deferral to include the self employed. We also urge all EU Member States to negotiate deferred mortgage and credit card payments for self-employed microbusinesses, who often operate out of their homes and use personal credit cards to fund their business.
Unemployment protection — More than 50% of independent workers in Europe are not covered by unemployment benefits. While Etsy sellers do not face the same classification issues as on-demand service providers, they do face similar economic security issues, such as managing income volatility and savings for the future. For this reason, the Commission and Member States should not only focus on platform workers as such, but broaden the discussion to include those workers outside of traditional employment arrangements. Member States should also be encouraged to immediately fund an income protection fund for the self-employed and gig workers, which would allow them to draw down benefits in the event of declining income due to decreased demand for their goods or services.
Direct assistance — We welcome that Cohesion Policy Funding and the EU Solidarity Fund will play a key role in the Coronavirus Response Investment Initiative, particularly with a focus on the long term impact of the crisis. It’s imperative, however, that EU countries now use these funds with greater flexibility to reallocate financial resources with a focus on the areas of greatest need, including support for vulnerable groups such as microbusinesses and the self-employed. For example, Member States should create a supplementary direct assistance program for the self-employed and sole traders to help cover the cost of lost business, paid sick leave, individual health care costs, and fixed expenses.
Business-critical services — Etsy sellers depend on critical e-commerce infrastructure, including financial services, shipping, and internet connectivity. EU governments should ensure that these essential services, including the free flow of goods, remain fully operational, even as the public and private sectors take greater measures to contain the spread of the virus.
Taken together, these reforms would dramatically ease the burdens faced by Etsy sellers, as well as the millions of independent contractors, self-employed individuals, and microbusiness who are driving the broader gig economy. At a time of so much uncertainty, let’s not leave our most vulnerable entrepreneurs behind.