Evaluating the prevalence and distribution of dependent self‐employment: some lessons from the European Working Conditions Survey

• Published date: 01 March 2018
• DOI: http://doi.org/10.1111/irj.12206
• Date: 01 March 2018

Evaluating the prevalence and distribution

of dependent self-employment: some lessons

from the European Working Conditions

Survey

Colin C. Williams and Ioana Alexandra Horodnic

ABSTRACT

This article advances understanding of the prevalence and distribution of dependent

self-employment. Analysing the 2015 European Working Conditions Survey of

35,765 employees in 28 European countries, the dependent self-employed are found

to comprise 4.3% (1 in 23) of the EU workforce, 47% of all those reporting themselves

as self-employed without employees and 31% of all self-employed. The prevalence of

dependent self-employment, however, is found to have decreased since the previous

2010 survey, is not found to be concentrated among marginalised population groups

and is significantly more likely in agriculture, forestry and fishing, arts, entertainment,

recreation and other service activities, and the household services sector. The implica-

tions for theorising and tackling dependent self-employment are discussed.

1 INTRODUCTION

Given that formal, full-time and permanent waged employment (i.e. the standard

employment relationship) has been the principal means used for allocating rights

and social protection, its potential decline raises issues for working conditions, rights

and benefits. Although many countries have been gradually extending protective

rights to non-standard employees (Conaty et al., 2016; Eichhorst et al., 2013; Forde

and MacKenzie, 2007; Gialis et al., 2017; Hatfield, 2015; ILO, 2016; Pedersini and

Coletto, 2010), the ‘self-employed’have been seldom considered when extending

such protective rights. Indeed, in recent years, there has been a small but burgeoning

literature that has raised concerns that employers are falsely classifying employees as

self-employed in order to circumvent collective agreements, labour laws (e.g. mini-

mum wages, working time legislation, protection in case of redundancy), employment

tax and other employer liabilities implied in the standard contract of employment

(Eichhorst et al., 2013; Fehringer, 2014; Gialis et al., 2017; Hatfield, 2015; ILO,

2016; Thörnquist, 2013, 2014, 2015). Commonly referred to as ‘dependent self-

employment’, this can be defined as employment relationships where workers are

classified as formally self-employed but present some characteristics of dependent

❒Colin C. Williams and Ioana Alexandra Horodnic, Sheffield University Management School (SUMS),

University of Sheffield, Sheffield, United Kingdom. Correspondence should be addressed to Colin C

Williams,Professor of Public Policy, Sheffield University Management School (SUMS), University of

Sheffield, Sheffield, United Kingdom.

Email: c.c.williams@sheffield.ac.uk

Industrial Relations Journal 49:2, 109–127

ISSN 0019-8692

© 2018 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribu-

tion and reproduction in any medium, provided the original work is properly cited.

employees, and thus have a de facto employment relationship, if not de jure, because

they do not have either more than one client, the authority to hire staff and/or the

authority to make important strategic decisions about how to run the business

(Eurofound, 2013, 2016a,b).

The aim of this article is to advance the emergent literature on this employment

relationship by examining its prevalence and distribution in the European Union.

This will put under the spotlight the dominant depiction of dependent self-

employment as an employment relationship that has rapidly grown in recent years

and is undertaken by ‘marginalised’population groups. To do so, the first known

extensive multi-national analysis of the extent and distribution of dependent

self-employment will be undertaken, reporting data from the 2015 European

Working Conditions Survey (EWCS).

To advance knowledge on dependent self-employment, therefore, section 2 reviews

the emergent literature to reveal a series of dominant depictions about its prevalence

and distribution that are presented as hypotheses to be evaluated. To test these

hypotheses, section 3 then introduces the data used, namely the 2015 EWCS on

dependent self-employment in the 28-member states of the European Union

(EU28), along with the variables and techniques used to evaluate its prevalence and

distribution. Section 4 then reports the results on its prevalence and distribution in

the EU28. Revealing that many of the dominant depictions regarding its prevalence

and distribution are not supported, section 5 then concludes by discussing the impli-

cations for theorising and tackling dependent self-employment.

2 DEPENDENT SELF-EMPLOYMENT: ITS PREVALENCE AND

DISTRIBUTION

Dependent self-employment has been variously referred to as ‘fake’,‘false’,‘sham’

or ‘misclassified’self-employment, or ‘disguised employment’(Forde and

MacKenzie, 2007; Harvey and Behling, 2008; Kautonen et al., 2009, 2010; Mandrone

et al., 2014). Despite this array of terms, however, there is a relatively strong

consensus on how to define this employment relationship. Even if one singular

definition is not universally used (Fehringer, 2014; Thörnquist, 2014), such an

employment relationship is seen to exist in the ‘grey zone’between pure dependent

employment and genuine self-employment (Ana, 2009; Böheim and Muehlberger,

2006; Eichhorst et al., 2013; Jorens, 2009, 2010; Kautonen et al., 2010; Pedersini

and Coletto, 2010; Thörnquist, 2013).

As the ILO (2016: 36) highlight, employment relationships lie on a spectrum

between pure self-employment at one end and pure dependent employees at the other

end, and those in the middle range from ‘disguised employment relationships’to-

wards the dependent employment end of the spectrum, in which ‘an employer treats

an individual as other than an employee in a manner that hides his or her true legal

status as an employee’,to‘dependent self-employment’towards the self-employment

end of the spectrum in which ‘workers perform service for a business under a contract

different from a contract of employment but depend on one or a small number of cli-

ents for their income and receive direct guidelines regarding how the work is done’.

Although some countries do not have well-developed criteria to distinguish

between pure dependent employment, pure self-employment and the ‘grey zone’of

what we here term dependent self-employment, those countries possessing them tend

to have slightly different criteria (Heyes and Hastings, 2017). However, the most

110 Colin C. Williams and Ioana Alexandra Horodnic

© 2018 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd