RC/TM/2026/OP.2 — A view on the shape of TM‑001

RC/TM/2026/OP.2
21 October 2026
Opinion — view
To the members of the Team Council

Who I am and what happened

I write as vice chair of the Team Council, from Lille, France. This is a view on the design of TM-001, not a report of a single business’s experience and not a claim to speak for every member. I do not identify my own business. The question before us is practical: what makes a small employer hesitate before turning work into a formal job, and what could a future standard ask governments and relevant institutions to change?

The call for evidence on TM-001 opened on 10 February. Since then, the Council has examined reports, held discussions, issued submissions and letters, and published an interim pattern review. The process matters because a persuasive reform should start with recurring evidence rather than a preferred solution. Our interim review, RC/TM/2026/N.1, found two of the five pattern tests met. That is a meaningful beginning, but not a licence to describe the case as complete. We still need to test the scale, frequency, consistency, spread and corroboration of what members report.

The issue is not simply whether a small employer can afford one more worker in the abstract. A first hire changes the employer’s obligations and exposure. The owner must understand the steps, register correctly, calculate what is due, and keep doing so on time. If the rules are hard to find, hard to sequence or difficult to predict, uncertainty itself becomes a cost. It can delay a decision even where the work exists and the employer wants to offer a formal job.

My view is that a future fix must address that whole decision. It should not offer a temporary discount while leaving registration fragmented and obligations opaque. Nor should administrative simplicity be used as a substitute for fair pay, social protection or compliance. The point is to make formal hiring practicable, not to make workers bear the cost of a system that is difficult for small employers to navigate.

What the evidence shows

The Team Council’s internal figures as of 21 October 2026 show 122 members in 39 countries and 174 reports from 43 countries. The median amount at stake is approximately US$4,220. All 174 reports are classified as concerning hiring costs. The reports come from a varied set of business sizes: 43% report teams of 2–9; 16% teams of 10–49; 39% are from members who report “Just me”; and 3% are from teams of 50–249. The team-size percentages total 101%, reflecting rounding. In the 30 days before the data cut, 26 reports were filed.

The country distribution is also worth stating without overreading it: Canada 27 reports, the United States 23, Germany 13, Italy 12, the United Kingdom 10, Mexico 7, India 7 and Brazil 6. These figures establish that the evidence is not confined to one national setting. They do not establish that every country has the same rules, the same cost structure or the same cause of difficulty. Nor should the country counts be treated as national prevalence rates: they are counts of reports to this Assembly.

The figures support a serious inquiry into the first-hire threshold. They do not, by themselves, prove that every reported cost is excessive, that contributions should be reduced in every jurisdiction, or that a single policy instrument will work everywhere. A median amount at stake is not an estimate of the cost to every employer; a report count is not a measure of all small businesses. These limitations are reasons for careful design and further evidence, not reasons to dismiss the pattern.

The wider context gives the question public importance. The ILO estimates that micro, small and medium-sized enterprises account for about 70% of employment worldwide and that around 80% operate in the informal economy.² Those global estimates do not prove that hiring costs cause informality. They do underline why policy should examine whether avoidable complexity or unpredictable obligations impede formal employment. The Assembly’s own evidence should remain the basis for claims

about member experience; global figures provide context, not a substitute for that evidence.

Our published agenda is appropriately concrete: phased social contributions for a business’s first ten hires, one-stop payroll registration and predictable rules. Those are connected proposals, not interchangeable slogans. A lower initial contribution may affect the direct cost of hiring. A one-stop process may reduce the time and risk involved in complying. Predictable rules may let an employer understand the full commitment before making a job offer. A standard that takes only one of these seriously would answer only part of the problem.

How the law in my country and elsewhere handles it

The material before the Council supports an international comparison of employment tax wedges, but it does not supply a country-by-country account of payroll registration law, contribution exemptions, eligibility criteria or enforcement. I will not fill those gaps with assumptions. In particular, I cannot responsibly claim from this dossier that France has, or lacks, a particular first-hire relief, registration route or contribution phase-in. The same caution applies to other countries.

The OECD’s Taxing Wages 2026 material reports an OECD-average tax wedge of 35.1% for 2025. The country figures in the dossier are Germany 49.3%, France 47.2%, Italy 45.8%, Spain 41.4%, Sweden 41.1%, the Netherlands 35.9% and New Zealand 20.8%.¹ These figures make clear that the measured wedge differs substantially across the listed economies. A tax wedge is a comparative measure; it should not be represented as a single payroll charge, a direct measure of an employer’s administrative burden, or proof that one country’s rules are better than another’s.

For France, the 47.2% figure is relevant as a description of the OECD comparison, not a complete legal analysis of the cost of a first hire. The dossier does not disaggregate that figure into employer and employee components for this purpose, specify how a particular small employer qualifies for any relief, or describe the steps for registration. We should therefore resist converting the number into a claim about a particular firm’s bill. The same distinction applies to Germany’s 49.3% and the other listed figures.

The ILO’s estimate that about 80% of MSMEs operate in the informal economy is likewise a global estimate, not a finding that a particular national contribution rule causes informality.² Taken together, the ILO and OECD materials establish a reason to take formalisation and employment costs seriously. They do not prescribe the design of a national scheme. That design must be tested against local financing arrangements, worker protections and administrative capacity.

For this reason, I would have the eventual TM-001 standard set out objectives and safeguards, while allowing national implementation to reflect law and institutions. It can identify a desired outcome—straightforward, predictable access to formal hiring for the first ten employees—without pretending that a uniform contribution schedule can simply be transplanted across jurisdictions.

The strongest argument against my view and my answer

The strongest argument against a first-ten-hire intervention is that social contributions finance protections and public services. Reducing or postponing them can shift costs to workers, other employers or public budgets. A special threshold may also create incentives to divide a business, delay hiring, or remain just below an eligibility limit. And if registration is simplified without adequate safeguards, simplification may weaken accurate reporting or enforcement. These are substantive objections. Any standard that ignores them would be incomplete.

My answer is not that the concerns are minor. It is that they argue for a bounded, transparent and reviewable reform, rather than for leaving the first-hire problem unexamined. A phase-in should be designed so that workers do not lose earned rights or protection. It should be clear who qualifies, what is payable, when ordinary obligations apply, and how the transition is handled. It should be monitored for avoidance, displacement and fiscal effects. If evidence shows that a provision is being used to fragment businesses or undermine protections, the provision should be corrected.

There is also a difference between lowering a cost and making a cost legible. Some members may need relief from the amount due; others may face a process that is difficult to understand or coordinate. A one-stop registration route and predictable rules can address the latter without necessarily reducing the contribution owed.

Treating these proposals as a package lets each be assessed on its own merits and prevents the Council from assuming that every administrative problem calls for a subsidy.

Finally, reforms must not turn “small employer” into an excuse for weak standards. Formal employment should remain formal. The standard should promote compliance by making obligations understandable and practicable, while preserving workers’ protections and requiring employers to meet their obligations. Better administration and fair protection are compatible objectives.

My position clause by clause

I support the direction of TM-001, subject to the following clauses being included in any future draft.

• First, define the purpose narrowly: help small employers make their first ten hires formally, with a view to reducing avoidable entry costs and administrative friction. The standard should not promise that every hire will become cheaper, and it should not treat the first ten hires as a universal measure of business size.

• Second, provide for phased social contributions where a jurisdiction chooses that instrument. The phase-in should be transparent, time-bounded or otherwise clearly defined, and designed so that workers’ earned rights and protections are not reduced. The standard should call for disclosure of who bears each contribution and what changes during the phase-in.

• Third, require a one-stop payroll registration route, or a clearly coordinated equivalent. An employer should be able to determine where to register, what information is required, what sequence to follow and when the process is complete. Where more than one public body must remain involved, the employer-facing process should make that division understandable rather than requiring the employer to discover it unaided.

• Fourth, require predictable rules. Employers should be able to find current eligibility conditions, rates, deadlines and reporting duties in accessible language. Changes should be communicated with reasonable notice and should not create avoidable uncertainty about obligations already incurred. Predictability is not a request to freeze policy; it is a request to make changes legible and administrable.

• Fifth, include safeguards against misuse and a way to review outcomes. A design should address business splitting and other foreseeable routes to gaming, while avoiding rules so complex that they defeat the intended access. Review should consider formal hiring, compliance, administrative burden, effects on workers and public revenue. The evidence gathered should be disaggregated where possible, and findings should be published without exposing individual members.

• Sixth, distinguish the common standard from national implementation. The standard should set objectives and minimum design principles; it should not assert that contribution rates, legal definitions or registration systems are identical across countries. National authorities should be able to choose an appropriate method while explaining how it meets the standard’s aims.

• Seventh, use evidence proportionately. The Council should continue the five-part pattern test and state clearly what is established, what remains uncertain and what further evidence is needed. Member reports can reveal recurring friction; they cannot alone determine the fiscal or legal effect of a proposed reform.

I would not support a draft that presents the OECD tax wedge as the whole cost of hiring, treats the ILO informality estimate as proof of causation, or promises contribution relief without worker protections and review. Nor would I support a standard whose only answer is “use a digital portal” if employers still cannot tell which body is responsible or what the final obligation will be.

What I ask

I ask the members of the Team Council to carry these principles into the next stage of TM-001. In particular, please keep the three strands together: phased contributions, one-stop registration and predictable rules. Ask for evidence that distinguishes direct cost from administrative burden; document differences between jurisdictions rather

than flattening them; and test proposed language against the experience of the smallest employers as well as larger small businesses.

I also ask that we remain precise about what our record can support. As of 21 October, our 174 reports across 43 countries and 122 members across 39 countries are a substantial basis for continued work. They are not a mandate to claim more than the evidence shows. The two tests met in the interim review should be followed by further scrutiny of the remaining tests, consultation and an honest account of limitations.

Notes and sources

Sources

1. OECD, Taxing Wages 2026 country note: Germany
2. ILO, Micro, small and medium-sized enterprises