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Kuva: Katri Lehtola

The number of light entrepreneurs has grown rapidly in recent years. At the same time, the profile of light entrepreneurs has changed: they are increasingly younger, of foreign origin and have only a basic education. The Finnish Centre for Pensions’ study examines, for the first time, the careers, income and pension accrual of light entrepreneurs in Finland over a period of several years.

According to the study, there were around 23,000 light entrepreneurs in Finland in 2017 who received their income via an invoicing service company. In 2022, they were nearly three times as many:  68,000.

As a rule, light entrepreneurs are 20-40 years old. Increasingly many of them are of foreign origin. In 2017, about one in ten light entrepreneurs working in Finland was born abroad. In 2022, already one in four was of foreign origin. Yet, most light entrepreneurs are men born in Finland. An increasingly larger share of light entrepreneurs has only a basic education.

“Light entrepreneurs are a heterogenous group. The results of our study indicate that the nature of light entrepreneurship changed during our review period (2017–2022). Persons with a weaker labour market status have become light entrepreneurs more often than before,” explains Senior Researcher Susanna Sten-Gahmberg from the Finnish Centre for Pensions.

In 2022 there were 67,995 light entrepreneurs, out of which 28,414 started as light entrepreneurs in that year.

Light entrepreneurship is often occasional and a source of extra income

Light entrepreneurship is often occasional: each year of our review period, starting light entrepreneurs made up 40–50 per cent of all light entrepreneurs. Only around one in five continued with this work for more than one year.

Light entrepreneurship seems most often to provide an extra income. In 2022, four in five light entrepreneurs received other income than from light entrepreneurship. Nearly 60 per cent of them were also in an employment relationship. In 2022, the median annual income from light entrepreneurship was 1,700 euros.

“Although the average income from light entrepreneurship tends to be low, the livelihood of many older and foreign-born light entrepreneurs seems to depend on this type of work. For example, for foreign-born men aged 50, the income from light entrepreneurship formed, on average, 57 per cent of all their earnings from work in 2022”, Sten-Gahmberg says.

Increasing employment and income after becoming a light entrepreneur

The careers of light entrepreneurs are varied and relatively unstable. Before becoming light entrepreneurs, many have studied, been unemployed or, if they are of foreign origin, lived abroad.

After starting working as a light entrepreneur, the share of employed persons grew in all population groups, although there were still some differences. The employment outlook for those with a higher education and those born in Finland was somewhat better than for others. Self-employment increased after light entrepreneurship, particularly among immigrants.

The income of starting light entrepreneurs grew more rapidly in the next few years than the income of similar population groups who were not light entrepreneurs. The income growth was more rapid particularly among the younger, foreign-born and those with only a basic education.

Light entrepreneurs experience slower income growth that their peers before entry into light entrepreneurship in 2017, and faster income growth in the years after entry.

Pension accrual more modest than income growth

Although the income of starting light entrepreneurs grew considerably over the next few years, their pension accrual did not grow or grew only modestly.

This indicates that all income from light entrepreneurship was not insured under the Self-employed Persons’ Pensions Act (YEL). The result is not surprising since the majority – nearly 80 per cent – of the income from light entrepreneurship falls below the annual limit (ca €8,260 in 2022) at which YEL insurance is required.  “A growing number of immigrants and other persons in a more vulnerable labour market state become light entrepreneurs. The current pension system in Finland does not ensure pension accrual for light entrepreneurs. This might weaken their social security compared to that of the rest of the population. Social security needs to be developed to consider new forms of work better than before”, Sten-Gahmberg concludes.

What is light entrepreneurship?

  • Light entrepreneurship is often described as a form of work in which the person who does the work is the customer of an invoicing service company. The worker does not have to establish a business.
  • Light entrepreneurship can be used for platform or gig work, but it is not platform work in and of itself.
  • According to Finish legislation, light entrepreneurship does not have an official labour market status. Light entrepreneurs are either in an employment relationship or self-employed persons. When a light entrepreneur is a self-employed person, they are liable to take out pension insurance themselves.

Research publication:

Light entrepreneurs in Finland. A longitudinal study of careers, income and pension (Julkari)

Edited on 17 May 2024 at 09:58:
The median earnings of light entrepreneurs in 2022 of 1,700 euros is the median annual earnings, not the median monthly earning.

Finnish Centre for Pensions – Central body of and expert on statutory earnings-related pensions