Adapting labour law and social security to the needs of the 'new self-employed' — comparing the UK, Germany and the Netherlands

Abstract

The emergence of the category of 'new self-employment' presents a challenge for political actors in European countries. The new self-employed are exposed to the same social risks as dependent employees, but they generally enjoy fewer social and labour rights. How are social policymakers reacting to this situation? Our response to this question is structured as follows. First, comparing the situation in the UK, Germany and the Netherlands, we briefly describe the factors which have contributed to the increase in self-employment and the structure of `new self-employment' . Second, we outline the initiatives to adjust legislation in these countries so as to accommodate new self-employment and those types of work that are found on the borderline between dependent employment and self-employment. We then describe the ways in which these types of work are considered under national labour legislation and the extent to which they are taken into account by the respective statutory social security systems. The main finding that emerges is that despite the similar challenges faced by the three countries, path-dependency has led national legislators to adopt very different strategies to adjust social security and labour law regulations.

Farewell to the rightist self-employed? ‘New self-employment’ and political alignments

“…What these theories fail to account for, however, is that employership is rarely the standard: In almost all European countries and in the United States, there are more self-employed without employees than with employees (Van Stel et al, 2014;OECD, 2015), and most ''solo'' self-employed workers will also never become employers (Millán et al, 2014). On the contrary, there is an increasing body of literature that has linked particular forms of selfemployment to labor market flexibility and so-called ''atypical'' work (Stanwoth and Stanworth, 1995;De Grip et al, 1997;Pernicka, 2006;Muehlberger, 2007;Buschoff and Schmidt, 2009;Barbieri and Scherer, 2009;Kalleberg, 2011). In this alternative perspective, much apparent self-employment arises from outsourcing and subcontracting practices as a way for employers to evade labor legislation and taxes.…”

“…Compared to standard employees (i.e., with secure employment contracts), freelancers, sub-contractors and others in quasi-independent employment relationships are exposed to greater risks because theysometimes involuntary -bear responsibility for market changes, enjoy lower levels of social protection, and have less capacity for savings, insurance and pensions (Buschoff and Schmidt, 2009;Dekker 2010a;Kautonen et al, 2010;Pedersini and Coletto, 2010). What is even more explicit in this stream of literature, is that risks and uncertainties cut across occupational lines.…”

“…Inside the domain of industrial relations studies, ''new'' self-employment has largely been examined through the lens of precarious work, linked to the flexibilization of labor markets (e.g., Stanwoth and Stanworth, 1995;Buschoff and Schmidt, 2009;Kalleberg, 2011). Compared to standard employees (i.e., with secure employment contracts), freelancers, sub-contractors and others in quasi-independent employment relationships are exposed to greater risks because theysometimes involuntary -bear responsibility for market changes, enjoy lower levels of social protection, and have less capacity for savings, insurance and pensions (Buschoff and Schmidt, 2009;Dekker 2010a;Kautonen et al, 2010;Pedersini and Coletto, 2010).…”

“…Although the label has been used in different ways, as a common denominator it usually refers to self-employed workers which are believed not to correspond to the traditional profile of business-owners. A group, according to Buschoff and Schmidt (2009), that works ''on their own account and without employees, often in professions with only low capital requirements. A growing share of these workers can be found on the one hand in 'modern' service-sector branches (such as education, health, financial and enterprise services) and on the other hand in the construction industry (via outsourcing and subcontracting) '' (2009, p. 147).…”

“…The growth of this type of work, Wright (1997, p. 140) argues ''does not reflect a sociologically meaningful expansion of the 'petty bourgeoisie'.'' In contrast, because (quasi-)self-employed workers combine low levels of social protection (including low access to insurances and pensions) with relatively high labor market risks, they are sometimes perceived as ''outsiders'' on the labor market (Buschoff and Schmidt, 2009;Dekker, 2010a;Muffels, 2013).…”