Entrepreneurs' Mikael Pentikäinen's YEL warning to the government: "There could be an unpleasant surprise"

CEO of Suomen Yrittäjie Mikael Pentikäinen is a guest on the latest episode of the Yrittäjän podcast, which tackles current themes such as the YEL reform, the Prime Minister Petteri Orpo (Kok) government's success and the general economic situation.

Occupational health care is also on the agenda, to which Yrittäjät has proposed changes. We have previously written about the subject here. Yrittäjät proposes that the statutory obligation for employers to organize occupational health care be removed.

– The underlying idea is that the current system is not working. It has shortcomings, especially from the perspective of small companies. The system has been developed largely in accordance with the wishes of large employers, while the views of smaller employers have not been listened to much, Pentikäinen explains in the podcast.

Small companies have criticized the content of occupational health services, among other things, for not meeting the needs of companies. More transparency is needed in billing. Pentikäinen also highlights billing errors in the podcast.

– For these reasons, we have made our proposal so that the service provider would have to think about the service in a more customer-oriented way. I have been contacted by several occupational health doctors who welcome our proposal.

According to Pentikäinen, the current system has partly supported the concentration of the sector.

– We hope that more entrepreneurship would emerge in the sector. There would be room for small, specialized operators.

"The proposal for unpaid leave for the first day of illness, which the government abandoned and did not replace with anything similar, has been left to be considered."

Mikael Pentikäinen

One thing in the tooth socket

The results achieved by Petteri Orpo's government have been excellent from the perspective of entrepreneurs.

– From the perspective of entrepreneurs, the government program was historically good. The Orpo government has implemented it with discipline. At the moment, it seems that about 90 percent of the 30 or so reforms that we selected as the most important for entrepreneurs will be completed. Some have changed somewhat during the preparation, but the entries that Entrepreneurs wanted have been implemented quite well and we are grateful for that.

At the same time, Pentikäinen points out that some of the reforms are still pending, such as the change to YEL legislation.

According to Pentikäinen, the entrepreneur organization has been successful in its advocacy work.

– There are other reasons as well. The government base is precisely the one that is optimally able to advance issues that promote entrepreneurship.

In the podcast episode, Pentikäinen mentions one thing that has stuck in his mind.

– The proposal for unpaid leave for the first day of illness, which the government abandoned and did not replace with anything similar, has been left to be considered. We further propose that the government at least investigate how the sick pay system could be reformed. It is currently unreasonable, especially from the perspective of small employers. The system is very cumbersome.

Pentikäinen says in the episode, what he means by unfairness and how he thinks the system should be reformed.

The CEO of Entrepreneurs is clear that the current government structure will not continue after the elections.

– The pendulum will swing to the left. However, it has not been announced in church that the SDP will win the elections. I also do not believe that the labor market reforms will be dismantled, perhaps with the exception of the tax deduction for membership fees of labor market organizations, which the SDP wants to restore.

“The YEL proposal should not be submitted to Parliament”

The YEL legislation, which determines social security and pension security during an entrepreneur's working career, is on the verge of reform. The Ministry of Social Affairs and Health's comment period on the government's proposal to reform the entrepreneur's pension system ends on 5 August. The Federation of Finnish Enterprises submitted its statement on the matter last week. 

Entrepreneurs have welcomed the government's decision to increase freedom of choice during the budget debate.

– In this, the entrepreneur can choose the model that best suits his or her situation. There have been problems, especially among entrepreneurs with lower incomes. Pension companies' income calculators have made YEL contributions unreasonable compared to the entrepreneur's income stream.

According to Pentikäinen, the proposal that has been submitted for comments should not be submitted to Parliament in its current form.

– In our opinion, the model does not correspond to what the government has agreed, because for entrepreneurs who choose actual income, it would be based on the last confirmed tax return, which means that the income could be a couple of years old. Limited companies have recent information in the income register about how much they pay in wages. We hope to change this, i.e. we want entrepreneurs to receive a pension payment based on real-time income as much as possible.

According to Pentikäinen, the problems with the earned income calculator used by pension companies may escalate next year.

– The government may be unpleasantly surprised that many entrepreneurs' pension contributions may increase during the elections, because YEL contributions can still be increased next year. That is why we have proposed that the increases be put on hold and waited until 2028, when the YEL reform comes into force.

On the podcast Pentikäinen explains why he supports investigating the possibility of funding YEL contributions. He considers the Swedish earnings-related pension model and its expansion to entrepreneurs to be a viable option, allowing entrepreneurs to direct part of their own pension contributions to investments of their own choosing.

“The biggest question of the next election period”

According to Pentikäinen, the economy has clearly improved since last year. He says he recently spoke with a construction entrepreneur from North Savo.

– He said that the company is in a better situation than ever. The economic turnaround is widely reflected in the situation of entrepreneurs. There have been fewer phone calls about the difficult economic situation this summer.

In the podcast, the CEO of Yrittäjät reminds us that before the war in Ukraine, about a quarter of Finland's export and import tonnage went across the eastern border.

– It is obvious that the war in Ukraine has had a major impact on our economy. In the future, the big question for entrepreneurs is how Finland will adapt to the debt brake in the next election period. An adjustment of around ten billion is inevitable. The more it is done by raising taxes, the more it will affect growth and entrepreneurship. In the big picture, it should be possible to make the adjustment by 75–80 percent by cutting spending and not by raising taxes. This is the biggest question of the next election period.

Listen to Pentikäinen's opinion on possible pension cuts in the podcast.

The entrepreneur's podcast is available to listen to on Spotify, In Supla ja Apple's on the podcast service.