Self-employed without personnel: between freedom and insecurity Project results Wieteke Conen Utrecht University School of Economics Final Conference, Utrecht, 1 July 2016

Project results: bundled in WSI Study Literature review/ LFS statistics -Developments over time Panel data -Labour market transitions -Impact of earlier life experiences -Consequences Survey data/ qualitative research -Motives -Work-life balance -Pay-off -Social security and pensions -Role of governments and interest organisations  Final version will appear soon

Background and aim Recent decades show an increase in the number and share of solo self-employed in many European countries Traditionally, self-employed considered ‘insiders’ fitting the category of independent entrepreneurs, but increasingly associated with ‘involuntary’, ‘dependent’ and ‘precarious’ self-employment (Schulze Buschoff and Schmidt, 2009; Westerveld, 2012) Limited quantitative empirical knowledge about how this group is faring, but many governments advocate further self-employment growth (European Commission, 2010) Examine and explain precariousness and self-sufficiency among solo self-employed.

Research question For whom does self-employment result into a precarious financial situation as opposed to who is rather well-off? 1.Identify who is to be classified as ‘precariously’ self- employed and who is rather ‘self-sufficient’; 2.What are the determinants? Contribution Self-employed regularly left out of empirical analyses; New light on relationship between self-employment and pay-off with specifically designed survey data

Concept of ‘precariousness’ vs ‘self-sufficiency’ Point of departure: ‘good jobs/ bad jobs’ (Kalleberg et al. 2000) ‘Bad jobs’ are “those with low pay and without access to health insurance and pension benefits” ( pp. 256 ) Broadened and adjusted this concept to situation of solo self-employed ‘Low pay’ (occupational level)  ‘low financial resilience’ (household level) Income notoriously hard to measure; Substantial share not or not completely dependent on this income Adjusted social security provisions Welfare states in Europe differ from situation in US Disability insurance does play substantial role

Step 1: Identify Used our own survey data: N=1,550 (Germany: N=757; Netherlands: N=793) Financial resilience Gross annual household income Financial means to bridge a period without work Financial situation of household Social security Disability insurance Supplementary pension Income after retirement Hierarchical cluster analysis (Ward’s method/ squared Euclidean distance) produced three clusters

Cluster descriptives Cluster 1 Precarious Cluster 2 Get by Cluster 3 Self-sufficient Financial resilience Gross annual household incomeFar below standard Almost standard Towards 2x standard Financial means to bridge a periodLess than a month About 3 months About half a year Financial situation of householdDeficitGet bySurplus Social security provisions Disability insurance11%21%34% Supplementary pension29%57%83% Income after retirementDisagreeNeither agree, nor disagree Agree %12,6%43,7%43,8%

Cluster analysis

Step 2: Determinants To what extent do different factors contribute to ‘precariousness’ or ‘self-sufficiency’? Supply side Motives to become solo self-employed Know-how Individual characteristics Demand side Timing Clientele Industries characteristics Institutional context  Multinomial logistic regression analysis

Conclusion Classified solo self-employed into o ‘precariously solo self-employed’ (12,6%), o solo self-employed who ‘get by’ (43,7%) o and ‘self-sufficient’ solo self-employed (43,8%); Especially solo self-employed who start from ‘push’ motives are less likely to be self-sufficient; Perceived financial knowledge positively affects the probability of being self-sufficient; No difference between solo self-employed starting their business before, during or after the financial crisis; ‘Destructive competition’ may play a role; Institutional context matters.

Discussion Comparison between for instance self-employed with and without personnel or with those in standard and non- standard employment relations; Low share insured against disability - even among self- sufficient; Future research: Mechanisms behind ‘push’ and destructive competition. Where do ‘push’ motives come from? Employers and industries, but also institutional changes? Destructive competition: does demand or supply side deserve attention?

Thank you for your attention