Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

The Many Faces Of Self-Employment In Europe

Mathijn Wilkens 26th October 2017

Mathijn Wilkens

Mathijn Wilkens

While the Europe 2020 strategy actively promotes entrepreneurial self-employment as a means to create good jobs, policy makers at national and EU level are actively looking at better social protection for self-employed workers. Understanding this paradox requires looking beyond the ‘self-employed’ label and acknowledging it as an umbrella term covering a widely differing group of workers.

A new study by Eurofound shows that while some self-employed live up to the image of the entrepreneurial, independent workers who decide for themselves when and how to work, others are less fortunate and are stuck in precarious and dependent work situations.

Despite the growing debates, self-employment in the EU has in fact not increased in decades, remaining stable at around 15% of the EU labour force. This is largely the result of the shrinking agricultural sector – which traditionally has a high proportion of self-employed – counterbalancing the rise in services. Also, the trend for Europe as a whole masks significant country differences: in places like the Netherlands, the share of self-employment is rising more than in others. And the composition is changing: the share of self-employed with employees is declining, whereas the share of self-employed without employees is on the rise, especially those working part-time.

Eurofound’s European Working Conditions Survey (EWCS) shows that for one in five self-employed workers, self-employment was the only viable option as there were no other work alternatives. This is important because, as a recent study commissioned by the European Parliament shows, the likelihood of ending up in precarious employment is higher for those who did not choose to become self-employed. The biggest concern for these workers is lack of social protection, as acknowledged by the European Pillar of Social Rights which advocates the right to fair and equal treatment regarding working conditions, access to social protection and training, regardless of the type of employment relationship.

While there are increasing concerns about social protection and working conditions among self-employed workers, self-employment is also encouraged as a means of promoting entrepreneurship, innovation and job creation within the Europe 2020 strategy. This paradox results from different policy makers talking about different types of self-employed workers. To make sense of the political discourse at work here we need to know who exactly the self-employed are. Also: Who needs social protection and who is sufficiently covered? We explored this diversity of the self-employed in the EU28 and investigated their coverage in social protection systems in a new Eurofound report.

We use data from the EWCS to cluster the self-employed into groups with broadly common characteristics. The results show that in terms of their working conditions, the self-employed can be roughly divided into five distinct groups.

wilkens graph01

On one side of the spectrum we find the types of self-employed that the Europe 2020 strategy seeks to promote – entrepreneurial independent self-employed, often enjoying higher earnings and more autonomy which is reflected in healthier, happier and longer working lives. Two of the five clusters – labelled ‘employers’ and ‘stable own-account workers’ – represent about half of the self-employed. The ‘employers’ are a group of self-employed with employees, while the ‘stable own-account workers’ do not employ any employees. Both groups are more likely to be self-employed out of choice.

Left behind

The opposite is the case for one in four self-employed labelled ‘vulnerable’ and ‘concealed’ –representing together roughly the size of Austria’s population. These are the self-employed the European Pillar of Social Rights seeks to protect as they generally are in more precarious situations, with lower levels of income and job security, more dependent and with less working autonomy. They experience, overall, unfavourable working conditions and this seems to correspond to lower levels of health and wellbeing. Both the ‘vulnerable’ and ‘concealed’ in some respects resemble employees as they are more likely to depend on one client only (especially the ‘vulnerable’) and have less autonomy (especially the ‘concealed’).

The picture is more mixed for the cluster labelled ‘small traders and farmers’, combining both favourable and unfavourable working conditions. They tend to be economically independent and work autonomously, but find it hard to do their job. More than 70 percent work six or seven days a week and find it difficult to take time off. Like the ‘vulnerable’ and ‘concealed’ their health, well-being and job satisfaction is lower than for the ‘employers’ and ‘stable own-account workers’.

Despite elevated risks for the self-employed, social protection systems in the EU primarily cater for the standard employment contract. We show in the report that especially coverage for unemployment, sickness and accidents at work is lacking for the self-employed in most member states. The member states provide strongly differing levels of social protection in terms of access, coverage and the extent of coverage for the self-employed. All social protection systems are to some extent hybrids, but some countries (Sweden, Finland, Denmark) are more inclusive and provide largely the same protection for self-employed as for employees since it is largely based on universal schemes. Others have specific, parallel, systems for the self-employed while yet another group of countries mix these options by making certain schemes voluntary for self-employed.

Between the legal cracks

Approaches to dealing with the ‘in-between’ category of workers – formally self-employed but in practice employee – vary as well. Some have categorised economic dependence as abuse of the self-employment status and have introduced legal definitions to identify and combat bogus self-employment. In Italy, for example, the self-employment contract is deemed unlawful when the relationship with the client lasts a long time, remuneration covers most of the worker’s income and s/he actually works at the client’s premises.

Others have clarified the criteria for determining employment status in an attempt to reduce ambiguity: Belgium considers subordination and autonomy at work as criteria for distinguishing between the two. Spain uses similar criteria to classify workers in a completely different ‘third’ status called the ‘dependent autonomous workers’ or ‘trabajadores autónomos económicamente dependientes’, with a set of workers’ rights and obligations. Others use a hybrid approach, as in Austria where ‘free service contractors’ or ‘freie Dienstnehmer’ are considered employees for social security purposes and self-employed for tax purposes.

What can we take away from this? Our analysis of the EWCS shows the self-employed in Europe are a very heterogeneous group and no one-size-fits-all solution exists. For some, self-employment is an opportunity to grow a business and create jobs or have a better work-life balance. This should be facilitated. Others may be confronted with the worst of both worlds by risking economic dependency and precariousness while not being covered in social protection systems. These workers deserve a response from policy makers.

This column is sponsored by Eurofound.
Mathijn Wilkens

Mathijn Wilkens is a research officer at Eurofound. He joined in 2015 and works on projects about job quality and its effects on health and well-being, often using the European Working Conditions Survey. He was previously a researcher in the Netherlands focussing on labour, income and social policy.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u4219834647f 0894ae7ca865 3 Europe’s Businesses Face a Quiet Takeover as US Investors CapitaliseTej Gonza and Timothée Duverger
u4219834674930082ba55 0 Portugal’s Political Earthquake: Centrist Grip Crumbles, Right AscendsEmanuel Ferreira
u421983467e58be8 81f2 4326 80f2 d452cfe9031e 1 “The Universities Are the Enemy”: Why Europe Must Act NowBartosz Rydliński
u42198345f5300d0e 2 Britain’s COVID Generation: Why Social Democracy Must Seize the MomentJatinder Hayre
u42198346761805ea24 2 Trump’s ‘Golden Era’ Fades as European Allies Face Harsh New RealityFerenc Németh and Peter Kreko

Most Popular Articles

startupsgovernment e1744799195663 Governments Are Not StartupsMariana Mazzucato
u421986cbef 2549 4e0c b6c4 b5bb01362b52 0 American SuicideJoschka Fischer
u42198346769d6584 1580 41fe 8c7d 3b9398aa5ec5 1 Why Trump Keeps Winning: The Truth No One AdmitsBo Rothstein
u421983467 a350a084 b098 4970 9834 739dc11b73a5 1 America Is About to Become the Next BrexitJ Bradford DeLong
u4219834676ba1b3a2 b4e1 4c79 960b 6770c60533fa 1 The End of the ‘West’ and Europe’s FutureGuillaume Duval
u421983462e c2ec 4dd2 90a4 b9cfb6856465 1 The Transatlantic Alliance Is Dying—What Comes Next for Europe?Frank Hoffer
u421983467 2a24 4c75 9482 03c99ea44770 3 Trump’s Trade War Tears North America Apart – Could Canada and Mexico Turn to Europe?Malcolm Fairbrother
u4219834676e2a479 85e9 435a bf3f 59c90bfe6225 3 Why Good Business Leaders Tune Out the Trump Noise and Stay FocusedStefan Stern
u42198346 4ba7 b898 27a9d72779f7 1 Confronting the Pandemic’s Toxic Political LegacyJan-Werner Müller
u4219834676574c9 df78 4d38 939b 929d7aea0c20 2 The End of Progess? The Dire Consequences of Trump’s ReturnJoseph Stiglitz

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity”,

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

What kind of impact is artificial intelligence (AI) having, or likely to have, on the way we work and the conditions we work under? Discover the latest issue of HesaMag, the ETUI’s health and safety magazine, which considers this question from many angles.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
How are minimum wage levels changing in Europe?

In a new Eurofound Talks podcast episode, host Mary McCaughey speaks with Eurofound expert Carlos Vacas Soriano about recent changes to minimum wages in Europe and their implications.

Listeners can delve into the intricacies of Europe's minimum wage dynamics and the driving factors behind these shifts. The conversation also highlights the broader effects of minimum wage changes on income inequality and gender equality.

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Spring issue of The Progressive Post is out!


Since President Trump’s inauguration, the US – hitherto the cornerstone of Western security – is destabilising the world order it helped to build. The US security umbrella is apparently closing on Europe, Ukraine finds itself less and less protected, and the traditional defender of free trade is now shutting the door to foreign goods, sending stock markets on a rollercoaster. How will the European Union respond to this dramatic landscape change? .


Among this issue’s highlights, we discuss European defence strategies, assess how the US president's recent announcements will impact international trade and explore the risks  and opportunities that algorithms pose for workers.


READ THE MAGAZINE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641