WITH more than 120,000 people taking up his new simplified "auto-entrepreneur" scheme for self-employment, Hervé Novelli - Minister for Commerce, Trade, Small and Medium-sized Businesses, Tourism and Services - has a success story on his hands.
He talks exclusively to The Connexion about what inspired him to do it and how he hopes it will help France recover from the economic crisis.
France has needed something like this simplified status for sole traders for a long time - was there a lack of political will to do it before? What inspired you to do it?
It's true, people in France did have a real desire to start working for themselves, as we can see from the way people have gone crazy for the auto-entrepreneur status that I launched on January 1. In just three months 120,000 have signed up to benefit from this regime, which revolutionises the setting up of a business by greatly simplifying it. Why did it take so long for something like this to be done?
For a start, because it was necessary to radically review the way businesses are set up: to offer the chance to become an auto-entrepreneur entirely over the internet, in just a few minutes, with one payment (of taxes and charges) and with nothing to pay if you don't make any money.
Then, because the auto-entrepreneur is the culmination of a change in mentalities: today people have got used to the idea of working for themselves. People in France have got business ideas and for a long time they have been waiting for a simple way of acting on them - now it exists, the auto-entrepreneur. It was because I was aware of these aspirations that I wanted, as soon as I came into my job, to put this reform in place.
In your career you ran a small business yourself (manufacturing artificial body parts and devices to support or correct the body in the case of certain medical conditions). Did this help you to understand the difficulties that entrepreneurs face? Do you think some politicians are less down-to-earth?
This experience allowed me to experience the day to day life of a business owner and to understand what difficulties they face. I was able to see to what an extent the complexity of the administrative procedures and access to funds can quickly become very real obstacles to the development of a small business. It is with this experience behind me that, as Minister for Small Businesses, I keep a very close watch on small businesses' ability to access funding, which the economic crisis is making more difficult.
It is also very important to me to make life as easy as possible for businesses in France. That's what I've been trying to do for two years. For me this feeling for the realities of life is very valuable, but I assure you that there are plenty of ways of staying pragmatic in politics.
Why does France combine the roles of Minister for Business and Minister for Tourism?
Because people too often tend to forget the absolutely essential economic importance of tourism, which represents 6% of our GDP. People also forget that the key players in the tourism sector are businesses too, confronted with the same problems as small and medium-sized businesses in other sectors.
What's more, our hotels, cafes and restaurants, our gastronomy, contribute to the welcome we offer and help make France - which has the world's highest number of tourists - attractive.
Does the success of the simplified methods for paying social charges and tax - where you pay soon after earning your money and only on what you have earned - make you think it might be a good idea to simplify procedures for other kinds of small and medium-sized businesses as well?
I am obviously in favour of anything that can simplify life for entrepreneurs and allow them to devote all their energy to their business. I think that lightening the administrative procedures that shackle French business is more necessary than ever.
More flexibility should encourage small and medium-sized businesses to develop more, to attain the critical size that will enable them to be truly competitive on the international scene.
We are in fact working towards simplification - at the moment I am working on creating a one-stop-shop which will enable firms to have a single contact point for all their formalities and that will be accessible via the internet.
Do you sometimes take inspiration from what they do in the UK?
To create the auto-entrepreneur we observed all the good ideas that our neighbours have. Schemes like the independent worker in Quebec, the autonomous worker in Spain or British self-employment were sources of inspiration, even if we have managed to go further in simplification.
Are you happy about the numbers that have signed up? Were there any surprises in terms of what kinds of people are taking it up, or for what kinds of businesses?
The first surprise is the notable success we have had - 120,000 signed up in the first three months when I only hoped for 200,000 in the first year. The typical profile of the auto-entrepreneur is a bit different from the traditional entrepreneur. Most commonly he is a man and aged about 40, which is a bit older than the average. There are twice as many retired people, which proves that the auto-entrepreneur is ideal for topping up your income. The most common activities are being a consultant or offering services in the home. There are also a lot of auto-entrepreneurs in IT or who sell over the internet.
Do you aim to encourage everyone to find out about and register for the auto-entrepreneur scheme online? In our experience there is only minimal help on offer in some chambres de métiers or commerce.
I wanted this regime to be up to date with new technologies and as paper-free as possible.
Whether signing up or looking for information - it's all on www.lautoentrepreneur.fr
However this regime also relies on a network of professionals offering support and being accessible - whether it is the centres de formalités des enterprises (chambres de métiers et de l'artisanat, chambres de commerce et d'industrie and Urssaf) or APCE (l'Agence Pour la Création d'Entreprises - a key partner body in running the auto-entrepreneur scheme). Would-be entrepreneurs do need to be supported and listened to and in some cases nothing replaces talking to someone face to face.
Is everything going as planned in terms of the online payments of tax and social charges?
Everything is going as planned. By the way, nearly 80% of people have registered as auto-entrepreneurs online, which is something that is unheard of.
Were there some initial difficulties, and are there any that remain to sort out?
It took a few weeks for the regime to really start working at full-steam, but that is happening now, what with the regime being opened up to people who want to use it for a profession libérale (a range of freelance professions of a broadly intellectual type) and also to civil servants.
Another measure, which came in on May 1 and which I was especially keen on, was to put in place incentives for unemployed people benefiting from Accre. Thanks to this scheme a registered unemployed person becoming an auto-entrepreneur will only have to pay a quarter of the normal social charges.It's a great message we are sending out to jobseekers - to get out of unemployment, become your own boss.
You are also launching a new union for auto-entrepreneurs?
Yes, its under way - I have launched the Union des Auto-Entrepreneurs, whose president is François Hurel, whose report about entrepreneurship was essential in the creation of this new status. The aim of the union is to bring auto-entrepreneurs together and support them as they set up their businesses and also as they run them day to day. It is very important that auto-entrepreneurs should help each other and defend their status.
(For more info see STORY: New union for auto-entrepreneurs)
Is it correct that auto-entrepreneurs have a right to healthcare as soon as they are registered, without needing to work for a certain number of hours? Could that not be open to abuse?
It was essential to guarantee auto-entrepreneurs the same security as any other business owner, notably as concerns social security rights. Without that the regime would have been much weaker. Who would start a business if it meant you had to give up all your social security? We will keep a close watch on the situation to avoid any abuse but I believe that those who have taken up this regime really have done it to breathe life into their business idea. In any case if an auto-entrepreneur has no turnover after 12 months they lose the benefits of the regime.
Do you think the auto-entrepreneur will be a key factor in recovery of the economy?
I do think that the auto-entrepreneur will help the economy to recover. I have aimed to make it a real “anti-economic-crisis weapon.” Obviously the contribution of each individual auto-entrepreneur might seem very small, but we are talking about tens of thousands of people who, all together, will act as a driving force.
What other measures have you taken recently, or do you plan to take, to help small businesses in difficulty?
We must do everything to make sure that small businesses survive the crisis.
I do a lot of work with the finance agency for small businesses Oséo and with René Ricol, the credit mediator, to make sure that small businesses can access credit. We recently increased the funding for Oséo, which can now put itself up as a guarantor for small businesses to banks.
I regularly travel to find out, region by region, what the main problems are that people are facing in accessing credit. Another important measure we took for small and medium-sized businesses was to reduce payment periods, with a 60-day ceiling.
The goal of this reform was to generate a significant flow of cash in favour of small businesses, essential to support economic growth and jobs both today and in years to come.
