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Slide 1: 1 Digital Cowboys Developments in the labour market for self-employed workers Dennis Bouwman
Slide 2: 2 Digital Cowboys Developments in the labour market for self-employed workers Digital Cowb oys • Cha pter •
Slide 3: 3 | Colofon Digital Cowboy Developments in the labour market for self-employed workers | Author Dennis Bouwman | Publication Dennis Bouwman Oktober 2008 Translated by Paula Maathuis @ 2009 Dennis Bouwman No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the author: Dennis Bouwman, Postbus 685, 7500 AR Enschede, the Netherlands. Requests to the Publisher for permission should be addressed to Dennis Bouwman, Postbus 685, 7500 AR Enschede, the Netherlands, or online at info@digitalecowboys.nl
Slide 4: Contents Page Foreword Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 The importance of self-employment A description of self-employment in the ICT sector Trends and developments in self-employment Trend I: Diversity in forms of working relationships Trend II: The rise of employment agencies for freelancers Trend III: The paradox of terms of employment for self-employed workers Trend IV: The importance of growth and development To a strategic agenda for self-employment within ICT 5 7 11 17 22 30 35 40 46
Slide 5: Digitale Cowboys • Foreword 5
Slide 6: Foreword 5 Work has become more flexible and workers have become more independent. When and where work is done, and in which form, don’t matter much, as long as it is done. These are the most important trends in the labour market for the coming years. More and more employees want to be self-employed. The growth in entrepreneurship is a result of the growth in the number of self-employed workers. Although self-employed workers don’t legally exist in the Netherlands – in legislation no description can be found – more and more people are choosing this flexible and free manner of work above fixed forms of employment by others. An important reason for becoming self-employed is the wish to be engaged in a craft, with real work. Self-employed workers flee from labour organisations. They want control of what they do and how they do it. They want to take on assignments which provide personal development and to do so independently. Within labour organisations there is a shell of flexible forces, the self-employed workers, around the core of fixed employees. Because of these developments the labour market has become diverse and flexible. Diverse, because it doesn’t consist only of employers and employees. flexible not because of an increasing number of employees with temporary contracts, but because of an increasing number of selfemployed workers. The labour market is the domain in which FNV Zelfstandigen operates. As a group caring for the interests of self-employed workers, our job is to follow trends and to translate these trends into concrete services for our members on both the individual and collective levels. We are the pioneers of the self-employed labour market sector. We are therefore proud to present to you Digital Cowboys, Developments in the labour market for self-employed workers. Our vice-president, Dennis Bouwman, also a self-employed worker in the ICT sector, offers you a look into developments in this sector, known as a frontrunner in economic developments. Which developments and which initiatives must we, as an association for self-employed workers, develop in conjunction with the public and private sectors to ensure that the self-employed worker can truly be a selfemployed worker? Or should we simply let the self-employed worker be
Slide 7: 6 an entrepreneur and interfere as little as possible? This publication answers these questions. Above all, Digital Cowboys outlines a framework to support self-employed workers in their entrepreneurship. As an association we take this issue to heart and resolve to use the coming period to further improve the protection of our members’ interests. | Digital Cowb oys • Chap ter 1 • The i mp o r tance o f self - em p loy m ent Linde Gongrijp Director FNV Zelfstandigen
Slide 8: 1 The importance of self-employment Chapter 7 At present the labour market is changing rapidly. Although at first sight there seems to be an evolution, in a broader historical perspective it must be asked whether the flexibility of the labour market is characteristic of our modern times. After all, self-employment was very common until the industrial revolution. Traders, bankers, fishermen, smiths, and farmers were often self-employed. This publication is about the trends and developments for self-employed workers in the labour market. ICT is not only interesting because of the developments in this sector, but also as a trendsetter for developments in the labour market in general. As an association within the trade union FNV, FNV Zelfstandigen plays the role of pioneer in the labour market. This is not only logical for a young association, but is also appropriate to the association’s target group: self-employed workers. | Self-employment: exceptional or standard? Both the ICT sector and the rise of self-employed workers show characteristics of receiving too much hype. Open any newspaper and there are articles about automation, digitalisation, and their applications. Ask any politician what he thinks of self-employed workers, and he will react enthusiastically, speaking about the modern employee who does his job without hindrance from others and at his own risk. Even in these modern times, from an international perspective, self-employment sets the tone of the labour market. In developing countries, most citizens survive by producing or selling goods, or by offering personal services. It is therefore remarkable that the employer-employee relationship has set the standard in the western world. Nevertheless, political parties in the Netherlands, from left to right, unanimously expect self-employment to increase rapidly. We live in the age of information technology. Both the current developments in work relations and the importance of information technology explain my choice for the ICT sector as research subject. | Research project FNV Zelfstandigen This publication aims to make clear what is going on in the labour market for self-employed workers. It analyses this labour market and examines the subject of four observable megatrends. The publication is a result of a
Slide 9: 8 research project on the developments of the labour market in ICT, carried out by FNV Zelfstandigen. The research project consists of literature and news article reviews, interviews, and quantitative studies of self-employed workers (member panel). The emphasis of this project was on the latter two parts. Literature review focused on research in several recent publications regarding developments in the ICT sector, the labour market for selfemployed workers, and the labour market for ICT workers. The results are used as background information for the interviews and member re- Additionally, quantitative research of self-employed workers was carried out. In this research, questions were not only asked about developments in the labour market. Special attention was paid to conclusions and assumptions which emerged from the qualitative interviews with self-employed workers. Finally, the combined results of the four research methods were analysed. | Reading guide Digi tal Cowb oys • Ch ap ter 1 • Th e im p o r t an ce o f self - emp loy me nt search, as well as for the descriptions of the ICT sector, the labour market, trends, and future expectations. News article research used recognized professional ICT literature, especially Computable, Automatisering Gids and IT Executive, as well as daily papers such as de Volkskrant and Financieel Dagblad. The largest part of the project was spent on interviews with self-employed workers and organisations. There were extensive interviews with seven self-employed workers: two project managers, three software architects and developers, a website designer, and a web host. The interviews are examined in this publication. Interviews were also held with three employment offices, directors of FNV Bondgenoten, and other social interest groups. In Chapters 2 and 3, the ICT sector, and trends and developments of this labour market, are discussed. There follows a description of four trends: diversity in work relations (Chapter 4), the rise of conciliation offices (Chapter 5), the paradox of terms of employment (Chapter 6), and the personal growth of self-employed workers (Chapter 7). Finally a strategic agenda is set to anticipate developments in self-employment. The strategic agenda is aimed at both individual self-employed workers and self-employed workers as a sector. The problems and successes of self-employment are relevant not only to the self-employed worker, but also to the whole of society.
Slide 10: 10 Digital Cowb oys • Ch ap ter 2 • A de sc r i p t io n of self- employment in the IC T s ec tor
Slide 11: 2 A description of self-employment in the ICT sector Chapter 11 The ICT sector was central to the research project. As stated in the previous chapter, the ICT sector has always been an example to and trendsetter for other market sectors. Outsourcing, individualoriented collective agreements, and personal bonus systems are examples of labour market developments in the Netherlands, which initially existed only in sectors like ICT and financial services, after which they also became common in other sectors. on a more executive level. The programmer is faced with totally different developments and trends than the project and interim managers. | Three groups of self-employed workers The ICT sector is characterized by a great diversity of companies, of all forms, shapes, and sizes. This is also evident in the diversity of self-employed ICT professionals who were interviewed for the FNV Zelfstandigen project. These professionals varied from the owner of a one-man The choice of ICT as research area was not only made because of the interesting companies and developments in the sector, but because of this industry’s role as trendsetter for developments in the labour market in general. Before the developments and trends in the world of selfemployed workers are discussed, a description of self-employment in the ICT sector is provided. The ICT sector has a number of specific characteristics, with which it distinguishes itself from other sectors. This chapter gives a simple description of self-employment in the ICT sector, divided into three different types. The self-employed project manager as ‘high professional’ differs from the ‘artisan’ programmer, who is active hosting company, to a self-employed software engineer who is active throughout Europe, to a website constructor, to a self-employed interim project manager. They all engage in different activities and reflect different definitions of the ICT sector. From the interviews with self-employed workers and conciliation offices, roughly three groups of self-employed workers can be distinguished: web designers and web hosts, architects and developers, and interim ICT project managers.
Slide 12: 12 | Self-employed web designers and internet hosts The first group within the self-employed ICT professionals is web de- IT or ICT? Information and communication technology are more and more a continuation of each other. That’s why the term Information and Communication TechnolDigital Cowb oys • Cha pter 2 • A descr ip ti o n of self - emp loy ment i n t he IC T s e c to r ogy (ICT) is often used instead of Information Technology (IT). Post and telecom activities are included in the definitions and research of the Dutch Ministry of Economic Affairs and the Dutch Central Office for Statistics (CBS). These make up a significant part of the total activities of the ICT sector. In this book postal activities are not included. Telecom activities are more and more part of automation activities. Just consider the developments in VoiP (telephone over the internet). Communication devices are business-like services, and aren’t included in the definition of the ICT sector. signers and internet hosts. Internet hosts (hosting providers) offer web space and web services, such as photo books and web logs. They maintain files for websites, which are owned by individuals or companies who don’t have their own web servers. The size of this group is very difficult to determine; factual data about the size and qualifications is scarce. This group is not mentioned in the statistics of the Central Bureau for Statistics in the Netherlands. The group of internet hosts is very small, unlike the group of self-employed web designers. Estimates by the self-employed workers themselves suggest that roughly half of the self-employed workers in the ICT sector are web designers. Many of these self-employed web designers combine their web design work with other assignments. This assumption is supported by the results from the digital research panel, in which half of the self-employed ICT professionals show the characteristics of web designers; that is, they do executive work for many different clients. In explanation, these workers point out that as the work becomes more large-scale, co-operation becomes more fixed. Moreover large employer companies seek large ICT companies to do the work, while smaller companies work more often with smaller ICT companies. Bigger, more complex projects are therefore executed by big companies, in which a multidisciplinary
Slide 13: team often works together, whereas self-employed workers tend to handle smaller cases, such as web design. The interviewees state that secondment and outsourcing abroad often take place. Although the software developer stated that this doesn’t bother him, he does notice that many of his large clients are sensitive 13 | ICT architects and developers about outsourcing. He thinks outsourcing is an alarming development for the Dutch economy. He is concerned about companies that arrange outsourcing because their approach is aggressive. Finally, the software developer states that he talks to many professionals ICT colleagues in his environs who work for large software houses. He states that these companies, which used to have a reputation for software development and system management, are now more and more occupied with secondment. The second group of self-employed workers in the ICT sector consists of architects and developers. Programmers (developers) and the system analysts (architects) are part of this group. The Central Bureau for Statistics in the Netherlands gives numbers for this group in its yearly report on De Digitale Economie (The Digital Economy): in 2005, the total number of self-employed ICT architects and developers was 21.800; at a rough estimate the number in 2008 was about 25.000. Number ICT professionals in The Netherlands Number of self-employed ICT professionals (9%) | Self-employed ICT project managers Programmers System analysts 87.800 154.300 7.900 13.900 The third group within the self-employed ICT professionals is the selfemployed project managers. Depending on the level of specialization within the ICT sector, this group also calls itself “(register) information scientists”. The third group is, according to interviews with self-employed Number of ICT architects and developers in 2005 (source: De Digitale Economie 2006) The architects interviewed stated that they work in companies of different sizes, thus the tasks they are assigned differ enormously. With larger clients, half of the ICT professionals work as architects or executors and the other half as project managers. With smaller clients, a personal match is much more important: ‘small seeks small’. In the smaller companies the demand is also different: here more ‘statute-labour’ is required. workers and the data of the Vereniging voor Register Informatici (the Association for Register Information scientists), also the group with the highest level of education and which mostly hires itself out for long-term assignments with one client. When one does not look purely at the specialized ICT project managers, but also at project managers for whose projects ICT or company process-
Slide 14: 14 es form an important part, then the total number of ICT project managers is, according to the interviewees, about 10,000. Characteristics of the ICT sector The ICT sector is so diverse that the differences within it are at least as numerous as the similarities. There are significant differences in the character and working methods of ICT companies. Whereas within bigger companies more Digital Cowb oys • Cha pter 2 • A descr ip ti o n of self - emp loy ment i n t he IC T s e c to r and more frequent takeovers and mergers take place, the smaller parties are often niche entrepreneurs who work with subcontractors. A known general characteristic of the ICT sector is economic conjuncture sensitiveness. There is a so-called short-cyclic character of activities: a rapid change between boom and recession. In a boom there is a shortage of ICT professionals. In a recession the supply is greater than the demand. At the same time the intake of young qualified workers remains lower than the expected demand for staff. Company branches characterise themselves further by strong competition between specialists in the area of maths, information, and systems management on the one hand and in organisational structure and communications on the other hand. Because of the ongoing nature of technological developments, continued investment in human capital is necessary to attain profit in the long term. Short term conjuncture cycle investments aren’t always efficient because companies have shortages or surpluses of staff. Investments will not occur automatically, because within ICT knowledge is volatile and work relationships are sometimes short; undoubtedly there is a connection between these two characteristics. The Central Bureau for Statistics (CBS) in the Netherlands describes a number of lesser known characteristics of the ICT sector in De Digitale Economie 2006 (The Digital Economy 2006). The profile of ICT professionals clearly differs on a There are quite a few changes occurring in the domain of tasks. Self-employed project managers see a movement in the ICT sector from ‘hard’ (application development, website building and techniques) to ‘with it’ (ICT supportive of company processes, which have to fit in with the strategy of the organisation). The aim of ICT, then, according to the project managers, is much more about change management and business; for example handling business cases, business goals, and business enablement. The project managers also sense four developments within the ICT sector as a whole. These are 1. A strong trend to increase companies’ efficiency and costs with the help of ICT 2. An increasing focus on what companies see as their core business, influencing the use of ICT 3. Increasing numbers of ICT professionals involved with the tangent plane between ICT and business 4. The increasing importance of change management in organizations, with a resulting influence on the need for competent ICT professionals This last development means that ever higher demands are made on ICT professionals, especially in the fields of competence, behaviour, and certification. According to the project managers, this is justified because of the magnitude of money and risk involved.
Slide 15: number of points from that of the average working Dutch person. ICT professionals work considerably more often in a fixed working relationship and less often as a flexible employee or self-employed worker. They also work 35 hours or more per week more often. Their age is somewhat lower and their level of education is higher, compared to the total active working population. The biggest difference lies in the percentage of women working in the ICT sector: the total working population of women is 42%, but in ICT this is merely 11%. 15 Number of ICT professionals in the Netherlands Information scientists Other ICT project managers Total number ICT project managers 26.600 - Number of self-employed ICT professionals (9%) 2.500 7.600 10.000 Number of ICT project managers in 2005 (source: De Digitale Economie 2006)
Slide 16: 16 Digital Cowb oys • Chap ter 3 • Tren ds an d develo p ment s in self - e m p l oy m e nt
Slide 17: 3 Trends and developments in self-employment Chapter 17 The previous chapter described the ICT sector and its labour market. The ICT working population appears to be highly educated and very stable. A large demand for ICT professionals remains, but the number of young ICT professionals is decreasing while many people over 45 are looking for work. In spite of a downfall in the outlook in the coming years, it is expected that this will have little influence on the quantitative supply and demand in the labour market. Historical data (in the recession at the start of the 21st century the ICT working population scarcely decreased) and the decreasing growth in numbers of young ICT professionals seem to support this expectation. Quantitatively, trends and future expectations for the labour market seem almost monotonously stable. | The rise of open innovation The scientific literature on economic developments and labour market policies is vast. Much of this literature was reviewed for this research project. Only a small part has a tangent plane with the labour market of selfemployed workers. Of interest is the study of ‘open innovation’ by Henry Chesbrough. In his book Open Innovation, Chesbrough considers the contrasting principles of closed and open innovation. He observes a slow transition from closed innovation principles to the new open innovation principles. For self-employed workers, open innovation offers many possibilities for work and innovation. Also for companies which adhere to the open innovation principles, the innovative power of self-employed workers, who move between different companies, offers great opportunities. Eventu- Qualitatively speaking, based on the research and news articles studied, combined with many interviews and conversations with self-employed workers, the labour market in the ICT sector seems to be stirring violently. In this chapter, we will examine these developments and expectations for the future. ally, this open innovation principle seems to create a ‘proliferation of knowledge’, which produces a win-win situation for companies and selfemployed workers. In the interviews with self-employed workers it is stated that assignments for clients which bring the open innovation principle into practice
Slide 18: 18 are both much more successful and much more likely to produce contented workers. The interviewees also state that more and more clients are bringing the principles of open innovation into practice. the part of the tax office, which now considers the hired self-employed worker as a disguised employee, which can lead to an additional tax assessment. | The secondment worker prefers to be his own boss A further development is the rise of commercial mediators. In Chapter 5 we will discuss the rise of employment offices. Almost all ICT architects and developers have noticed that the smaller, nicer companies (with about 100 employees) are disappearing. Because Digital Cowb oys • Chap ter 3 • Tren ds an d develo p ment s in self - e m p l oy m e nt of this development the stimulus to work for these smaller, more creative companies has disappeared and still more ICT professionals are choosing to be self-employed. | Big puts out to small: the rise of tender chains One of the most interesting developments in the labour market for selfemployed workers is the rise of the tender and client chains. The links between ICT companies and employment offices have led slowly to the At the beginning of November 2007, Financieel Dagblad reported that more and more secondment employees are choosing to become selfemployed. According to company economist and advisor Kees de Kruijff, this is a result of the worsening of the terms of employment for secondment employees. The commitment of secondment worker to the secondment office is not strong in any case and the secondment worker doubts the worth of the secondment office, De Kruijff believes. De Kruijff estimates that, a year after takeover, from five to eight percent of secondment workers choose to become self-employed. But even those who take that step still often have to deal with a commercial mediator, because companies don’t always want to do business with an individual freelancer. That’s too much bother. Moreover, there has been a change on creation of a whole chain between the ultimate client and contractor. In this way, big puts out to smaller, and so on. This is especially true for the programmers and the developers. They work as self-employed workers through employment offices for bigger companies, sometimes even through several employment offices. | Personal skills become more and more important The interviewed self-employed project managers stated unanimously that the ICT sector is slowly changing from ‘hard’ (engineering) to ‘soft’ (business). This means that more demands are made on the behavioural competence of ICT professionals. In addition, certification is more and more important. This applies not only to certification for technical skills,
Slide 19: but especially for management skills, which are tested with 360 degree analyses, for example. ment and negative experiences with ICT in the past. ‘The time has passed when you could work somewhere without being tested.’ Also, the technical programmers and developers state that their clients 19 As a reason for this increasing need for certification, the project managers mention, among other factors, the report of the Dutch Government Audit Office about serious losses on ICT projects by the Dutch Govern- increasingly think that social skills and the ability to imagine oneself in other situations are important. For the ICT technicians this is a cultural change; irreversible, but also difficult. Contrasting principles of ‘closed’ and ‘open’ innovation Closed innovation principles The smart people in our sector work for us. Open innovation principles Not all smart people work for us. We think it’s necessary to work with smart people in and outside our company. To profit from Research & Development, we have to discover, develop, and Research & Development outside our company can create much more inexploit innovations ourselves. novation value; R&D inside our company is necessary to be able to use a part of that innovation value. Whenever we discover an innovation ourselves, we are the first to bring it To profit from innovation, it isn’t necessary to start research ourselves. to the market. The company that gets an innovation to the market first wins. It is more important to make a better business model than to get to the market first. We win when we create the most and the best ideas in the industry. We win when we use ideas from in and outside the company best. We must defend our intellectual ownership, so that our competitors can’t We must profit from the use of our intellectual ownership by others, and profit from our ideas. we must buy the intellectual ownership of others’ ideas if this improves our own business model.
Slide 20: 20 | Networking in a flexible labour market Carnoy also notes that the success of the flexible labour market depends perhaps even more upon networks and contacts outside the workplace. Those who can make their skills known through a network of companies have a much better chance of finding work. Also, for workers with lower levels of education, social networks outside the workplace appear to be more and more important in flexible markets. All in all, many people find work through networks. The key does not lie in networking itself, but in workers making others aware of their knowledge and skills via these networks; it is a way to find work. This also seems to be true for canvassing by self-employed workers in the Netherlands, for the more highly educated as well for the less educated. A second development, which is occurring more and more, is the importance of networking and cooperation. A case study of the labour relations strategies in Silicon Valley by Martin Carnoy offers a number of conclusions that are also interesting for the Dutch situation. The culture of labour market flexibility is not only directed by the traditional explanations of rapidly changing markets and intensive competiDigital Cowb oys • Cha pter 3 • Tren ds an d develo p ment s in self - e m p l oy m e nt tion, but also by high turnover rates and the mobility of the most competent employees between these companies. As a result, knowledge and innovation power spreads rapidly through the local economy. Specialist flexibility seems to have greater benefits for this group than for the employers, although generally it is assumed that flexibility is especially beneficial for employers. Especially for less educated employees, the assumption is often that flexibility is beneficial for employers. In the United States of America, the flexibility of this group has led to lower salaries and worsening of terms of employment. From this, Carnoy concludes that the success of flexible labour markets is clearly dependant on a certain education- and skill level. | Conclusion This chapter discusses interesting developments in the labour market for self-employed workers. These were the developments mentioned most during the project and interviews and which caused the most indignation or anxiety. The developments can be divided into four different categories. In the next chapters these four trends will be examined further.
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Slide 22: 22 4 Trend I: Diversity in forms of working relationships Chapter The first trend that can be seen in the ICT sector labour market is the Digital Cowb oys • Chap ter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re t i ns hi s volved, but the collective labour agreement developments in the ICT sector invite workers to become self-employed. Barely increasing wages and little improvement in terms of employment are also important fac- shift from being employed by others to being self-employed. Within the sector there is great concern about the outflow of experienced ICT professionals who become self-employed workers. Although each month there are many vacancies filled, this number is lower than the outflow to self-employed work. We will discuss the reasons why so many employees become self-employed workers further. tors. Still, most interviewees state that money is less important than it seems. “It is true that you make more money as a self-employed worker, but there are also more risks. And my wife does like it when I can pay the mortgage at the end of the month.” Therefore, financial reasons don’t really seem the main reason to take From the trade and industry point of view, the flexible employment of self-employed workers plays an important role. “Self-employed workers are useful for their ability to adapt to the cycles of the ICT market”, says Kasteel, the chairman of the board of Ordina. the step. The interviewees state that “small, nice businesses of about a hundred people” are disappearing. Thus, the stimulus to work for these smaller, more creative companies is gone and more and more ICT professionals have become self-employed. If we also take into account the large amount of secondment and consulting taking place by the software For the self-employed worker himself, finances play an important role. An ICT professional receives a much higher income as a self-employed worker than as an employee. It is true that there are also more risks inhouses of old, and that in the evenings there are obligatory teambuilding sessions “to see the colleagues once in a while”, then the step from being an employee to being self-employed is very small.
Slide 23: Recruiting by making noise: employee problems at Ordina Ordina is an interesting example of the bottlenecks in the employment policies of ICT companies. Ronald Kasteel, Ordina’s chairman of the board, thinks that structurally there are too few people educated in the relevant skills. “The problem is getting worse because of the individualization of society. Because of that, more and more people are becoming self-employed workers.” Because of the loss of workers to self-employment, the turnover of personnel at Ordina is 15%. If the company wants to address the decline and expand the number of personnel, Kasteel states that there must be about 800 to 1000 new employees recruited yearly. As an important solution to the personnel shortage, Ordina mentions the takeover of entire ICT divisions from customers. “Recently we took over an ICT division of Rabobank, about 150 people, after we signed a seven-year contract with the bank to, among other things, take care of the whole administrative processing of their mortgage portfolio.” The alliance between Ordina and American trade companion Cognizant is new. “This club has 80% of its personnel in India and is growing at the rate of over 14.000 employees per year. We have agreed that they will do work for us in two areas: system development and control and maintenance of systems. For now it’s about 50 to 100 people. We think with that we can render about five to 10% more turnover. So it is not a replacement of work that is done in the Netherlands, but an acceleration of the growth.” Finally, Kasteel mentions the ICT professionals who are now self-employed workers. The self-employed workers are useful in being able to adapt to the cycles of the ICT market. Ordina places about 13% of their assignments to selfemployed workers by contract, but keeps a bigger number within the company. Kasteel expects that the market will act as a brake to decrease the numbers of those wanting to become self-employed and that there may even be a turnaround in the future. “On the one hand, there is the trend that clients like the | The rise of different types of working relationships 23 Ordina’s Chairman of the Board, Kasteel, expressed the expectation that the market is going to help decrease the number of workers wanting to become self-employed and may even turn that trend around. However the market seems to be developing in another manner. On 29 June 2007, Bas Linders of ICT Office wrote in Een Paar Apart, the position paper for the top dialogue between ICT companies and trade unions, that Human Resource Managers (HRM) are looking for contract forms for this new group on the labour market and that a standard on that point had not been developed yet. The question is whether a standard contract form is necessary for the self-employed worker. After all, the fact that it’s an assignment between employer and self-employed worker is in itself a form of economic agreement. Still, the rise of different forms of labour relationships within the ICT sector is striking, which confirms that Human Resource Managers seem to have found contract forms for self-employed workers. In addition to the classic employer/employee relationship, there are now also secondment, payroll, and self-employment. In between there are also all sorts of constructs like midlance (basic wage with bonuses) and working from a BV (Dutch legal form of a Limited or Incorporated company) or a partnership construction. These constructs aren’t, economically nor fiscally, forms of self-employment or freelance work. The form of labour is
Slide 24: 24 still employer-employee, with increased flexibility and decreased risk for the employer and higher recompense for the employee. As this is not, in fact, self-employed work, but is often said to be, we also speak of “sogovernment want to work with fewer different ICT contractors. They want one contact person and won’t give self-employed workers separate assignments. Besides that we are less nice to the self-employed workers that we hire. Just like us, they aren’t paid by the hour any more, but depending on the results. There- called” self-employed work. Digital Cowb oys • Cha pter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re l at i o ns hi p s fore you’ll have to work harder for your money than before. And then maybe it is more agreeable to have more security.” Source: Financieel Dagblad, 20 October 2007 Form of labour relationship Labour contract with employer Payroll contract Secondment contract Self-employed worker Self-employed through employment agency Constructions like ZZP Oké and Uniforce1 Constructions like FreeICT2 Legal contract party Employer Payroll company Secondment agency Client Employment office Client through own BV (Dutch legal form of Limited) Client through Partnership construction Employer in practice Employer Employer (usually stays the same) Employer (changes with new assignments) Client Client Client Client 1. ZZP Oké and Uniforce are organizations which created a construction by which people work for a client as employees in their own BV. This is done by forming a ‘one-person secondment agency’ for every freelancer. The freelancer is working through this BV, which, among other things, remits valueadded tax, income tax and employer taxes. Clients receive an audit certificate. 2. FreeICT has developed a partnership-model as a labour market-model, in which acquisition and negotiations take place through the partnership.
Slide 25: | The role of the ‘Verklaring Arbeidsrelatie’ (VAR) (declaration labour relationship) Midlance: an example of an HRM construction 25 The rise of new contract forms for self-employed workers in the ICT sector invokes the question of what the biggest trigger for this development is. Conversations with employment offices don’t leave any doubt. The Verklaring Arbeidsrelatie (VAR) (declaration labour relationship) is causing so much confusion that clients would rather hire someone by an acknowledged construct than directly as a self-employed worker with a VAR. This is in spite of the fact that with a VAR the self-employed worker as well as the client can be certain beforehand of the question of whether the income from a labour relationship is taxed as taxable profit from entrepreneurship, taxable income, or taxable results from other work. Many self-employed workers think that the application of a VAR is an administrative bother. Even though they state that other administrative burdens are much more complicated, the VAR is needlessly complicated. For clients, the VAR is, above all, unclear and insecure. The employment offices, partly for marketing purposes, hook in cleverly on this insecurity. Employment office P/Flex, a division of Randstad, acknowledges they hook into the indistinctness of the labour relationship and the risk that the client runs. They refer to an amendment of law per the first of January 2007 through which the burden of proof of the VAR is with the client. In The secondment agency InWork has launched a new labour market form. Midlance is a variant of the freelance developments and is midway between a freelance/self-employed worker and an employee. InWork observes that in four years the number of self-employed workers has grown by nearly a quarter. Also, the profile of the new self-employed workers has changed markedly compared to a couple of years ago. “More and more native males (between 25 and 45 years old) are becoming self-employed, in the search for more freedom, self-realization and, especially, higher earnings!”, InWork analyses. However, “Freelancing isn’t ideal for many. Midlance is the golden midway between freelance and a regular job. A midlancer has the security of a fixed employment. He receives a monthly paycheck and has good terms of employment.” InWork states that several research agencies predict that midlance is going to be the trend in the labour market for self-employed ICT professionals in 2008. Actually midlance is nothing other than an individual performance recompense system, with a traditional employer-employee relationship. Source: press report, beginning of February 2008 InWork Bron: Persbericht InWork, begin februari 2008
Slide 26: 26 commercials by P/Flex in 2007 this sense of indistinctness was strengthened by examples of situations and solutions from P/Flex. Although the (Dutch) tax office clearly states that the VAR gives secu- Hooking in on the insecurity around the VAR HARDERWIJK – Freelancers, interim workers, and Digital Cowb oys • Cha pter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re l at i o ns hi p s rity to the client beforehand about the labour relationship, there is much mistrust over this from clients. It seems therefore that this insecurity about the VAR is crucial. The question that then remains is if the solution is right. Do we have to develop all kinds of new labour constructs, or do we have to improve the information about clientship and the VAR? The latter seems in any case a good recommendation, in order to offer clarity about the VAR. self-employed workers who, for whatever reason, don’t want to work with a so-called Verklaring Arbeidsrelatie (VAR) (declaration labour relationship) can from now instead work with a Verklaring Uniforce Registratie (VUR) (declaration Uniforce registration). | The UWV, the Dutch tax office and the Uniforce Group have signed an agreement on this, so they reported Tuesday. With that the VUR is a new official national labour form for self-employed workers and their clients. According to the undersigners, the VUR forms are “a perfect completion of the grey area” between a labour agreement as employee and as self-employed worker. Changing labour relationships and security Although large diversity in labour relationships is typical for a dynamic economy like the ICT sector, this diversity seems to be a predictor for other economic sectors. Gerard Everts and Ton Wilthagen, in De Toekomst van de Arbeidsrelatie: Een essay over wederkerig risicomanagement (The Fu- Clients Many people have difficulties with a VAR, finding that it fills them with questions and that the VAR work is restrictive; for example, to new clients. The VUR is a looser form of labour agreement. In particular, specialists in the area of financial services, personnel policy, automation, and interim-management are often hired for their knowledge and experience. ture of the Labour Relationship, an essay about mutual risk management), give an interesting analysis of this situation. They discuss multiple developments in the labour market. Everts and Wilthagen observe new risks in the labour market, like the Source: Automatiseringsgids, 19 August 2008 tendency toward internationalisation and the accompanying interna-
Slide 27: tional competition, migration of labour, and the rise of new economies. They also observe increasing individualisation and the call for custommade goods. The need for flexibility is increasing. Meanwhile, the Dutch government has withdrawn and is opting for freedom of choice and personal responsibility. Deregulation, liberalisation, and privatisation are key words. A day later the Dutch tax office gave a totally different explanation. In a press report, the Dutch tax office stated that the VUR is not a new fiscal labour form. “Yesterday, in the media, the impression was wrongly given that there is a new fiscal labour form; the VUR”; thus the press report. “The VUR would be a solution for freelancers, interim workers and self-employed workers who don’t want to work with a VAR. However a new fiscal labour form with legal (therefore national) basis has not been introduced in conjunction with the VAR. It is the product of a individual presenter.” 27 Further, they state that the labour market’s adaptability and manoeuvrability are too limited. They believe that people want security. After all, the classical labour relationship always characterizes itself by striving for long-term fixed contracts, with few risks for the employee. Within this relationship workers have not been encouraged to be mobile. 1. Source: Press report Dutch tax office, 20 August 2008 Precaution (prevention). These are efforts to make sure employees remain usable. In contrast, Everts and Wilthagen argue for a transitional labour market, also based on the flexicurity concept (Centraal Planbureau, 2005). Flexicurity represents the mixture of a flexible labour market with good provisions and assurances in the area of social security. Everts and Wilthagen conclude that risks in the labour market must be divided between employer, employee and, from a general perspective, society (the government). They quote the Wetenschappelijke Raad voor het Regeringsbeleid (WRR) (Scientific Counsel for Government policies), which makes a distinction between three essential aspects of risk division. 3. 2. Protection. These are measures which, for example, cover resignation conditions and collective labour agreements, which make sure that traditionally unbalanced power balances are righted. Recovery. This includes compensating losses of income, assistance in finding new jobs, and restoring the capacity to gain new incom
Slide 28: 28 | Guaranteed basic provisions for self-employed workers also take part more in guaranteed basic provisions, like pregnancy leave, which have previously only been available to employees. Finally, the WRR also draws a few conclusions for self-employed workers. To make the flow in the labour market – in, out and through – much more flexible in the future, there must always be social security for employees. When this security is lacking, the system itself is not successful because Digital Cowb oys • Cha pter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re l at i o ns hi p s The characteristics of the self-employed worker are thus shifting more and more towards those of the employee. For some that may seem an unwanted development, but frmo an international perspective it is not illogical. In Denmark, even employers can derive rights of social security for some employees, and therefore don’t run their companies solely at their own risk. While the self-employed worker is becoming more similar to the employee, the employee is becoming more similar to the selfemployed worker. Though there is nothing wrong with differentiation of labour forms, clarity and transparency are required. If a form of labour becomes a trick on the part of HRM specialists, it is better to legally re- of resistance from employees. This is the main reason why the (Dutch) government has to ensure, by flexicurity, that there are basic provisions for all workers, whether self-employed or not. Everts and Wilthagen argue that it would be curious if society were to deny paid pregnancy leave or better career regulation to self-employed workers. | Where is the limit to flexibility? strict the problems for everybody or to permit labour construction for everybody. This chapter notes a large rise in forms of labour relationship. The reasons behind these developments are also analysed. Indistinctness, as well as the insecurity surrounding existing labour relationships, has been discussed. Changes in the labour market affecting the whole of society, in which flexibility and risk management are more and more prominent, were also discussed. While employee relationships become more flexible, the social security position of the self-employed worker strengthens. From the flexicurity point of view the role and (social) security of the employee will change sooner or later in future years. At the same time, self-employed workers
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Slide 30: 30 5 Trend II: The rise of employment agencies for freelancers Chapter Digital Cowb oys • Cha pter 5 • Tren d II: The r ise o f emp loy ment a ge nc i e s fo r f re e l a nce r s One of the strongest trends for self-employed workers in the labour market in recent years is the rise of employment agencies for freelancers. This chapter describes how employment agencies work and the changes occurring in this market which affect the position of self-employed workers. Especially in large companies and the government it amounts to a form of secondment. These companies choose this form via an employment office because they want to avoid bother and believe this way offers some kind of continuity. Money interests them much less. In smaller companies the contacts are often much more direct. In some larger companies, it may also be the case that there is no intermediary. In these instances, | Employment offices in practice contracts of around 100,000 Euros are often involved. Direct hire is then usually more efficient, more direct, and cheaper. Traditionally, self-employed workers receive assignments through their personal networks. Mostly, assignments seem to come officially from employment offices, while in practice they derive from indirect personal contacts. However, it is true that the lower the self-employed worker’s level of knowledge is, the more that worker seems to depend on secondment work. The employment offices and the self-employed workers both state this. However, the independently acquiring self-employed worker also often doesn’t escape having an intermediary between the client and himself. Within ICT, self-employed workers recognize a distinction between employment by the employment offices of smaller and larger companies. Many employment offices have a number of big companies as clients, who at first let personnel be staffed via the employment office. Actually, in that way the employment office operates as a temporary employment agency. There is also a rising market for freelancers – “which grows by the hour”- which these regular customers also want to use. They offer three reasons. Firstly, the company usually does not have the resource capacity and does not know where to find the specialised ICT professional required. Secondly, companies are hesitant to do business directly with self-employed workers. Thirdly, companies want to put the administra-
Slide 31: tive duties out to contract. For these reasons they sign a contract with the employment office, after which all self-employed workers are mediated via this one office. 31 Definition of an employment agency From interviews with employment offices, it is clear that, in their view, employment and secondment are the same thing. Employment offices state that they contact the tax office about this frequently, and see this labour form as a grey area. In the end the differences are negligible. “Eventually the self-employed worker is working under the supervision of an ATOS Origin or KPN”, it is said. For the tax office, the question is who the real client is: the ‘material’ client or the ‘formal’ client. An employment agency is an office which first brings a contractor and a client into contact, for a fee, and then steps back. The contract agreement between contractor and client is signed by both parties (Article 7:400 Dutch Civil Code); the contractor is not under the authority of the client because otherwise there would be a labour contract between the client and the contractor (Article 7:610 Dutch Civil Code). A variant of the employment agency is the intermediary agency. This also brings contractor and client in contact, for a fee, but then keeps the contractual relationship in the form of a contract agreement of assignment (Article 7:400 Dutch Civil Code) until the end of the assignment. The client is neither under the authority of the employment agency nor under the authority of the client. If there is authority between the contractor and the employment agency, then the employment agency is officially a secondment office and there is a labour contract (Article 7:610 Dutch Civil Code) between contractor and employment agency. If there is authority between contractor and client, then the employment agency is actually a temporary employment agency and there is a temporary employment contract (Article 7:690 Dutch Civil Code) between contractor and intermediary agency. Legally, if a contract is signed in the Netherlands between a self-employed worker and the employment office, and there is no contract between the customer and the self-employed worker, the employment office is the only client. The lack of different clients can form a problem for the self-employed worker. Due to Dutch law the self-employed worker then isn’t really a self-employed worker, but someone who is employed by another. Then, of course, income taxes and employment security contributions have to be paid. From the interviews with the self-employed in the ICT sector about their experiences, it would appear that they are actually very content with the role that employment offices play and the quality that they provide.
Slide 32: 32 However, they also expressed their concerns about a few negative developments. These concerns relate to the fear of a monopoly of employment offices, the greater and heavier risks of entrepreneurship passed Why do self-employed workers work Digital Cowb oys • Cha pter 5 • Tren d II: The r ise o f emp loy ment a ge nc i e s fo r f re e l a nce r s by clients to self-employed workers, and the extensive chains of indirect client and contractor relations that come into existence. via an employment office? The traditional view that employment offices aren’t good, that they financially exploit the self-employed, and that the self-employed would rather take on assignments without the use of employment offices, is no longer current. In the interviews, while the point was emphatically made that the self-employed do worry about some negative developments, it was clear that they do in principle value the services of the employment offices highly. Many ICT professionals and project managers get in contact with clients or potential assignments via their own networks. Often, they then make use of the employment office. On the one hand, they do so to benefit from a sort of safety net to ensure a fixed income each month, and on the other hand, to benefit from the handling of administration. For them, a fixed monthly income and assignment security seem to have a higher priority than self-employment and freedom. Additionally, a number of engineers state that they aren’t good at acquiring work and therefore are glad to give this task to professional employment offices, so that they can concentrate on the work they are good at. | Dependency on employment offices increases In the interviews with ICT professionals, a much heard fear was that the relationship with the employment office was becoming too tight. A selfemployed worker can’t make a decision to take on an assignment on behalf of an employment office. It may become impossible to gain an interesting assignment without an employment office. With these concerns in mind, we interviewed a representative group of self-employed workers, from both inside and outside the ICT sector. Within the ICT sector, almost half of the self-employed have had experience with clients who only wanted to do business via an employment office, while this number for all sectors is 25%. The statement that almost half of the ICT self-employed had experience with clients who only wanted to do business via an employment office is interesting in itself. A comparison with historical data isn’t possible, because there is no previous research into the experience of self-employed workers with employment offices. In the interviews with employment offices, they themselves also said that they are indispensable. From the
Slide 33: 33 ‘Clients prefer not to do business with the self-employed directly, but only via an employment office’ (ICT sector) ‘Clients prefer not to do business with the self-employed directly, but only via an employment office’ (Total of all sectors) interviews with mediators we gather that the percentage of clients that only want to work with self-employed ICT workers via an employment office is higher than a few years ago. The percentage will probably increase over the next few years. Finally, the test panel of self-employed propounded the thesis that for certain assignments workers cannot get around use of an employment agency. In this, the trend from the interviews was affirmed: the self-employed in ICT, but also in other sectors, often can’t do without employment offices for the acquisition of assignments. tal employment office is freep.nl. On this digital platform, self-employed workers with Higher Professional Education or an academic degree can find new assignments without interim or secondment offices. Purchasing managers of big companies are contributing to this development, because they’re also beginning to see the market position of the employment offices as a threat. All in all, there’s nothing wrong with the function and economic role of employment offices. They make an important contribution to bringing clients and contractors into contact, acting as a lubricant in the economy. The growing dependency on employment offices is indeed a point of | Counter reaction and Conclusion concern. The rise of a new generation of online employment offices is a logical development, surely, in the world of open innovation. Initiatives for this, with fair changes from the clients and the government, therefore deserve all support. There are numerous initiatives at this time, such as the formation of a type of digital employment office, to help the self-employed avoid becoming dependent on regular employment offices. An example of a digi-
Slide 34: 34 Digital Cowb oys • Cha pter 6 • Tren d III: Th e paradox o f ter m s o f e m p l oy m e nt fo r...
Slide 35: 6 Trend III: The paradox of terms of employment for self-employed workers Chapter 35 The growing dependency of self-employed workers is a point of concern. Although employment offices have an important and useful function, we’ve seen in the previous chapter that they can also make self-employed workers dependent. Self-employed workers can’t undertake assignments as freely and independently as you might expect. | The growing dependency on employment offices An important development in the labour market for self-employed workers in the ICT sector is that more and more ICT companies only work through employment offices instead of directly employing self-employed workers. This is especially true for architects, programmers, and project managers. One employment office representative interviewed stated that self-employed workers are largely dependent on employ- This chapter discusses the insecurities of self-employment and the terms of employment with which the self-employed have to deal. Although self-employed workers work at their own risk, they still have, of course, a right to decent terms of employment and circumstances. Some (employee) representations therefore call for collective terms of employment. Whether that is the right track for self-employed workers is very much the question. ment offices. According to employment offices, it’s more and more important for selfemployed workers to have their invoices paid on time. From interviews and ‘the Top Ten bottlenecks of self-employed workers’, it is evident that the term of payment for some companies and authorities is over three months, making it difficult for most self-employed workers to finance beforehand. Moreover, the trend is that the difference between employment and secondment is increasingly fading. For many self-employed, it doesn’t matter if they are mediated via an employment office or are seconded.
Slide 36: 36 Digital Cowb oys • Ch ap ter 6 • Trend III: The p aradox o f ter ms o f em p l oy m e nt fo r s e l f - e m p l oye d wo r ker s Therefore, transitions between self-employment and secondment commonly take place. the ICT companies base their charges, against high margins, on a good brand name’s high hourly rates. Hiring managers think that consultants from these ICT companies are worth more money than self-employed The employment offices state that they think, in the future, people will have the freedom to voluntarily choose to give up their employee assurance. They also expect a further increase in British agencies, because the labour supply of ICT specialists is much higher in Great Britain than in the Netherlands and because the demand in the Netherlands will remain stable and high for the next few years. workers who work under their own company names. Hiring managers have two reasons for this: one is that they expect that their “own” consultant to have more knowledge than a self-employed worker, and the other is that the purchase manager estimates the chance of a good result to be higher as the company is bigger and more renowned. When a computer service office doesn’t have appropriate specialists, they hire self-employed workers. The self-employed worker then must – as laid | Setting up contracts and general conditions happens from the top down in the employment conditions – say in the workplace that he is an employee of the computer service office. In this way the good name of the computer service office is maintained. Most of the time, a computer service office imposes its general conditions upon the employment office. These conditions are often rigid and non negotiable. Afterwards, the employment office signs a contract with the self-employed worker. Then, some employment offices also sign several contracts with other chain partners. Most employment offices dislike this last step because of the lack of transparency. Employment offices and self-employed workers negotiate items: the competition clause, and risk and responsibility. The salary is a less important part of the negotiations. Big ICT companies often let the self-employed workers they hire work under the name of the computer service office itself. This happens because | Growing tension within the ownership of human capital Another development is the problem of the ownership of human capital. This problem occurs particularly within the ICT sector. In this sector there is heavy competition for skills and knowledge. Katherine V.W. Stone describes in her article Thinking and Doing: The Regulation of Workers’ Human Capital in the United States the regulation of the human capital of workers in the United States. The question of who owns human capital is very topical in the United States at this moment. Stone observes a trend in the US of judges being less reserved about binding imposing agree-
Slide 37: ments in competition clauses. In the Netherlands, too, attention to the ownership of human capital is growing. In her New Year’s speech of January 2008, Agnes Jongerius, chairwoman of the board of FNV, called upon the cabinet to abolish the competition clause. The fact that questions about competition clauses now come up for trial more often shows a profound change in labour relationships over the past decades. From a situation in which the knowledge of employees was not acknowledged, or at least made inferior to the dutiful discharge of tasks, we now live in a time in which knowledge and development are highly appreciated. In other European countries, too, the development of restrictions on labour freedom is visible. Andrew Bibby, in his report Handcuffed to the Job for the European trade union ‘UNI Europa’, describes many examples of restrictions for employees as well as self-employed workers. Developments in the area of intellectual ownership are thus not only relevant for employees, but also for self-employed workers in the ICT sector. This is especially true because self-employed workers who work for big companies via employment offices often have a form of competition clause put in their contracts. Information from the legal department of FNV Zelfstandigen shows that the amount of legal advice in the area of intellectual ownership almost doubled in the first quarter of 2008 compared to the previous year. This strengthens the conclusion that ownership of human capital will also be an important political theme in the Netherlands. | No need for a collective labour agreement for self-employed workers 37 Included in the previously mentioned research there were conversations with several representatives of FNV Bondgenoten, the biggest Dutch trade union within the ICT sector. The strong rise of the different labour forms, as described in Chapter 4, was a subject of all the conversations. Several large employers have experimented with new labour forms in the labour market. For employers, the ideal is the ‘super self-employed worker’: a maximum of flexibility and a minimum of risk. Further, negotiations on collective labour agreements have, in general, been laborious. Several negotiations have been broken off, mainly because of the level of salary and the terms of employment. It isn’t even unthinkable that in the future a sector-wide collective labour agreement will be cancelled, and replaced by “made to measure” agreements. At the same time, in the interviews, self-employed workers unanimously stated that they do not have a need for collective labour agreements. They want to be free in their undertakings, and have as little as possible to do with agreements drawn up from above. They do plead for further collective attention to their interests from the government at The Hague and in the political arena. The point of view of the self-employed in the ICT sector is that if there are to be collective agreements, they have to be discussed and laid down at a national level for all self-employed workers and not only for sectors or collectives.
Slide 38: 38 Digital Cowb oys • Ch ap ter 6 • Tren d III: Th e p aradox o f ter ms o f em p l oy m e nt fo r s e l f - e m p l oyed wo r kers | Mirrored discussion on terms of employment employment, such as a competition clause and risk consideration, can be arranged without difficulty through a mirrored discussion. Moreover, this can work to the advantage of the image of the self-employed worker; an image that is under pressure from the indistinctness of the work relationships (VAR) and the presumptions about ‘so-called self-employed work’. Standard contracts and general conditions Apart from the need for a collective attending to the interests of all selfemployed workers on a national level, self-employed workers stated in the interviews that they would like information and support on contracts and general conditions. From the research it is evident that almost 50% of self-employed workers need examples of contracts and information about general conditions. More than a quarter have a need for testing or some type of checklist of subjects which one must take into account. However, a third of the workers have no need at all for support. In spite of the fact that over 30% are coping well, it is justified to conclude that a large group has a need for information about and testing of contracts and general conditions. Employees in the ICT sector say that the rise of the self-employed clearly hinders them. The outflow of employees to self-employment causes tensions. Employees are concerned about their worsening labour position and terms of employment, because self-employed workers accept lower standards in their terms of employment. On the employees’ side there is a need for collective agreements between employers and self-employed workers. A solution for this can be a so-called mirrored discussion on terms of employment. Through a mirrored discussion of terms of employment, agreements are made with a company on a collective level about the employment for the whole chain, with a clear line between the legal positions of the employee and the self-employed worker. An important point of interest here is the way in which the position of the self-employed stays as independent and free as possible. After all, the entrepreneur has to be able to make their own conditions. The guarantee of this independence is a crucial point in the mirrored discussion on terms of employment, notably because the self-employed workers themselves have a clear aversion to collective agreements. Then again, the current extent of independence of the self-employed worker must not be romanticized. As previously described in this chapter, conditions are often laid down to the self-employed from the top, making the freedom to negotiate almost nil. In that way, basic level terms of
Slide 39: | Conclusion ditions at a sector level. They prefer education, information, and basic conditions for all self-employed workers on a national level. A so-called mirrored discussion of terms of employment seems a good alternative, whereby agreements about the conditions of hiring of external personnel by employers are laid down in a collective labour agreement. Although, in theory, this could be at the cost of the freedom of the self-employed workers, in practice this allows the reins which currently exist, like the competition clause and conditions, to be released. In the end, that would be the best outcome for the self-employed worker in a freely competitive market. 39 Self-employment means freedom. It also means working at your own risk. In practice, the freedom of the self-employed worker is flourishing less than it may seem to the outside world. General conditions of employment offices and tender chains often restrict the negotiation position of the self-employed worker. This is especially true for the conditions of a competition clause, because the self-employed worker derives his right to exist from operating in a freely competitive market. The introduction of collective labour agreements for self-employed workers is not an option. The practicability of this is complex. Moreover, self-employed workers have no need for collective agreements or con-
Slide 40: 40 7 Trend IV: The importance of growth and development Chapter Digital Cowb oys • Cha pter 7 • Tren d IV: Th e i m p o r t ance o f growt h a nd d e ve l o p m e nt We have discussed the labour market, labour relationships, labour employment, and terms of employment. However, self-employment is first of all about the self-employed worker. rapidly. At the same time, by far the largest part of the new enterprises have no employees; in other words, are self-employed workers. Even more importantly, a large number of these enterprises don’t even want to have personnel. The self-employed worker wants to exercise his own Even in economic textbooks in secondary school, we learn that profit is an essential condition of the survival of an enterprise in the long term. Profits are needed to maintain or expand the enterprise and as a reward for the entrepreneur, who dares to take the risk. Profit may not only be financial, but can take the form of an increased knowledge of the enterprise or a growing network for the enterprise: forms of profit that are difficult to express in financial terms. For economic growth, more or less the same is true. Here, also, the total income is expressed in financial terms. To enable economic growth, a policy may aim, for example, to stimulate innovative people to start their own companies or to let small businesses grow. The reason behind this is that growth lies in employing people to increase the product capacity, and therefore increase the profits. The question is whether this is still true in the 21st century, the time of the knowledge economy. The number of enterprises has never grown so professionalism in an independent and enterprising way. That does not mean that economic growth is coming to a standstill. It is true that the profit of a one-person enterprise remains lower than the profit of an enterprise of which the production capacity of its labour force is growing. The total profit of one-man businesses is growing. So, the growth of the modern enterprise in the knowledge economy is based much more on the individual growth of the individual self-employed worker and his network than in the enlargement of his production capacity. This chapter describes this individual growth and development. We will also discuss the requirements which the self-employed worker needs in the discharge of his profession.
Slide 41: | Experience as a source of professional knowledge So, the level of education of employees in the ICT sector is high. But where does the ICT professional get his professional knowledge? It has emerged from research that self-employed workers in ICT value experience as a source of professional knowledge higher than do self-employed workers in general. Self-employed workers in ICT value their original vocational training, or supplementary or other vocational training, much less as a source of professional knowledge. A logical conclusion is that self-employed workers in the ICT sector, in contrast with the self-employed in other sectors, gain their professional knowledge more from experience and less from original or supplementary vocational training. 41 To measure the growth of the self-employed worker, it is first of all important to know his current expertise and the source of his professional knowledge. From numerous researches it is evident that the level of education of ICT professionals, in general, is high. Over half of the working ICT professionals have an education at Higher Professional Education or University level, while for the total working population this is just over 30%. The number of ICT professionals with only secondary education (or an unfinished higher education) is somewhat larger then average but mostly, the number of people with a (preparatory) intermediate vocational education is lower than in other sectors. Most important source of professional knowledge according to self-employed workers in the ICT sector Most important source of professional knowledge according to self-employed workers in general
Slide 42: 42 | Quality of competences more important ams of theoretical knowledge. While it is simple to gain this theoretical knowledge in a short time, in practice this theoretical knowledge offers little security regarding the quality of the self-employed worker. It seems that with the help of certification, a type of false security is created, while the certification also serves as a tool to select ICT professionals. The certification has become a selection criterion, but one of which the value is disputed. Self-employed project managers observe that the ICT sector is slowly changing from ‘hard’ (engineering) to ‘soft’ (business). This means that more demands are made on the behavioural competencies of ICT professionals. In addition, certification is more and more important. This apDigital Cowb oys • Cha pter 7 • Tren d IV: Th e i m p o r t ance o f growt h a nd d e ve l o p m e nt plies not just to certification of technical skills, but to management skills especially, which for example are assessed with 360 degree analyses. As a reason for this increasing need of certification the managers mention, among other things, the report of the Dutch Government audit office about serious losses by the Dutch Government on ICT projects and negative experiences with ICT. “The time is past when you could work somewhere without being tested.” | Certification more often relevant because of client demands Most certified self-employed workers, or those who are busy getting certificates, do so because clients demand certification. The self-employed themselves say that the knowledge of the certification is not very useful. Project managers – certificate of competencies Project managers say that current certifications focus especially on theoretical knowledge. However, the need for quality in behavioural competencies is increasing. Therefore managers would like certification of behavioural competencies, and have a need for a more uniform and generally accepted certification standard. This trend toward certification is confirmed by the research into self-employed workers. The research shows that self-employed workers in the ICT sector more often cite certification as important for their work, especially because clients expect or even demand that the self-employed worker is certified. In other sectors, certification plays a much less important role. Software architects and developers – stop the false security of certification Software architects and developers say that current certifications have gotten totally out of hand. Their expertise must be proven in several ex-
Slide 43: | Need for training ‘on demand’ From the interviews it was evident that the need for training ‘on demand’ is high. After asking further it became clear that online courses in particular must be of high quality. In the United States, many renowned institutions offer online courses. Also, the prices of these seem more reasonable. The average training course costs 500 to 600 dollars. The American methods are different from the Dutch (and European) practice and are therefore not useful to Dutch ICT professionals. In the Netherlands there are no well known institutions offering online training. 43 It seems that the necessity for certification derives largely from the client. Self-employed workers don’t really see the need. They do see a need for courses and training for the self-employed. “It isn’t about proving that you’ve gained knowledge, but about the knowledge itself”, says a programmer, who is clearly interested in specific training. There are countless developments in the area of training. Software providers offer training and there is master training in IT. Such training is often costly. Two thousand Euros for two days of training is considered too expensive. Although the quality is often good, the costs do not match the profits. The two biggest problems with the common training courses are quality and flexibility. Though it is true that the quality of the course content can be good, the form in which the training is given does not meet the expectations of the self-employed. Self-employed workers would like short courses and would like to learn knowledge and skills that can be directly applied in practice. Thus programmers and architects don’t find extra training in general business administration to be useful. Also, individual subjects offered by an HBO or a University are often not practical enough. The inflexibility of much training is an issue, too. There are few options for choice between day education, evening education, and elearning, or a combination of these. | Networking in the network economy In Chapter 3, we saw that the importance of networking is increasing. In this section, we will further discuss the motivation of the self-employed ICT professional. In practice, for the self-employed worker, the knowledge economy is a network economy. The role of networking is important for acquiring and using one’s skills in order to acquire work. Exchanging experiences and trends, and keeping social contacts with self-employed colleagues, are also important to the actively networking self-employed. In the research, self-employed workers were explicitly asked about the need for networking activities for self-employed workers in the ICT sector. The self-employed workers were markedly divided about this. Thirty percent said they have a need for networking; almost the same percent-
Slide 44: 44 age said they have no need at all for networking. The remaining group did not know (yet). These results connect with the results of the interviews, where many different views about the importance of networking were also demonstrated. Some expressed a need for this, while others said that they do not miss anything without networking. sential for the self-employed worker to grow, and with him, the economy as a whole. | Conclusion The growth in numbers of self-employed workers is inevitable. After all, big companies employ personnel with fixed contracts less often. The rise of self-employment brings more importance to the knowledge economy. Certification of professionals is also an irreversible development. Certification of behavioural skills, which are necessary for good and professional execution of an assignment, is crucial. The time when a self-employed project manager could get work without any certificates is past. So, the false security of learning technical skills by theoretical training seems over also. Flexible training on demand and management of a professional network play important roles in the individual growth of the self-employed worker. Interestingly, the longer the enterprise exists, the more important both these needs become. As well as financial profit and education, networking power is crucial to the sustainable development of the economy of the future. Digital Cowb oys • Cha pter 7 • Tren d IV: Th e i m p o r t ance o f growt h a nd d e ve l o p m e nt Answers to the question about whether this network should be physical or virtual were also very varied. Apart from that, it was evident from the interviews that the self-employed prefer to seek a physical network at a local level. It was preferred that national or European networks remain digital as much as possible. The purpose of these wider networks is not to acquire work assignments, but to exchange experiences. Based on these remarks and the results of the research, one can conclude that networking per se is not necessary for the growth of an individual self-employed worker. Still, from the experience of longer term self-employed workers, it seems that as one works longer as a self-employed worker, the need to network increases. The explanation may be that ‘young’ entrepreneurs can still lean on their existing network, but that at a certain point these contacts disappear. The case study of Chapter 3 shows that the success of a self-employed worker is clearly connected with the strength of his or her network. Sooner or later, networking is es-
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Slide 46: 46 8 To a strategic agenda for self-employment within ICT Chapter Digital Cowb oys • Cha pter 8 • To a st rategic agenda fo r self - em p l oy m e nt w it hin IC T Previous chapters discuss the most important trends in the labour market for self-employed ICT workers. These trends are distilled from interviews, news messages, and research into the self-employed in ICT. In this final chapter we formulate a strategic agenda for selfemployed work, aimed not only at the ICT sector, but at all sectors in which professionals work. The strategic agenda offers handles to jump into the opportunities and threats that come with the development of the labour market. In that way, self-employment can sail before the wind and move at full speed to become a significant and valuable part of the labour market and economy. various authorities and their goals, such as the tax office, social security, and economic registration, the self-employed worker is put into a different box each time. This does not even begin to address the psychological aspects of the definition which the self-employed workers see themselves as fitting into. Perhaps the conclusion is that a definition of self-employed workers cannot exist; that is it simply impossible to put the self-employed worker into a box. In spite of indistinct definitions, the self-employed worker does display clear and distinguishing characteristics. On the one hand, a self-employed worker strives to execute his own profession as well as possible and he has an interest in well organized social security. On the other hand, a self-em- | Starting point: The self-employed worker as a pioneer in the labour market ployed worker shows new initiatives and dares to take risks. The self-employed worker in ICT is especially his own employee. From the classic role of an entrepreneur, this self-employed worker shifts into the form of a postmodern employee. This shift demands a new approach from politics and social partners. Of significance in this approach is that the self-employed worker is no longer seen as an employer, who aims for capacity growth, but as a post-modern employee, who is a pioneer in the labour market. There have been many attempts to come to a definition of the same tenor. But the self-employed worker doesn’t exist. Politics, the government, and several social organisations have, without results, looked into a definition. In fact, it comes down to the fact that self-employed workers can’t really be put into a box, at this moment. For the purposes of the
Slide 47: | Agenda point 1 Support of a modern social security system A solution to this problem could be the introduction of basic social securities, from which the self-employed can choose supplements. This is a solution that connects with the needs of the greater part of self-employed workers, on the condition that it meets the fundamental needs of the selfemployed worker: a slender, stable and practical solution. 47 The self-employed worker as employee of the future: this starting point must lead to a discussion about the social security of the future. The discussion of dismissal rights has been prominently featured in the news for good reason. Employers have invariably pointed out that the labour market is locked because of the current system of social security. Against this argument are sufficient counterarguments, but the discussion about a modern system of social security is cranked up. This is especially so because the number of self-employed worker is growing considerably, and one of the main concerns of these workers is deficiencies in insurance possibilities against being unfit for work. Nobody is anticipating a revival of the WAZ, the obligatory insurance for disability which was cancelled in 2004 because of high costs and low benefits. | Agenda point 2 Invest in individual development and growth In former days, financial means and labour forces were the most important Gerard Everts and Ton Wilthagen in De toekomst van de arbeidsrelatie (The future of the work relationship) describe a blueprint for modern social security. The important aspect of this blueprint is that it fits faultlessly into a labour market in which employees and self-employed workers function together. In this labour market the starting point of social security is shifted from striving for job security to striving for work security. This shift applies to employees as well as self-employed workers. A central point is the self responsibility of individual workers and the context of spreading risks, in which the government also has its role as guardian of social interests. Economic growth is less and less caused by increasing product capacity. The binding and productive power of an individual self-employed worker is an increasing part of economic growth. This trend is still small on the macro economic scale at this point. However, several studies, including a study of self-employment by Arjan van Born as part of his doctoral studfactors for successful entrepreneurship. For the individual self-employed worker nowadays, the most important capital is the entrepreneur himself. Human capital, the ‘development of self’, has become the most important factor for success.
Slide 48: 48 ies, conclude that the rise of self-employed workers is structural. The rise of self-employed workers will probably progress even more rapidly than we are now experiencing. that knowledge exchange in the knowledge economy can be intensified. Finally, make sure that local authorities and educational partners also have an eye on the needs of self-employed workers; not only in traditional education forms, but also in knowledge exchange and connections. Let the This asks for more input from the government and social partners through Digital Cowb oys • Cha pter 8 • To a st rategic agenda fo r self - em p l oy m e nt w it hin IC T meeting of today be the development of tomorrow! economic policy. Less should be put into economic and fiscal favouritism of big enterprises and more into tendering rules, which currently disadvantage the self-employed, and individual training possibilities. Make it fiscally advantageous for both the self-employed and employees to take training or practical courses, including when they are over 30 years old. Stimulate an accessible educational air bridge between Europe, US, and China, so The third agenda point on the strategic agenda for self-employment of the future is the power of networking. The power of networking is increasing right now in the knowledge economy. | Agenda point 3 Facilitate Network Power
Slide 49: | The compass of network power At the same time we also see locally all kinds of network developments, some rather unexpected. It is well known that several multinationals 49 These networks are developing in two different directions. At this moment, it is already apparent that self-employed professionals within the ICT sector exchange their professional knowledge via English-language newsgroups on the internet. These networks aim to exchange professional knowledge and keep up with the latest developments. At the same time, self-employed workers operate in a local or regional network. Here, they meet other self-employed workers both inside and outside the ICT sector. These horizontal networks now often take place via organized network meetings. In the future, especially with an increased number of self-employed workers, new forms of these kinds of networks will appear and grow. have arranged flexible offices for employees in order to avoid traffic jams. Because these flexible workplaces are used by multiple companies and self-employed workers, a network comes into existence, which indirectly produces assignments and knowledge exchange. The lesson that can be learned from this is that aiming for (physical) networking as a breeding ground brings with it a collective power for innovation. This is certainly true when, as in case of the flexible workplaces, the access to existing networks is easy. That is, especially for self-employed workers, a big advantage. Locally, there are also renewed initiatives that connect with this trend. The municipality of Enschede is busy with the concept of the so-called ‘knowledge spinning mill’. The renewed aspect of this concept is that it is More than ever, networkers will act to accelerate the economy. In this way, Proctor and Gamble, one of the biggest producers of consumer goods in the world, has launched the innovative principle of Connect & Develop as a successor to traditional Research & Development. Through this change, Proctor and Gamble actively seek external cooperation with a large group of small companies and self-employed workers. The expectation is that the skill to change course rapidly is becoming more important than the skill to create innovations yourself. This connects seamlessly with the innovation development observed in Chapter 4. connected wit a large number of self-employed workers who are working in Enschede: self-employed workers who have an office at home or are often travelling. These self-employed workers don’t really have a need for separate working spaces, but much more for a place in the neighbourhood to be able to consult, to hold presentations, or to just drink a cup of coffee and be able to network unconstrainedly. In coming years, the municipality of Enschede will make further experiments to facilitate these meeting places (‘hubs’). An initiative like this connects with the rise of the self-employed workers and the network power that it produces.
Slide 50: 50 | Why make it hard when we could do it together? Without a doubt, self-employed workers will also transform into a stable and respected core of the labour market. The art will be to stimulate technological and economical developments so that this transformation process will be gradual and fluent. In this way, the digital cowboys will both be retrained and gain their own respected role in the labour market and the economy. The rise of self-employed workers demands a new approach from the economy and the labour market of trade and industry as well as the government. Self-employed workers are no longer seen as a threat to wellfought securities, but as pioneers in the labour market, just like the cowDigital Cowb oys • Cha pter 8 • To a st rategic agenda fo r self - em p l oy m e nt w it hin IC T boys of the Wild West, who at that time transported their herds of cattle as shepherds. With the rise of technology such as the steam engine and means of communication, these pioneering cowboys transformed themselves into stable farming entrepreneurs.
Slide 51: Digital Cowboys is about self-employed work, a concept about which much is spoken: The Hague has produced much hype about self-employed work. However, knowledge about self-employed workers is severely lacking. During 2007 and 2008, FNV Zelfstandigen executed a project, headed by Dennis Bouwman, to discover the most important trends in this flexible labour market. The research also brings clarity to the characteristics of the selfemployed worker in the ICT sector. It is evident that there is a proliferation of flexible labour forms, tenders, and employment offices; also, that the training, certification, and terms of employment of self-employed workers are restricted. In this publication, these trends are described in a clear manner. The implications of these trends and developments for the labour market as a whole, and the strategic agenda for self-employed workers in particular, are analysed. Dennis Bouwman is vice president of FNV Zelfstandigen and self-employed worker himself. As a self-employed worker he gives advice and leads projects in the areas of ICT, organization science, and management.