ECJ EUROPEAN Cleaning Journal

Self-employment is on the rise in Europe and being promoted as an important driver of the economic recovery at a time when traditional job markets remain depressed across the region. Hartley Milner looks at why people are increasingly leaving the workplace to embark on an employment path fraught with risk and uncertainty.

The world of work has been turned on its head in recent years. Jobs for life and generous final salary pensions reaped by the post-war baby boom generation are fast fading into mythology. In this age of austerity, job insecurity is the new norm, driving us to work harder and put in ever-longer hours, often for little extra reward.

For besieged employees looking to break free of their shackles and reap more of the fruits of their endeavours setting up on their own can offer that escape.

In a poll, 45 per cent of EU citizens expressed a preference for self-employment over being in permanent work, citing job satisfaction and the opportunity to strike a better work-life balance among the perceived key benefits.

In reality, the proportion of the region’s workforce in self-employment in 2015 was just over 16 per cent (37.8 million), but that is still two per cent more than for the previous year, and the upward trend is forecast to continue until at least 2020. Figures show that self-employment appeals more to men than women.

More than two thirds of the self-employed work on their own, though the proportion varies between member states. They are a diverse group, ranging from freelance professionals such as airline pilots, engineers, IT consultants and medical and care sector workers to domestic and office cleaners, gardeners and construction workers.

In surveys, the fear of being made redundant due to the economic crisis remains the single biggest worry for those in full-time work, stoked by concerns about the impact of labour-saving technologies. Some respondents report having been made redundant more than once due to one of the above or a combination of the two.

“The threat of losing your job is very real in a recession, so you feel you have to give a little more to your boss every day to convince him that the business would go under without you,” said Dean Saddler of employment agency Rightjob UK. “For their part, it is tempting for employers to exploit this insecurity to squeeze more out of their people for little or no extra benefit. So it is clear why employees may see working for themselves as an attractive proposition.

“The self-employed traditionally flourish in straitened times such as these because there are more opportunities out there for them and the rewards can be substantial, depending on how much effort they put in. Self-employment may be just the thing for you if you thrive on working alone and don’t mind putting in long and often erratic hours. It can allow you to focus on providing a product or service you believe in and are good at producing.

“Many types of self-employment lend themselves well to working from home, which might save money and provide some flexibility, particularly for those with families. And you are going to save on the dreaded daily commute, often regarded as one of the most stressful periods of the day.

Scale your own business

“Working for yourself also allows you to scale your business – you determine how much or how little you want to work. If successful, you could make a lucrative living in the long run or perhaps you are just looking for a little peace of mind and freedom to pursue other interests.

“One of the big advantages of working from home is that you are in a less pressurised environment without continuous distractions. Workloads are such nowadays, particularly in middle-management roles, that employees frequently find themselves having to work well beyond the nine-to-five, which means taking work home. People often say they get more done working from home, and it can set them thinking ‘hmm, do I need all this hassle? I could do this for myself and keep more of the rewards’.

“The rewards may also not attract such high levels of taxation, but self-employment tax rates vary greatly between EU countries and a fair proportion of the benefits from being self-employed may be eaten up by having to employ a professional to manage your tax affairs unless, of course, you feel confident about filing your own tax returns.

“Most tax systems allow the self-employed to claim against tax for items such as electricity, heating and water, any local taxes and mortgage interest for the use of their home as an office space. However you will need to take into account how many hours a week you are using the space and then calculate the cost of the room per hour.

“From a boss’s point of view, taking on a self-employed person is better than an employee because in most of Europe the self-employed do not enjoy the same raft of rights as employees, such as paid holidays, statutory sick pay, maternity and paternity leave and the right not to be unfairly dismissed – or entitlement to statutory redundancy pay. An employer may make an employee redundant, only to re-employ them in a freelance capacity as and when needed.”

Evidence of the impact of technology on full-time employment is limited, but there are those who argue that overall almost as many, or even more, jobs have been created than lost.

Way out of unemployment

“The technology sector employs millions of people worldwide, including many who are self-employed, and with innovation happening all the time it can only continue to grow, creating millions more new jobs,” Saddler continued. “And an industry built on high levels of expertise and offering big rewards to its innovators increases spending power and demand for products and services in traditional markets, creating new opportunities here too.”

Self-employment tends to be higher in southern and eastern countries. Greece has the highest rate with more than 36.9 per cent of its workforce self-employed last year. Like Greece, Italy (25.1 per cent), Poland (21.8 per cent) and Spain (17.9 per cent) have traditionally had a high proportion of self-employed workers due to the nature of the work available, comprising primarily agricultural, service-based and informal work.

Self-employment is also seen as a route out of unemployment in countries with poor labour market conditions, while northern and western European economies have traditionally had a far lower rate of self-employment in their workforce. However even here the picture is changing as opportunities continue to decline or remain flat in waged and salaried employment.

And this is no more true than in the UK and the Netherlands where self-employment has surged in recent years and is making a significant contribution to the labour market recovery of both countries.

In fact self-employment in the UK is at its highest level since records began almost 40 years ago, with taxi-driving, media, accountancy, construction and carpentry among the most common occupations. There are 4.6 million people working for themselves in the UK, representing 15 per cent of the total workforce compared to 13 per cent in 2008 and 8.7 per cent in 1975.

The rise in self-employed workers accounts for 40 per cent of the growth in UK employment since the second quarter of 2010. This is a startlingly high proportion, given that in 2010 just 13 per cent of workers were self-employed.

Meanwhile the self-employment rate in the Netherlands rose from a pre-recession rate of around 12 per cent to more than 15 per cent in 2014. Since the financial crisis started at the end of 2008, the number of Dutch jobs has been falling, while more and more people are starting their own business. Job losses are especially numerous in the care and construction sectors. The care sector is now no longer the employment provider it used to be, partly as a result of cutbacks in childcare.

If the current growth in self-employment continues in the UK and the Netherlands, then in 10 years from now they could have self-employment rates approaching those of Poland, Spain and other south/eastern European nations.

Less than 10 employees

Micro-enterprises run by the self-employed – those having less than 10 employees – account for around 30 per cent of all employment in the EU, of which nearly a third are in the wholesale/retail and motor vehicle and motorcycle repair sectors.

These figures are important to the European Commission. In its Europe 2020 strategy, the EC recognises that entrepreneurship and self-employment are key to “achieving smart, sustainable and inclusive growth” across member nations and says its top priority is “to get Europe growing again and to increase the number of jobs without creating new debt”.

In its support of entrepreneurship and self-employment, the Commission is focusing its efforts on:

• Business start-ups by the unemployed and people from vulnerable groups
• Support for social entrepreneurs
• Making micro-finance more accessible, and seeks to:
• Increase knowledge about entrepreneurship and self-employment
• Build capacity in EU countries and regions
• Support entrepreneurship financially.
• Adjust tax regulation and access to social protection.