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  • 1. 1 Digital Cowboys Developments in the labour market for self-employed workers Dennis Bouwman
  • 2. 2 Digital Cowboys Developments in the labour market for self-employed workers Digital Cowb oys • Cha pter •
  • 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 sys- tem 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, with- out 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
  • 4. Contents Page Foreword 5 Chapter 1 The importance of self-employment 7 Chapter 2 A description of self-employment in the ICT sector 11 Chapter 3 Trends and developments in self-employment 17 Chapter 4 Trend I: Diversity in forms of working relationships 22 Chapter 5 Trend II: The rise of employment agencies for freelancers 30 Chapter 6 Trend III: The paradox of terms of employment for self-employed workers 35 Chapter 7 Trend IV: The importance of growth and development 40 Chapter 8 To a strategic agenda for self-employment within ICT 46
  • 5. Digitale Cowboys • Foreword 5
  • 6. Foreword 5 Work has become more flexible and workers have become more inde- and flexible. Diverse, because it doesn’t consist only of employers and pendent. When and where work is done, and in which form, don’t matter employees. flexible not because of an increasing number of employees much, as long as it is done. These are the most important trends in the la- with temporary contracts, but because of an increasing number of self- bour market for the coming years. More and more employees want to be employed workers. self-employed. The growth in entrepreneurship is a result of the growth in The labour market is the domain in which FNV Zelfstandigen operates. the number of self-employed workers. Although self-employed workers As a group caring for the interests of self-employed workers, our job is don’t legally exist in the Netherlands – in legislation no description can be to follow trends and to translate these trends into concrete services for found – more and more people are choosing this flexible and free manner our members on both the individual and collective levels. We are the pio- of work above fixed forms of employment by others. neers of the self-employed labour market sector. We are therefore proud An important reason for becoming self-employed is the wish to be en- to present to you Digital Cowboys, Developments in the labour market gaged in a craft, with real work. Self-employed workers flee from labour for self-employed workers. Our vice-president, Dennis Bouwman, also a organisations. They want control of what they do and how they do it. self-employed worker in the ICT sector, offers you a look into develop- They want to take on assignments which provide personal development ments in this sector, known as a frontrunner in economic developments. and to do so independently. Within labour organisations there is a shell Which developments and which initiatives must we, as an association for of flexible forces, the self-employed workers, around the core of fixed self-employed workers, develop in conjunction with the public and pri- employees. vate sectors to ensure that the self-employed worker can truly be a self- Because of these developments the labour market has become diverse employed worker? Or should we simply let the self-employed worker be
  • 7. 6 an entrepreneur and interfere as little as possible? This publication an- swers these questions. Above all, Digital Cowboys outlines a framework to support self-em- ployed 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. | Linde Gongrijp Director FNV Zelfstandigen Digital Cowb oys • Chap ter 1 • The i mp o r tance o f self - em p loy m ent
  • 8. Chapter 1 7 The importance of self-employment At present the labour market is changing rapidly. Although at first This publication is about the trends and developments for self-employed sight there seems to be an evolution, in a broader historical perspec- workers in the labour market. ICT is not only interesting because of the tive it must be asked whether the flexibility of the labour market is developments in this sector, but also as a trendsetter for developments characteristic of our modern times. After all, self-employment was in the labour market in general. As an association within the trade union very common until the industrial revolution. Traders, bankers, fish- FNV, FNV Zelfstandigen plays the role of pioneer in the labour market. ermen, smiths, and farmers were often self-employed. 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 charac- Even in these modern times, from an international perspective, self-em- teristics of receiving too much hype. Open any newspaper and there are ployment sets the tone of the labour market. In developing countries, articles about automation, digitalisation, and their applications. Ask any most citizens survive by producing or selling goods, or by offering per- politician what he thinks of self-employed workers, and he will react en- sonal services. It is therefore remarkable that the employer-employee thusiastically, speaking about the modern employee who does his job relationship has set the standard in the western world. Nevertheless, po- without hindrance from others and at his own risk. litical parties in the Netherlands, from left to right, unanimously expect self-employment to increase rapidly. We live in the age of information | Research project FNV Zelfstandigen technology. Both the current developments in work relations and the im- This publication aims to make clear what is going on in the labour market portance of information technology explain my choice for the ICT sector for self-employed workers. It analyses this labour market and examines as research subject. the subject of four observable megatrends. The publication is a result of a
  • 9. 8 research project on the developments of the labour market in ICT, carried Additionally, quantitative research of self-employed workers was carried out by FNV Zelfstandigen. out. In this research, questions were not only asked about developments The research project consists of literature and news article reviews, in- in the labour market. Special attention was paid to conclusions and as- terviews, and quantitative studies of self-employed workers (member sumptions which emerged from the qualitative interviews with self-em- panel). The emphasis of this project was on the latter two parts. ployed workers. Literature review focused on research in several recent publications Finally, the combined results of the four research methods were analy- regarding developments in the ICT sector, the labour market for self- sed. employed workers, and the labour market for ICT workers. The results are used as background information for the interviews and member re- | 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, In Chapters 2 and 3, the ICT sector, and trends and developments of this trends, and future expectations. News article research used recognized labour market, are discussed. There follows a description of four trends: professional ICT literature, especially Computable, Automatisering Gids diversity in work relations (Chapter 4), the rise of conciliation offices and IT Executive, as well as daily papers such as de Volkskrant and Finan- (Chapter 5), the paradox of terms of employment (Chapter 6), and the cieel Dagblad. personal growth of self-employed workers (Chapter 7). The largest part of the project was spent on interviews with self-em- Finally a strategic agenda is set to anticipate developments in self-em- ployed workers and organisations. There were extensive interviews with ployment. The strategic agenda is aimed at both individual self-em- seven self-employed workers: two project managers, three software ar- ployed workers and self-employed workers as a sector. The problems and chitects and developers, a website designer, and a web host. The inter- successes of self-employment are relevant not only to the self-employed views are examined in this publication. Interviews were also held with worker, but also to the whole of society. three employment offices, directors of FNV Bondgenoten, and other so- cial interest groups.
  • 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
  • 11. Chapter 2 11 A description of self-employment in the ICT sector The ICT sector was central to the research project. As stated in the on a more executive level. The programmer is faced with totally different previous chapter, the ICT sector has always been an example to developments and trends than the project and interim managers. and trendsetter for other market sectors. Outsourcing, individual- oriented collective agreements, and personal bonus systems are ex- | Three groups of self-employed workers amples of labour market developments in the Netherlands, which The ICT sector is characterized by a great diversity of companies, of all initially existed only in sectors like ICT and financial services, after forms, shapes, and sizes. This is also evident in the diversity of self-em- which they also became common in other sectors. ployed ICT professionals who were interviewed for the FNV Zelfstandi- gen 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 hosting company, to a self-employed software engineer who is active interesting companies and developments in the sector, but because of throughout Europe, to a website constructor, to a self-employed interim this industry’s role as trendsetter for developments in the labour mar- project manager. They all engage in different activities and reflect differ- ket in general. Before the developments and trends in the world of self- ent definitions of the ICT sector. employed workers are discussed, a description of self-employment in the From the interviews with self-employed workers and conciliation offices, ICT sector is provided. The ICT sector has a number of specific character- roughly three groups of self-employed workers can be distinguished: istics, with which it distinguishes itself from other sectors. web designers and web hosts, architects and developers, and interim ICT This chapter gives a simple description of self-employment in the ICT sec- project managers. tor, divided into three different types. The self-employed project manager as ‘high professional’ differs from the ‘artisan’ programmer, who is active
  • 12. 12 | Self-employed web designers and internet hosts The first group within the self-employed ICT professionals is web de- IT or ICT? signers and internet hosts. Internet hosts (hosting providers) offer web space and web services, such as photo books and web logs. They main- Information and communication technology are more and more a continuation of each other. That’s why the term Information and Communication Technol- tain files for websites, which are owned by individuals or companies who 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 ogy (ICT) is often used instead of Information Technology (IT). Post and telecom don’t have their own web servers. The size of this group is very difficult 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 to determine; factual data about the size and qualifications is scarce. This up a significant part of the total activities of the ICT sector. In this book postal group is not mentioned in the statistics of the Central Bureau for Statis- activities are not included. Telecom activities are more and more part of auto- mation activities. Just consider the developments in VoiP (telephone over the tics in the Netherlands. internet). Communication devices are business-like services, and aren’t includ- The group of internet hosts is very small, unlike the group of self-employed ed in the definition of the ICT sector. web designers. Estimates by the self-employed workers themselves sug- gest 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 sup- ported by the results from the digital research panel, in which half of the self-employed ICT professionals show the characteristics of web design- ers; that is, they do executive work for many different clients. In explana- tion, 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
  • 13. team often works together, whereas self-employed workers tend to han- The interviewees state that secondment and outsourcing abroad often 13 dle smaller cases, such as web design. take place. Although the software developer stated that this doesn’t bother him, he does notice that many of his large clients are sensitive | ICT architects and developers about outsourcing. He thinks outsourcing is an alarming development The second group of self-employed workers in the ICT sector consists of for the Dutch economy. He is concerned about companies that arrange architects and developers. Programmers (developers) and the system an- outsourcing because their approach is aggressive. Finally, the software alysts (architects) are part of this group. The Central Bureau for Statistics developer states that he talks to many professionals ICT colleagues in in the Netherlands gives numbers for this group in its yearly report on his environs who work for large software houses. He states that these De Digitale Economie (The Digital Economy): in 2005, the total number companies, which used to have a reputation for software development of self-employed ICT architects and developers was 21.800; at a rough and system management, are now more and more occupied with sec- estimate the number in 2008 was about 25.000. ondment. Number ICT professionals in Number of self-employed | Self-employed ICT project managers The Netherlands ICT professionals (9%) Programmers 87.800 7.900 The third group within the self-employed ICT professionals is the self- System analysts 154.300 13.900 employed project managers. Depending on the level of specialization Number of ICT architects and developers in 2005 (source: De Digitale Economie 2006) within the ICT sector, this group also calls itself “(register) information scientists”. The third group is, according to interviews with self-employed The architects interviewed stated that they work in companies of differ- workers and the data of the Vereniging voor Register Informatici (the ent sizes, thus the tasks they are assigned differ enormously. With larger Association for Register Information scientists), also the group with the clients, half of the ICT professionals work as architects or executors and highest level of education and which mostly hires itself out for long-term the other half as project managers. With smaller clients, a personal match assignments with one client. is much more important: ‘small seeks small’. In the smaller companies the When one does not look purely at the specialized ICT project managers, demand is also different: here more ‘statute-labour’ is required. but also at project managers for whose projects ICT or company process-
  • 14. 14 es form an important part, then the total number of ICT project manag- ers is, according to the interviewees, about 10,000. Characteristics of the ICT sector There are quite a few changes occurring in the domain of tasks. Self-em- ployed project managers see a movement in the ICT sector from ‘hard’ (ap- The ICT sector is so diverse that the differences within it are at least as numer- ous as the similarities. There are significant differences in the character and plication development, website building and techniques) to ‘with it’ (ICT working methods of ICT companies. Whereas within bigger companies more supportive of company processes, which have to fit in with the strategy of and more frequent takeovers and mergers take place, the smaller parties are 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 often niche entrepreneurs who work with subcontractors. the organisation). The aim of ICT, then, according to the project manag- ers, is much more about change management and business; for example A known general characteristic of the ICT sector is economic conjuncture sensi- tiveness. There is a so-called short-cyclic character of activities: a rapid change handling business cases, business goals, and business enablement. between boom and recession. In a boom there is a shortage of ICT profession- The project managers also sense four developments within the ICT sec- als. 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 tor as a whole. These are for staff. 1. A strong trend to increase companies’ efficiency and costs with the Company branches characterise themselves further by strong competition be- help of ICT tween specialists in the area of maths, information, and systems management 2. An increasing focus on what companies see as their core business, on the one hand and in organisational structure and communications on the influencing the use of ICT other hand. Because of the ongoing nature of technological developments, continued investment in human capital is necessary to attain profit in the long 3. Increasing numbers of ICT professionals involved with the tangent term. Short term conjuncture cycle investments aren’t always efficient because plane between ICT and business companies have shortages or surpluses of staff. Investments will not occur au- tomatically, because within ICT knowledge is volatile and work relationships 4. The increasing importance of change management in organizations, are sometimes short; undoubtedly there is a connection between these two with a resulting influence on the need for competent ICT professionals characteristics. This last development means that ever higher demands are made on ICT The Central Bureau for Statistics (CBS) in the Netherlands describes a number professionals, especially in the fields of competence, behaviour, and cer- 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 tification. According to the project managers, this is justified because of the magnitude of money and risk involved.
  • 15. number of points from that of the average working Dutch person. ICT profes- 15 sionals 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 big- gest 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%. Number of ICT professionals in the Netherlands Number of self-employed ICT professionals (9%) Information scientists 26.600 2.500 Other ICT project managers - 7.600 Total number ICT project managers - 10.000 Number of ICT project managers in 2005 (source: De Digitale Economie 2006)
  • 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
  • 17. Chapter 3 17 Trends and developments in self-employment The previous chapter described the ICT sector and its labour mar- | The rise of open innovation ket. The ICT working population appears to be highly educated and The scientific literature on economic developments and labour market very stable. A large demand for ICT professionals remains, but the policies is vast. Much of this literature was reviewed for this research proj- number of young ICT professionals is decreasing while many people ect. Only a small part has a tangent plane with the labour market of self- over 45 are looking for work. In spite of a downfall in the outlook in employed workers. the coming years, it is expected that this will have little influence on Of interest is the study of ‘open innovation’ by Henry Chesbrough. In his the quantitative supply and demand in the labour market. Historical book Open Innovation, Chesbrough considers the contrasting principles data (in the recession at the start of the 21st century the ICT working of closed and open innovation. He observes a slow transition from closed population scarcely decreased) and the decreasing growth in num- innovation principles to the new open innovation principles. bers of young ICT professionals seem to support this expectation. For self-employed workers, open innovation offers many possibilities for Quantitatively, trends and future expectations for the labour mar- work and innovation. Also for companies which adhere to the open in- ket seem almost monotonously stable. novation 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, ally, this open innovation principle seems to create a ‘proliferation of combined with many interviews and conversations with self-employed knowledge’, which produces a win-win situation for companies and self- workers, the labour market in the ICT sector seems to be stirring violent- employed workers. ly. In this chapter, we will examine these developments and expectations In the interviews with self-employed workers it is stated that assign- for the future. ments for clients which bring the open innovation principle into practice
  • 18. 18 are both much more successful and much more likely to produce con- the part of the tax office, which now considers the hired self-employed tented workers. The interviewees also state that more and more clients worker as a disguised employee, which can lead to an additional tax as- are bringing the principles of open innovation into practice. sessment. | The secondment worker prefers to be his own boss A further development is the rise of commercial mediators. In Chapter 5 Almost all ICT architects and developers have noticed that the smaller, we will discuss the rise of employment offices. 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 | Big puts out to small: the rise of tender chains companies has disappeared and still more ICT professionals are choosing One of the most interesting developments in the labour market for self- to be self-employed. employed 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 creation of a whole chain between the ultimate client and contractor. more and more secondment employees are choosing to become self- In this way, big puts out to smaller, and so on. This is especially true for employed. According to company economist and advisor Kees de Kruijff, the programmers and the developers. They work as self-employed work- this is a result of the worsening of the terms of employment for second- ers through employment offices for bigger companies, sometimes even ment employees. The commitment of secondment worker to the second- through several employment offices. ment office is not strong in any case and the secondment worker doubts the worth of the secondment office, De Kruijff believes. | Personal skills become more and more important De Kruijff estimates that, a year after takeover, from five to eight percent The interviewed self-employed project managers stated unanimously of secondment workers choose to become self-employed. But even those that the ICT sector is slowly changing from ‘hard’ (engineering) to ‘soft’ who take that step still often have to deal with a commercial mediator, (business). This means that more demands are made on the behavioural because companies don’t always want to do business with an individual competence of ICT professionals. In addition, certification is more and freelancer. That’s too much bother. Moreover, there has been a change on more important. This applies not only to certification for technical skills,
  • 19. but especially for management skills, which are tested with 360 degree ment and negative experiences with ICT in the past. ‘The time has passed 19 analyses, for example. when you could work somewhere without being tested.’ Also, the technical programmers and developers state that their clients As a reason for this increasing need for certification, the project manag- increasingly think that social skills and the ability to imagine oneself in ers mention, among other factors, the report of the Dutch Government other situations are important. For the ICT technicians this is a cultural Audit Office about serious losses on ICT projects by the Dutch Govern- change; irreversible, but also difficult. Contrasting principles of ‘closed’ and ‘open’ innovation Closed innovation principles Open innovation principles The smart people in our sector work for us. 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 in- exploit 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.
  • 20. 20 | Networking in a flexible labour market Carnoy also notes that the success of the flexible labour market depends A second development, which is occurring more and more, is the impor- perhaps even more upon networks and contacts outside the workplace. tance of networking and cooperation. A case study of the labour rela- Those who can make their skills known through a network of companies tions strategies in Silicon Valley by Martin Carnoy offers a number of con- have a much better chance of finding work. Also, for workers with lower clusions that are also interesting for the Dutch situation. levels of education, social networks outside the workplace appear to be The culture of labour market flexibility is not only directed by the tradi- more and more important in flexible markets. tional explanations of rapidly changing markets and intensive competi- All in all, many people find work through networks. The key does not lie Digital 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 com- in networking itself, but in workers making others aware of their knowl- petent employees between these companies. As a result, knowledge and edge and skills via these networks; it is a way to find work. This also seems innovation power spreads rapidly through the local economy. Special- to be true for canvassing by self-employed workers in the Netherlands, ist flexibility seems to have greater benefits for this group than for the for the more highly educated as well for the less educated. employers, although generally it is assumed that flexibility is especially beneficial for employers. | Conclusion Especially for less educated employees, the assumption is often that flex- This chapter discusses interesting developments in the labour market for ibility is beneficial for employers. In the United States of America, the self-employed workers. These were the developments mentioned most flexibility of this group has led to lower salaries and worsening of terms during the project and interviews and which caused the most indigna- of employment. From this, Carnoy concludes that the success of flexible tion or anxiety. labour markets is clearly dependant on a certain education- and skill The developments can be divided into four different categories. In the level. next chapters these four trends will be examined further.
  • 21. 21
  • 22. 22 Chapter 4 Trend I: Diversity in forms of working relationships The first trend that can be seen in the ICT sector labour market is the volved, but the collective labour agreement developments in the ICT shift from being employed by others to being self-employed. sector invite workers to become self-employed. Barely increasing wages 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 and little improvement in terms of employment are also important fac- Within the sector there is great concern about the outflow of experi- tors. Still, most interviewees state that money is less important than it enced ICT professionals who become self-employed workers. Although seems. “It is true that you make more money as a self-employed worker, each month there are many vacancies filled, this number is lower than but there are also more risks. And my wife does like it when I can pay the the outflow to self-employed work. We will discuss the reasons why so mortgage at the end of the month.” many employees become self-employed workers further. Therefore, financial reasons don’t really seem the main reason to take From the trade and industry point of view, the flexible employment of the step. The interviewees state that “small, nice businesses of about a self-employed workers plays an important role. “Self-employed workers hundred people” are disappearing. Thus, the stimulus to work for these are useful for their ability to adapt to the cycles of the ICT market”, says smaller, more creative companies is gone and more and more ICT pro- Kasteel, the chairman of the board of Ordina. fessionals 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. houses of old, and that in the evenings there are obligatory teambuilding An ICT professional receives a much higher income as a self-employed sessions “to see the colleagues once in a while”, then the step from being worker than as an employee. It is true that there are also more risks in- an employee to being self-employed is very small.
  • 23. Recruiting by making noise: employee problems at Ordina | The rise of different types of working relationships 23 Ordina’s Chairman of the Board, Kasteel, expressed the expectation that Ordina is an interesting example of the bottlenecks in the employment poli- the market is going to help decrease the number of workers wanting to cies 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 become self-employed and may even turn that trend around. However problem is getting worse because of the individualization of society. Because the market seems to be developing in another manner. On 29 June 2007, of that, more and more people are becoming self-employed workers.” Bas Linders of ICT Office wrote in Een Paar Apart, the position paper for Because of the loss of workers to self-employment, the turnover of personnel the top dialogue between ICT companies and trade unions, that Human 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 Resource Managers (HRM) are looking for contract forms for this new employees recruited yearly. As an important solution to the personnel short- group on the labour market and that a standard on that point had not age, Ordina mentions the takeover of entire ICT divisions from customers. “Re- cently we took over an ICT division of Rabobank, about 150 people, after we been developed yet. signed a seven-year contract with the bank to, among other things, take care of the whole administrative processing of their mortgage portfolio.” The question is whether a standard contract form is necessary for the 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 self-employed worker. After all, the fact that it’s an assignment between 14.000 employees per year. We have agreed that they will do work for us in two employer and self-employed worker is in itself a form of economic agree- areas: system development and control and maintenance of systems. For now ment. Still, the rise of different forms of labour relationships within the 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 Nether- ICT sector is striking, which confirms that Human Resource Managers lands, but an acceleration of the growth.” seem to have found contract forms for self-employed workers. In addi- Finally, Kasteel mentions the ICT professionals who are now self-employed tion to the classic employer/employee relationship, there are now also workers. The self-employed workers are useful in being able to adapt to the secondment, payroll, and self-employment. In between there are also all cycles of the ICT market. Ordina places about 13% of their assignments to self- employed workers by contract, but keeps a bigger number within the company. sorts of constructs like midlance (basic wage with bonuses) and working Kasteel expects that the market will act as a brake to decrease the numbers of from a BV (Dutch legal form of a Limited or Incorporated company) or a those wanting to become self-employed and that there may even be a turn- around in the future. “On the one hand, there is the trend that clients like the partnership construction. These constructs aren’t, economically nor fis- cally, forms of self-employment or freelance work. The form of labour is
  • 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 “so- government want to work with fewer different ICT contractors. They want one called” self-employed work. 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- fore you’ll have to work harder for your money than before. And then maybe it 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 is more agreeable to have more security.” Source: Financieel Dagblad, 20 October 2007 Form of labour relationship Legal contract party Employer in practice Labour contract with employer Employer Employer Payroll contract Payroll company Employer (usually stays the same) Secondment contract Secondment agency Employer (changes with new assignments) Self-employed worker Client Client Self-employed through employment agency Employment office Client Constructions like ZZP Oké and Uniforce1 Client through own BV (Dutch legal form of Limited) Client Constructions like FreeICT2 Client through Partnership construction 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 value- added 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.
  • 25. | The role of the ‘Verklaring Arbeidsrelatie’ (VAR) 25 (declaration labour relationship) Midlance: an example of an HRM construction The rise of new contract forms for self-employed workers in the ICT sec- The secondment agency InWork has launched a new labour market form. Mid- tor invokes the question of what the biggest trigger for this development lance is a variant of the freelance developments and is midway between a free- lance/self-employed worker and an employee. is. InWork observes that in four years the number of self-employed workers has Conversations with employment offices don’t leave any doubt. The Verk- 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 na- laring Arbeidsrelatie (VAR) (declaration labour relationship) is causing so tive males (between 25 and 45 years old) are becoming self-employed, in the much confusion that clients would rather hire someone by an acknowl- search for more freedom, self-realization and, especially, higher earnings!”, In- edged construct than directly as a self-employed worker with a VAR. This Work analyses. However, “Freelancing isn’t ideal for many. Midlance is the golden midway is in spite of the fact that with a VAR the self-employed worker as well between freelance and a regular job. A midlancer has the security of a fixed as the client can be certain beforehand of the question of whether the employment. He receives a monthly paycheck and has good terms of employ- ment.” income from a labour relationship is taxed as taxable profit from entre- InWork states that several research agencies predict that midlance is going to preneurship, taxable income, or taxable results from other work. be the trend in the labour market for self-employed ICT professionals in 2008. Actually midlance is nothing other than an individual performance recompense Many self-employed workers think that the application of a VAR is an system, with a traditional employer-employee relationship. administrative bother. Even though they state that other administrative Source: press report, beginning of February 2008 burdens are much more complicated, the VAR is needlessly complicated. InWork For clients, the VAR is, above all, unclear and insecure. The employment Bron: Persbericht InWork, begin februari 2008 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
  • 26. 26 commercials by P/Flex in 2007 this sense of indistinctness was strength- ened 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 rity to the client beforehand about the labour relationship, there is much mistrust over this from clients. It seems therefore that this insecurity HARDERWIJK – Freelancers, interim workers, and about the VAR is crucial. The question that then remains is if the solution 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 self-employed workers who, for whatever reason, don’t is right. Do we have to develop all kinds of new labour constructs, or do want to work with a so-called Verklaring Arbeidsrelatie we have to improve the information about clientship and the VAR? The (VAR) (declaration labour relationship) can from now latter seems in any case a good recommendation, in order to offer clarity instead work with a Verklaring Uniforce Registratie about the VAR. (VUR) (declaration Uniforce registration). | Changing labour relationships and security The UWV, the Dutch tax office and the Uniforce Group have signed an agree- Although large diversity in labour relationships is typical for a dynamic ment on this, so they reported Tuesday. With that the VUR is a new official na- tional labour form for self-employed workers and their clients. According to economy like the ICT sector, this diversity seems to be a predictor for the undersigners, the VUR forms are “a perfect completion of the grey area” other economic sectors. Gerard Everts and Ton Wilthagen, in De Toekomst between a labour agreement as employee and as self-employed worker. van de Arbeidsrelatie: Een essay over wederkerig risicomanagement (The Fu- Clients ture of the Labour Relationship, an essay about mutual risk management), Many people have difficulties with a VAR, finding that it fills them with ques- give an interesting analysis of this situation. They discuss multiple devel- tions 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 opments in the labour market. area of financial services, personnel policy, automation, and interim-manage- ment are often hired for their knowledge and experience. Everts and Wilthagen observe new risks in the labour market, like the Source: Automatiseringsgids, 19 August 2008 tendency toward internationalisation and the accompanying interna-
  • 27. tional competition, migration of labour, and the rise of new economies. 27 They also observe increasing individualisation and the call for custom- made goods. The need for flexibility is increasing. Meanwhile, the Dutch A day later the Dutch tax office gave a totally different explanation. In a press government has withdrawn and is opting for freedom of choice and per- report, the Dutch tax office stated that the VUR is not a new fiscal labour form. sonal responsibility. Deregulation, liberalisation, and privatisation are “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 so- key words. lution 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 Further, they state that the labour market’s adaptability and manoeu- product of a individual presenter.” vrability are too limited. They believe that people want security. After all, the classical labour relationship always characterizes itself by striving for Source: Press report Dutch tax office, 20 August 2008 long-term fixed contracts, with few risks for the employee. Within this relationship workers have not been encouraged to be mobile. 1. Precaution (prevention). These are efforts to make sure employees In contrast, Everts and Wilthagen argue for a transitional labour market, remain usable. also based on the flexicurity concept (Centraal Planbureau, 2005). Flexi- 2. Protection. These are measures which, for example, cover resignation curity represents the mixture of a flexible labour market with good provi- conditions and collective labour agreements, which make sure that sions and assurances in the area of social security. traditionally unbalanced power balances are righted. Everts and Wilthagen conclude that risks in the labour market must be 3. Recovery. This includes compensating losses of income, assistance in divided between employer, employee and, from a general perspective, finding new jobs, and restoring the capacity to gain new incom 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 divi- sion.
  • 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. The characteristics of the self-employed worker are thus shifting more To make the flow in the labour market – in, out and through – much more and more towards those of the employee. For some that may seem an flexible in the future, there must always be social security for employees. unwanted development, but frmo an international perspective it is not When this security is lacking, the system itself is not successful because illogical. In Denmark, even employers can derive rights of social security 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 of resistance from employees. This is the main reason why the (Dutch) for some employees, and therefore don’t run their companies solely at government has to ensure, by flexicurity, that there are basic provisions their own risk. While the self-employed worker is becoming more simi- for all workers, whether self-employed or not. Everts and Wilthagen ar- lar to the employee, the employee is becoming more similar to the self- gue that it would be curious if society were to deny paid pregnancy leave employed worker. Though there is nothing wrong with differentiation of or better career regulation to self-employed workers. 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- | Where is the limit to flexibility? strict the problems for everybody or to permit labour construction for This chapter notes a large rise in forms of labour relationship. The reasons everybody. behind these developments are also analysed. Indistinctness, as well as the insecurity surrounding existing labour relationships, has been dis- cussed. 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
  • 29. 29
  • 30. 30 Chapter 5 Trend II: The rise of employment agencies for freelancers 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 Especially in large companies and the government it amounts to a form market in recent years is the rise of employment agencies for free- of secondment. These companies choose this form via an employment of- lancers. This chapter describes how employment agencies work and fice because they want to avoid bother and believe this way offers some the changes occurring in this market which affect the position of kind of continuity. Money interests them much less. In smaller compa- self-employed workers. nies 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 Traditionally, self-employed workers receive assignments through their usually more efficient, more direct, and cheaper. personal networks. Mostly, assignments seem to come officially from employment offices, while in practice they derive from indirect personal Many employment offices have a number of big companies as clients, contacts. However, it is true that the lower the self-employed worker’s who at first let personnel be staffed via the employment office. Actually, level of knowledge is, the more that worker seems to depend on second- in that way the employment office operates as a temporary employment ment work. The employment offices and the self-employed workers both agency. There is also a rising market for freelancers – “which grows by the state this. However, the independently acquiring self-employed worker hour”- which these regular customers also want to use. They offer three also often doesn’t escape having an intermediary between the client and reasons. Firstly, the company usually does not have the resource capac- himself. ity and does not know where to find the specialised ICT professional Within ICT, self-employed workers recognize a distinction between em- required. Secondly, companies are hesitant to do business directly with ployment by the employment offices of smaller and larger companies. self-employed workers. Thirdly, companies want to put the administra-
  • 31. tive duties out to contract. For these reasons they sign a contract with the 31 employment office, after which all self-employed workers are mediated via this one office. Definition of an employment agency From interviews with employment offices, it is clear that, in their view, An employment agency is an office which first brings a contractor and a client employment and secondment are the same thing. Employment offices 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); state that they contact the tax office about this frequently, and see this the contractor is not under the authority of the client because otherwise there labour form as a grey area. In the end the differences are negligible. would be a labour contract between the client and the contractor (Article 7:610 Dutch Civil Code). “Eventually the self-employed worker is working under the supervision A variant of the employment agency is the intermediary agency. This also of an ATOS Origin or KPN”, it is said. For the tax office, the question is who brings contractor and client in contact, for a fee, but then keeps the contractual the real client is: the ‘material’ client or the ‘formal’ client. 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. Legally, if a contract is signed in the Netherlands between a self-em- 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 ployed worker and the employment office, and there is no contract be- contract (Article 7:610 Dutch Civil Code) between contractor and employment tween the customer and the self-employed worker, the employment of- agency. If there is authority between contractor and client, then the employ- ment agency is actually a temporary employment agency and there is a tempo- fice is the only client. The lack of different clients can form a problem for rary employment contract (Article 7:690 Dutch Civil Code) between contractor the self-employed worker. Due to Dutch law the self-employed worker and intermediary agency. then isn’t really a self-employed worker, but someone who is employed by another. Then, of course, income taxes and employment security con- tributions 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.
  • 32. 32 However, they also expressed their concerns about a few negative de- velopments. These concerns relate to the fear of a monopoly of employ- ment offices, the greater and heavier risks of entrepreneurship passed Why do self-employed workers work by clients to self-employed workers, and the extensive chains of indirect via an employment office? client and contractor relations that come into existence. 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 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 as- | Dependency on employment offices increases signments without the use of employment offices, is no longer current. In the In the interviews with ICT professionals, a much heard fear was that 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 relationship with the employment office was becoming too tight. A self- value the services of the employment offices highly. Many ICT professionals employed worker can’t make a decision to take on an assignment on be- 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 half of an employment office. It may become impossible to gain an inter- the one hand, they do so to benefit from a sort of safety net to ensure a fixed esting assignment without an employment office. With these concerns in income each month, and on the other hand, to benefit from the handling of ad- ministration. For them, a fixed monthly income and assignment security seem mind, we interviewed a representative group of self-employed workers, to have a higher priority than self-employment and freedom. Additionally, a from both inside and outside the ICT sector. number of engineers state that they aren’t good at acquiring work and there- fore are glad to give this task to professional employment offices, so that they Within the ICT sector, almost half of the self-employed have had experi- can concentrate on the work they are good at. ence 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, be- cause 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
  • 33. 33 ‘Clients prefer not to do business with the self-employed directly, but only ‘Clients prefer not to do business with the self-employed directly, but only via via an employment office’ (ICT sector) an employment office’ (Total of all sectors) interviews with mediators we gather that the percentage of clients that tal employment office is freep.nl. On this digital platform, self-employed only want to work with self-employed ICT workers via an employment of- workers with Higher Professional Education or an academic degree can fice is higher than a few years ago. The percentage will probably increase find new assignments without interim or secondment offices. Purchas- over the next few years. ing managers of big companies are contributing to this development, Finally, the test panel of self-employed propounded the thesis that for because they’re also beginning to see the market position of the employ- certain assignments workers cannot get around use of an employment ment offices as a threat. agency. In this, the trend from the interviews was affirmed: the self-em- All in all, there’s nothing wrong with the function and economic role of ployed in ICT, but also in other sectors, often can’t do without employ- employment offices. They make an important contribution to bringing ment offices for the acquisition of assignments. 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 There are numerous initiatives at this time, such as the formation of a logical development, surely, in the world of open innovation. Initiatives type of digital employment office, to help the self-employed avoid be- for this, with fair changes from the clients and the government, therefore coming dependent on regular employment offices. An example of a digi- deserve all support.
  • 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...
  • 35. Chapter 6 35 Trend III: The paradox of terms of employment for self-employed workers The growing dependency of self-employed workers is a point of con- | The growing dependency on employment offices cern. Although employment offices have an important and useful An important development in the labour market for self-employed function, we’ve seen in the previous chapter that they can also make workers in the ICT sector is that more and more ICT companies only self-employed workers dependent. Self-employed workers can’t un- work through employment offices instead of directly employing self-em- dertake assignments as freely and independently as you might ex- ployed workers. This is especially true for architects, programmers, and pect. 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 ment offices. of employment with which the self-employed have to deal. Although According to employment offices, it’s more and more important for self- self-employed workers work at their own risk, they still have, of course, a employed workers to have their invoices paid on time. From interviews right to decent terms of employment and circumstances. Some (employ- and ‘the Top Ten bottlenecks of self-employed workers’, it is evident that ee) representations therefore call for collective terms of employment. the term of payment for some companies and authorities is over three Whether that is the right track for self-employed workers is very much months, making it difficult for most self-employed workers to finance the question. 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.
  • 36. 36 Therefore, transitions between self-employment and secondment com- the ICT companies base their charges, against high margins, on a good monly take place. brand name’s high hourly rates. Hiring managers think that consultants 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 from these ICT companies are worth more money than self-employed The employment offices state that they think, in the future, people will workers who work under their own company names. Hiring managers have the freedom to voluntarily choose to give up their employee assur- have two reasons for this: one is that they expect that their “own” con- ance. They also expect a further increase in British agencies, because the sultant to have more knowledge than a self-employed worker, and the labour supply of ICT specialists is much higher in Great Britain than in other is that the purchase manager estimates the chance of a good re- the Netherlands and because the demand in the Netherlands will remain sult to be higher as the company is bigger and more renowned. When stable and high for the next few years. 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 down in the employment conditions – say in the workplace that he is an from the top employee of the computer service office. In this way the good name of Most of the time, a computer service office imposes its general condi- the computer service office is maintained. tions upon the employment office. These conditions are often rigid and non negotiable. Afterwards, the employment office signs a contract with | Growing tension within the ownership of human capital the self-employed worker. Then, some employment offices also sign sev- Another development is the problem of the ownership of human capi- eral contracts with other chain partners. Most employment offices dislike tal. This problem occurs particularly within the ICT sector. In this sector this last step because of the lack of transparency. there is heavy competition for skills and knowledge. Katherine V.W. Stone Employment offices and self-employed workers negotiate items: the describes in her article Thinking and Doing: The Regulation of Workers’ Hu- competition clause, and risk and responsibility. The salary is a less impor- man Capital in the United States the regulation of the human capital of tant part of the negotiations. workers in the United States. The question of who owns human capital is Big ICT companies often let the self-employed workers they hire work un- very topical in the United States at this moment. Stone observes a trend der the name of the computer service office itself. This happens because in the US of judges being less reserved about binding imposing agree-
  • 37. ments in competition clauses. In the Netherlands, too, attention to the | No need for a collective labour agreement 37 ownership of human capital is growing. In her New Year’s speech of Janu- for self-employed workers ary 2008, Agnes Jongerius, chairwoman of the board of FNV, called upon Included in the previously mentioned research there were conversations the cabinet to abolish the competition clause. with several representatives of FNV Bondgenoten, the biggest Dutch The fact that questions about competition clauses now come up for trial trade union within the ICT sector. The strong rise of the different labour more often shows a profound change in labour relationships over the forms, as described in Chapter 4, was a subject of all the conversations. past decades. From a situation in which the knowledge of employees Several large employers have experimented with new labour forms in was not acknowledged, or at least made inferior to the dutiful discharge the labour market. For employers, the ideal is the ‘super self-employed of tasks, we now live in a time in which knowledge and development are worker’: a maximum of flexibility and a minimum of risk. highly appreciated. Further, negotiations on collective labour agreements have, in general, In other European countries, too, the development of restrictions on la- been laborious. Several negotiations have been broken off, mainly be- bour freedom is visible. Andrew Bibby, in his report Handcuffed to the Job cause of the level of salary and the terms of employment. It isn’t even for the European trade union ‘UNI Europa’, describes many examples of unthinkable that in the future a sector-wide collective labour agreement restrictions for employees as well as self-employed workers. Develop- will be cancelled, and replaced by “made to measure” agreements. ments in the area of intellectual ownership are thus not only relevant At the same time, in the interviews, self-employed workers unanimously for employees, but also for self-employed workers in the ICT sector. This stated that they do not have a need for collective labour agreements. is especially true because self-employed workers who work for big com- They want to be free in their undertakings, and have as little as possible panies via employment offices often have a form of competition clause to do with agreements drawn up from above. They do plead for further put in their contracts. Information from the legal department of FNV Zelf- collective attention to their interests from the government at The Hague standigen shows that the amount of legal advice in the area of intellectu- and in the political arena. The point of view of the self-employed in the al ownership almost doubled in the first quarter of 2008 compared to the ICT sector is that if there are to be collective agreements, they have to be previous year. This strengthens the conclusion that ownership of human discussed and laid down at a national level for all self-employed workers capital will also be an important political theme in the Netherlands. and not only for sectors or collectives.
  • 38. 38 | Mirrored discussion on terms of employment employment, such as a competition clause and risk consideration, can be Employees in the ICT sector say that the rise of the self-employed clearly arranged without difficulty through a mirrored discussion. Moreover, this 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 hinders them. The outflow of employees to self-employment causes ten- can work to the advantage of the image of the self-employed worker; an sions. Employees are concerned about their worsening labour position image that is under pressure from the indistinctness of the work relation- and terms of employment, because self-employed workers accept lower ships (VAR) and the presumptions about ‘so-called self-employed work’. standards in their terms of employment. On the employees’ side there is Standard contracts and general conditions a need for collective agreements between employers and self-employed Apart from the need for a collective attending to the interests of all self- workers. employed workers on a national level, self-employed workers stated in A solution for this can be a so-called mirrored discussion on terms of em- the interviews that they would like information and support on contracts ployment. Through a mirrored discussion of terms of employment, agree- and general conditions. From the research it is evident that almost 50% ments are made with a company on a collective level about the employ- of self-employed workers need examples of contracts and information ment for the whole chain, with a clear line between the legal positions about general conditions. More than a quarter have a need for testing of the employee and the self-employed worker. An important point of or some type of checklist of subjects which one must take into account. interest here is the way in which the position of the self-employed stays However, a third of the workers have no need at all for support. as independent and free as possible. After all, the entrepreneur has to be In spite of the fact that over 30% are coping well, it is justified to conclude able to make their own conditions. The guarantee of this independence that a large group has a need for information about and testing of con- is a crucial point in the mirrored discussion on terms of employment, no- tracts and general conditions. tably because the self-employed workers themselves have a clear aver- sion 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, mak- ing the freedom to negotiate almost nil. In that way, basic level terms of
  • 39. | Conclusion ditions at a sector level. They prefer education, information, and basic 39 Self-employment means freedom. It also means working at your own conditions for all self-employed workers on a national level. A so-called risk. In practice, the freedom of the self-employed worker is flourishing mirrored discussion of terms of employment seems a good alternative, less than it may seem to the outside world. General conditions of em- whereby agreements about the conditions of hiring of external personnel ployment offices and tender chains often restrict the negotiation posi- by employers are laid down in a collective labour agreement. Although, tion of the self-employed worker. This is especially true for the conditions in theory, this could be at the cost of the freedom of the self-employed of a competition clause, because the self-employed worker derives his workers, in practice this allows the reins which currently exist, like the right to exist from operating in a freely competitive market. competition clause and conditions, to be released. In the end, that would The introduction of collective labour agreements for self-employed be the best outcome for the self-employed worker in a freely competitive workers is not an option. The practicability of this is complex. Moreover, market. self-employed workers have no need for collective agreements or con-
  • 40. 40 Chapter 7 Trend IV: The importance of growth and development We have discussed the labour market, labour relationships, labour rapidly. At the same time, by far the largest part of the new enterprises 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 employment, and terms of employment. However, self-employment have no employees; in other words, are self-employed workers. Even is first of all about the self-employed worker. 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 professionalism in an independent and enterprising way. an essential condition of the survival of an enterprise in the long term. That does not mean that economic growth is coming to a standstill. It is Profits are needed to maintain or expand the enterprise and as a reward true that the profit of a one-person enterprise remains lower than the for the entrepreneur, who dares to take the risk. Profit may not only be profit of an enterprise of which the production capacity of its labour financial, but can take the form of an increased knowledge of the enter- force is growing. The total profit of one-man businesses is growing. So, prise or a growing network for the enterprise: forms of profit that are dif- the growth of the modern enterprise in the knowledge economy is based ficult to express in financial terms. For economic growth, more or less the much more on the individual growth of the individual self-employed same is true. Here, also, the total income is expressed in financial terms. worker and his network than in the enlargement of his production ca- To enable economic growth, a policy may aim, for example, to stimulate pacity. This chapter describes this individual growth and development. innovative people to start their own companies or to let small businesses We will also discuss the requirements which the self-employed worker grow. The reason behind this is that growth lies in employing people to needs in the discharge of his profession. 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
  • 41. | Experience as a source of professional knowledge So, the level of education of employees in the ICT sector is high. But where 41 To measure the growth of the self-employed worker, it is first of all im- does the ICT professional get his professional knowledge? It has emerged portant to know his current expertise and the source of his professional from research that self-employed workers in ICT value experience as a knowledge. From numerous researches it is evident that the level of edu- source of professional knowledge higher than do self-employed workers cation of ICT professionals, in general, is high. Over half of the working in general. Self-employed workers in ICT value their original vocational ICT professionals have an education at Higher Professional Education or training, or supplementary or other vocational training, much less as a University level, while for the total working population this is just over source of professional knowledge. 30%. The number of ICT professionals with only secondary education (or A logical conclusion is that self-employed workers in the ICT sector, in an unfinished higher education) is somewhat larger then average but contrast with the self-employed in other sectors, gain their professional mostly, the number of people with a (preparatory) intermediate voca- knowledge more from experience and less from original or supplemen- tional education is lower than in other sectors. tary vocational training. Most important source of professional knowledge according Most important source of professional knowledge according to self-employed workers in the ICT sector to self-employed workers in general
  • 42. 42 | Quality of competences more important ams of theoretical knowledge. While it is simple to gain this theoretical Self-employed project managers observe that the ICT sector is slowly knowledge in a short time, in practice this theoretical knowledge offers changing from ‘hard’ (engineering) to ‘soft’ (business). This means that little security regarding the quality of the self-employed worker. It seems more demands are made on the behavioural competencies of ICT pro- that with the help of certification, a type of false security is created, while fessionals. In addition, certification is more and more important. This ap- the certification also serves as a tool to select ICT professionals. The cer- plies not just to certification of technical skills, but to management skills tification has become a selection criterion, but one of which the value is 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 especially, which for example are assessed with 360 degree analyses. disputed. As a reason for this increasing need of certification the managers men- tion, among other things, the report of the Dutch Government audit of- | Certification more often relevant fice about serious losses by the Dutch Government on ICT projects and because of client demands negative experiences with ICT. “The time is past when you could work Most certified self-employed workers, or those who are busy getting cer- somewhere without being tested.” tificates, 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 This trend toward certification is confirmed by the research into self-em- Project managers say that current certifications focus especially on the- ployed workers. The research shows that self-employed workers in the oretical knowledge. However, the need for quality in behavioural com- ICT sector more often cite certification as important for their work, es- petencies is increasing. Therefore managers would like certification of pecially because clients expect or even demand that the self-employed behavioural competencies, and have a need for a more uniform and gen- worker is certified. In other sectors, certification plays a much less impor- erally accepted certification standard. tant 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-
  • 43. | Need for training ‘on demand’ From the interviews it was evident that the need for training ‘on demand’ 43 It seems that the necessity for certification derives largely from the client. is high. After asking further it became clear that online courses in particu- Self-employed workers don’t really see the need. They do see a need for lar must be of high quality. In the United States, many renowned institu- courses and training for the self-employed. “It isn’t about proving that tions offer online courses. Also, the prices of these seem more reason- you’ve gained knowledge, but about the knowledge itself”, says a pro- able. The average training course costs 500 to 600 dollars. The American grammer, who is clearly interested in specific training. methods are different from the Dutch (and European) practice and are There are countless developments in the area of training. Software pro- therefore not useful to Dutch ICT professionals. In the Netherlands there viders offer training and there is master training in IT. Such training is of- are no well known institutions offering online training. ten costly. Two thousand Euros for two days of training is considered too expensive. Although the quality is often good, the costs do not match | Networking in the network economy the profits. In Chapter 3, we saw that the importance of networking is increasing. The two biggest problems with the common training courses are qual- In this section, we will further discuss the motivation of the self-em- ity and flexibility. Though it is true that the quality of the course content ployed ICT professional. In practice, for the self-employed worker, the can be good, the form in which the training is given does not meet the knowledge economy is a network economy. The role of networking is expectations of the self-employed. Self-employed workers would like important for acquiring and using one’s skills in order to acquire work. short courses and would like to learn knowledge and skills that can be Exchanging experiences and trends, and keeping social contacts with directly applied in practice. Thus programmers and architects don’t find self-employed colleagues, are also important to the actively networking extra training in general business administration to be useful. Also, indi- self-employed. vidual 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 In the research, self-employed workers were explicitly asked about the options for choice between day education, evening education, and e- need for networking activities for self-employed workers in the ICT sec- learning, or a combination of these. tor. The self-employed workers were markedly divided about this. Thirty percent said they have a need for networking; almost the same percent-
  • 44. 44 age said they have no need at all for networking. The remaining group sential for the self-employed worker to grow, and with him, the economy did not know (yet). These results connect with the results of the inter- as a whole. views, where many different views about the importance of networking were also demonstrated. Some expressed a need for this, while others | Conclusion said that they do not miss anything without networking. The growth in numbers of self-employed workers is inevitable. After all, Answers to the question about whether this network should be physical big companies employ personnel with fixed contracts less often. The rise 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 or virtual were also very varied. Apart from that, it was evident from the of self-employment brings more importance to the knowledge econo- interviews that the self-employed prefer to seek a physical network at a my. local level. It was preferred that national or European networks remain Certification of professionals is also an irreversible development. Certifi- digital as much as possible. The purpose of these wider networks is not cation of behavioural skills, which are necessary for good and profession- to acquire work assignments, but to exchange experiences. al execution of an assignment, is crucial. The time when a self-employed Based on these remarks and the results of the research, one can conclude project manager could get work without any certificates is past. So, the that networking per se is not necessary for the growth of an individual false security of learning technical skills by theoretical training seems self-employed worker. Still, from the experience of longer term self-em- over also. ployed workers, it seems that as one works longer as a self-employed Flexible training on demand and management of a professional network worker, the need to network increases. The explanation may be that play important roles in the individual growth of the self-employed work- ‘young’ entrepreneurs can still lean on their existing network, but that er. Interestingly, the longer the enterprise exists, the more important at a certain point these contacts disappear. The case study of Chapter 3 both these needs become. As well as financial profit and education, net- shows that the success of a self-employed worker is clearly connected working power is crucial to the sustainable development of the economy with the strength of his or her network. Sooner or later, networking is es- of the future.
  • 45. 45
  • 46. 46 Chapter 8 To a strategic agenda for self-employment within ICT Previous chapters discuss the most important trends in the labour various authorities and their goals, such as the tax office, social security, 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 market for self-employed ICT workers. These trends are distilled from and economic registration, the self-employed worker is put into a dif- interviews, news messages, and research into the self-employed in ferent box each time. This does not even begin to address the psycho- ICT. In this final chapter we formulate a strategic agenda for self- logical aspects of the definition which the self-employed workers see employed work, aimed not only at the ICT sector, but at all sectors themselves as fitting into. Perhaps the conclusion is that a definition of in which professionals work. The strategic agenda offers handles to self-employed workers cannot exist; that is it simply impossible to put jump into the opportunities and threats that come with the devel- the self-employed worker into a box. opment of the labour market. In that way, self-employment can sail In spite of indistinct definitions, the self-employed worker does display before the wind and move at full speed to become a significant and clear and distinguishing characteristics. On the one hand, a self-employed valuable part of the labour market and economy. 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 ployed worker shows new initiatives and dares to take risks. The self-em- in the labour market ployed worker in ICT is especially his own employee. From the classic role There have been many attempts to come to a definition of the same of an entrepreneur, this self-employed worker shifts into the form of a post- tenor. But the self-employed worker doesn’t exist. Politics, the govern- modern employee. This shift demands a new approach from politics and ment, and several social organisations have, without results, looked into social partners. Of significance in this approach is that the self-employed a definition. In fact, it comes down to the fact that self-employed work- worker is no longer seen as an employer, who aims for capacity growth, but ers can’t really be put into a box, at this moment. For the purposes of the as a post-modern employee, who is a pioneer in the labour market.
  • 47. | Agenda point 1 Support of a modern social security A solution to this problem could be the introduction of basic social securi- 47 system ties, from which the self-employed can choose supplements. This is a so- The self-employed worker as employee of the future: this starting point lution that connects with the needs of the greater part of self-employed must lead to a discussion about the social security of the future. The discus- workers, on the condition that it meets the fundamental needs of the self- sion of dismissal rights has been prominently featured in the news for good employed worker: a slender, stable and practical solution. reason. Employers have invariably pointed out that the labour market is locked because of the current system of social security. Against this argu- Nobody is anticipating a revival of the WAZ, the obligatory insurance for ment are sufficient counterarguments, but the discussion about a modern disability which was cancelled in 2004 because of high costs and low ben- system of social security is cranked up. This is especially so because the efits. number of self-employed worker is growing considerably, and one of the main concerns of these workers is deficiencies in insurance possibilities | Agenda point 2 Invest in individual development against being unfit for work. 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 factors for successful entrepreneurship. For the individual self-employed future of the work relationship) describe a blueprint for modern social se- worker nowadays, the most important capital is the entrepreneur himself. curity. The important aspect of this blueprint is that it fits faultlessly into Human capital, the ‘development of self’, has become the most important a labour market in which employees and self-employed workers function factor for success. 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 Economic growth is less and less caused by increasing product capacity. to employees as well as self-employed workers. A central point is the self The binding and productive power of an individual self-employed worker responsibility of individual workers and the context of spreading risks, in is an increasing part of economic growth. This trend is still small on the which the government also has its role as guardian of social interests. macro economic scale at this point. However, several studies, including a study of self-employment by Arjan van Born as part of his doctoral stud-
  • 48. 48 ies, conclude that the rise of self-employed workers is structural. The rise of that knowledge exchange in the knowledge economy can be intensified. self-employed workers will probably progress even more rapidly than we Finally, make sure that local authorities and educational partners also have are now experiencing. an eye on the needs of self-employed workers; not only in traditional ed- ucation forms, but also in knowledge exchange and connections. Let the This asks for more input from the government and social partners through meeting of today be the development of tomorrow! economic policy. Less should be put into economic and fiscal favouritism 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 of big enterprises and more into tendering rules, which currently disadvan- | Agenda point 3 Facilitate Network Power tage the self-employed, and individual training possibilities. Make it fiscally advantageous for both the self-employed and employees to take training The third agenda point on the strategic agenda for self-employment of the or practical courses, including when they are over 30 years old. Stimulate future is the power of networking. The power of networking is increasing an accessible educational air bridge between Europe, US, and China, so right now in the knowledge economy.
  • 49. | The compass of network power At the same time we also see locally all kinds of network developments, 49 some rather unexpected. It is well known that several multinationals These networks are developing in two different directions. At this mo- have arranged flexible offices for employees in order to avoid traffic jams. ment, it is already apparent that self-employed professionals within the Because these flexible workplaces are used by multiple companies and ICT sector exchange their professional knowledge via English-language self-employed workers, a network comes into existence, which indirectly newsgroups on the internet. These networks aim to exchange profes- produces assignments and knowledge exchange. The lesson that can be sional knowledge and keep up with the latest developments. At the same learned from this is that aiming for (physical) networking as a breeding time, self-employed workers operate in a local or regional network. Here, ground brings with it a collective power for innovation. This is certainly they meet other self-employed workers both inside and outside the ICT true when, as in case of the flexible workplaces, the access to existing sector. These horizontal networks now often take place via organized networks is easy. That is, especially for self-employed workers, a big ad- network meetings. In the future, especially with an increased number of vantage. self-employed workers, new forms of these kinds of networks will appear Locally, there are also renewed initiatives that connect with this trend. and grow. 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 connected wit a large number of self-employed workers who are working way, Proctor and Gamble, one of the biggest producers of consumer in Enschede: self-employed workers who have an office at home or are goods in the world, has launched the innovative principle of Connect & often travelling. These self-employed workers don’t really have a need for Develop as a successor to traditional Research & Development. Through separate working spaces, but much more for a place in the neighbour- this change, Proctor and Gamble actively seek external cooperation with hood to be able to consult, to hold presentations, or to just drink a cup of a large group of small companies and self-employed workers. The expec- coffee and be able to network unconstrainedly. In coming years, the mu- tation is that the skill to change course rapidly is becoming more impor- nicipality of Enschede will make further experiments to facilitate these tant than the skill to create innovations yourself. This connects seamlessly meeting places (‘hubs’). An initiative like this connects with the rise of the with the innovation development observed in Chapter 4. self-employed workers and the network power that it produces.
  • 50. 50 | Why make it hard when we could do it together? Without a doubt, self-employed workers will also transform into a sta- The rise of self-employed workers demands a new approach from the ble and respected core of the labour market. The art will be to stimulate economy and the labour market of trade and industry as well as the gov- technological and economical developments so that this transformation ernment. Self-employed workers are no longer seen as a threat to well- process will be gradual and fluent. In this way, the digital cowboys will fought securities, but as pioneers in the labour market, just like the cow- both be retrained and gain their own respected role in the labour market boys of the Wild West, who at that time transported their herds of cattle and the economy. 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 as shepherds. With the rise of technology such as the steam engine and means of communication, these pioneering cowboys transformed them- selves into stable farming entrepreneurs.
  • 51. Digital Cowboys is about self-employed work, a concept about which much is spoken: The Hague has pro- duced much hype about self-employed work. However, knowledge about self-employed workers is se- verely 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 self- employed 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 develop- ments 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.

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