'Genuine' or 'Quasi' Self-Employment: Who Can Tell?

Abstract

In many industrialised countries, including the Netherlands, the share of solo self-employed workers has strongly increased in recent years. This development is subject to a lot of public debate as it is feared that this increase is caused by 'quasi' self-employment. There still seems to be little consensus, however, on what constitutes ‘genuine’ self-employment and what not. In this article we present a theoretical framework for 'quasi' solo self-employment and discuss how the various indicators for 'quasi' self-employment that are used in the literature fit in this framework. We then compare the outcomes of different indicators by applying them to solo self-employed workers in the Netherlands. The data used for the analysis are taken from the Dutch Labour Force Survey (NL-LFS) 2017 complemented with the European Labour Force Survey (EU-LFS) ad hoc module 2017 on self-employment. Our results show that about 7% of the solo self-employed workers is dependent on one client. Furthermore, almost 20% of all solo self-employed had an involuntary start. The correspondence between dependency and involuntariness is very low: less than 2% of the solo self-employed workers are both dependent and involuntary. Both dependency and voluntariness are related to the fiscal and legal status of the solo self-employed workers and to the type of work activities. Solo self-employed workers that own their own business and who mainly sell products are less likely to be dependent and/or involuntary self-employed compared to those who do not own a business and/or offer services. Dependency is hardly related to the unfavourable outcomes of solo self-employment. Involuntariness, on the contrary, seems to have some impact on outcomes. Those who became self-employed because they couldn’t find a job as an employee have a higher probability to be unsatisfied with their job, to have financial problems or problems due to a lack of work or a low income. Nevertheless even among the involuntary solo self-employed workers, the majority does not report negative outcomes.