Self-employed Workers

Within the Swiss social security system, self-employed persons are granted a special status. The majority of social insurance schemes prioritise the protection of the workforce, while even today, self-employed workers are often only partially or inadequately covered.​​​​​​​

Self-employment as a concept is defined in various ways. Generally, in Switzerland, self-employed workers are defined to be those who work on their own behalf or are employed in their own business.  At the beginning of the 21st century, this included many entrepreneurs, such as artists, hairdressers and freelance journalists, as well as independent professionals such as doctors, lawyers and architects. Social insurance schemes like the AHV (1st pillar social insurance) use a restrictive definition of self-employment and only include those employees who work on their own behalf. Consequently, anyone who is employed in their own limited company is not considered to be self-employed. Many self-employed persons are simultaneously self-employed and employed.

The early social insurance schemes established in the late 19th and early 20th centuries in Germany, France and Switzerland primarily offered protection against the risks of poverty in industrialised society. The emphasis was on factory workers, while the self-employed and agricultural workers remained excluded from the first social security schemes, such as state accident insurance or unemployment insurance. Farmers constituted about half of the self-employed workforce. By 1900, about a quarter of the working population was self-employed. With the decline in the number of people employed in farming, the proportion of self-employed workers has also fallen, now accounting for around one eighth of the total labour force.

One problem concerning social security for the self-employed was the financing model of social insurance, which was based on wage-dependent contributions. This method of financing was out of the question for the self-employed, who generally did not receive a salary but lived off the profits from their labour. The majority of farmers were particularly affected by this, as they did not play a major role in the social insurance projects of the 19th century. The «liberal professions» - doctors or lawyers - who were traditionally regarded as self-employed in the 19th century were also not a focus. Liberal professions were academic, bourgeois professions with high levels of prestige and usually a good income, so the idea of self-employment as a precarious existence worthy of protection was alien to people of the 19th century. Not until the emergence of universal social insurance schemes, which covered the entire adult population, were the self-employed collectively included in a section of the welfare state. In Switzerland, this happened in 1948 with the establishment of the Old Age and Survivors' Insurance (AHV).

Even though the lack of welfare state protection for the self-employed was frequently criticised during the second half of the 20th century, the problem has only been partially resolved to this day. One obstacle was that the self-employed were a very disparate group and so did not have a powerful lobby. Certain self-employed groups, such as the medical societies, even objected to the expansion of the welfare state by a majority, instead favouring their own professional pension schemes. Moreover, self-employment involved a certain entrepreneurial risk and any support benefits for the self-employed should not be misappropriated to cover this risk, since this would ultimately result in the general public having to pay for private losses in the event of bankruptcy.

The protection of the self-employed was already discussed in the first major social welfare law, theFederal Act on Health and Accident Insurance (KUVG) adopted in 1912. In the preliminary consultations, the Federal Council and Parliament agreed that the self-employed were one of the population groups that, thanks to their income, did not need any special support and were able to support themselves. The handful of low-income self-employed people would be best helped by voluntary access to accident insurance. This was ultimately enshrined in the KUVG.

The 1930s were marked by the Great Depression, which also impacted the self-employed. The authorities acted hesitantly during this crisis, with a first package of crisis aid for the unemployed (1931) initially excluding the owners of small businesses (small master craftsmen) from support due to financial misgivings. It was not until the end of 1932 that a solution was found that was limited to the small businesses in the watch industry that were particularly affected. Beyond this, there was no assistance for the self-employed.

After the Second World War, the government and parliament repeatedly discussed including self-employed workers in various branches of social insurance. However, these attempts regularly failed. Self-employed workers were not included in the revision of unemployment insurance in 1950, in the debates on the reform of health insurance in 1973, between 1975 and 1982 when the law on occupational pension schemes was drafted, nor between 1976 and 1984 and nor again in 2008 when accident insurance was revised. The justifications were similar in each case. The groups affected were too small for blanket solutions; the professional organisations had to be made more accountable. In the case of unemployment insurance, it was claimed that it was difficult to determine the difference between self-inflicted and involuntary unemployment in the case of the self-employed. The only minimal consensus offered was the voluntary insurance model, which has been in place for accident insurance since 1912 and was subsequently introduced for occupational pension schemes in 1982.

The voluntary insurance model, however, was less and less suited to the typical employment situation of many self-employed workers. Since the 1980s, precarious working conditions have become increasingly widespread. These include, for example, part-time work with lower workloads or low incomes, night and weekend work or on-call work. Many of these affect the self-employed. To make matters worse, self-employed people in precarious employment are often unable to afford voluntary insurance schemes.

The COVID-19 pandemic, which engulfed Switzerland from 2020 to 2022, marked a turning point in the welfare state's protection of the self-employed. Many self-employed workers lost their livelihoods because of the lockdown, particularly due to business closures and the ban on events. Many of the support measures did little to help the self-employed. Compensation for short-time working from unemployment insurance was limited to employees in salaried employment and interim loans only benefited companies. The authorities were aware of the problem, however, and in March 2020, the Federal Council and Parliament put together an aid package specifically tailored to the needs of the self-employed in the form of Corona Virus Income Compensation Scheme. Self-employed workers who suffered a loss of earnings due to the pandemic measures were entitled to compensation amounting to 80 per cent of their previous income. Employees who suffered a loss of income due to additional childcare or quarantine measures were also eligible to apply. In total, the federal government paid out CHF 3.5 billion in income compensation between March 2020 and October 2021, more than two thirds of which (CHF 2.6 billion), went to the self-employed. In addition to creative industry workers, the taxi industry, non-medical health industry workers (e.g. physiotherapists), management consultants and restaurant and hairdressing salon owners benefited. In total, over 430,000 people, the majority of them self-employed, received such support. Income compensation was an important, albeit comparatively small, item within the Confederation's COVID-19 expenditure. Short-time work compensation alone totalled over CHF 15 billion for 2020 and 2021.

In retrospect, support for the self-employed during the COVID-19 pandemic proved to be a temporary measure. Better protection for the self-employed in the Swiss welfare state remains a current social policy issue.

Literatur / Bibliographie / Bibliografia / ReferencesArticle series «Soziale Absicherung von Selbständigen» (2023), in Soziale Sicherheit (CHSS); Felix Bühlmann (2020), Arbeitsverhältnisse (atypische), in Wörterbuch der Schweizer Sozialpolitik, Ludwig Gärtner (2023), Die Diskussion um die soziale Absicherung der Selbstständigerwerbenden, in Soziale Sicherheit (CHSS), Kurt Pärli (2021), Die Einbindung Selbstständiger in die Sozialversicherung der Schweiz.Soziale Sicherung Selbstständiger – Interdisziplinäre und internationale Betrachtungen Workshop am 24. – 25. Juni 2021, Hamburg; Eidgenössische Finanzkontrolle (ed.) (2022), Evaluation des Corona-Erwerbsersatzes für Selbständigerwerbende, Federal Social Insurance Office, Bern; Ecoplan, Michael Mattmann, Ursula Walther, Julian Frank, Michael Marti (2017), Die Entwicklung atypisch-prekärer Arbeitsverhältnisse in der Schweiz. Nachfolgestudie zu den Studien von 2003 und 2010, unter Berücksichtigung neuer Arbeitsformen, SECO Publikationen Arbeitsmarktpolitik No 48 (11. 2017), Bern