businesses where both partners are self-employed, to one partner losing access to the business, and hence their self-employed status.
Table 3.4: Self-employment rates by age and marital status (1989)
Ratio of male to female self-employment rates
Gennany Single 2.2 France Single 2.6
Married 2.0 Married 2.4
Widowed t.2 Widowed 1.7
Divorced/separated 2.7 Divorced/separated 2.3
Italy Single 2.0 Netherlands Single 1.9
Married 1.6 Married 1.4
Widowed 1.4 Widowed 0.9
Divorced/separated 2.2 Divorced/separated 1.1
Belgium Single 1.7 United Kingdom Single 3.2
Married 1.9 Married 2.4
Widowed 1.0 Widowed 2.1
Divorced/separated 1.1 Divofced/sqsarated 2.8
Ireland Single 5.3 Denmark Single 5.0
Married 3.7 Married 5.3
Widowed 1.4 Widowed 2.9
Divorced/separated • Divorced/separated *
Greece Single 1.8 Portugal Single 0.9
Married 2.6 Married 1.0
Widowed 1.2 Widowed 1.3
Divorced/separated 2.2 Divorced/separated 2.1
Spain Single 1.7
Married 1.3
Widowed 1.3
Divorced/separated 1.8
Source: ELFS. * indicates cell sizes too small for reliable estimates to be made
Further insight into these issues is provided by an analysis by marital status and gender. The
detailed data are not shown here, but they indicate that in all countries the pattern of higher self-employment rates among married than among single people applies to both men and women separately. More interestingly, perhaps. Table 3,4 shows how the ratio between male and female self-employment rates varies with marital status, and it would appear that in more than half of the countries (the exceptions being Belgium, Denmark, Greece and Portugal) marriage increases thefemale self-employmentrate proportionally rather more than the male rate. This is interesting for several reasons. Firstly, we noted above that being married may make self-employment easier in one of three ways:
1 through the possibility of sharing the running of the business with a self-employed
spouse;
2 through having a spouse in wage (dependent) employment providing a stable
contribution to household income;
3 through having a "non-working" spouse providing domestic and child-care support
within the household.
Clearly in terms of their influence, the first factor would affect both sexes equally, the second factor has no obvious a priori sex bias, whereas the third factor would be expected to benefit self-employed men much more often than self-employed women. It is therefore some surprise that in most countries marriage increases female self-employment rates more than male. This suggests that in those countries the third factor is unlikely to be playing a major role, and the data are consistent with the second factor (flnancial support from a spouse) being important, but suggest that self-employed women benefitfrom the wage-income support of their spouses,
more often than for vice versa.
Secondly, such an interpretation tends to militate against the perspective advanced by some
authors that
"... small business ownership offers women a way to escape economic domination by men and to establish their independence outside the conventional marriage relationship" (Curran and Burrows 1988, p 41, commenting on Watkins and Watkins
1984).
This kind of literature (see also Goffee and Scase 1985), is consistent with the notion suggested earlier (see section 3.1.1 above) that some women aspiring to career development may enter into self-employment as means of satisfying such aspirations (or of combining them with domestic responsibilities). These authors suggest, however, that much of the motivation lies in the domestic sphere (to establish economic independence - from men - within the household), rather than in the employment sphere (to escape career blockages, occupational segregation, "the glass ceiling" etc). If this domestic motivation were dominant, however, one might expect to find particularly high self-employment rates among divorced and separated women. In practice, this is not the case, and the fall-off in self-employment rates among divorced/separated people compared with their married counterparts (which we have noted above) applies to both men and women in most countries. Indeed in most countries (the exceptions being France, the Netherlands, Belgium and Greece) the decline is greater among
women than among men, as evidenced bythehigher ratios of male to female self-employment
rates in Table 3.4 above.
Widowed women, by contrast, seem to experience an even greater increase in self-employment propensities (compared with married or single women) than do their male counterparts (in nearly all countries the ratio of male to female self-employment rates is lowest among widows - Table 3.4). These general patterns are consistent with the notion that widows' increased self-employment propensitiespartly reflect the inheritance of self-employed activities from the deceased partner, and that female widows in particular benefit. By contrast, self-employment rates fall off among divorced and separated people, consistent with the notion that on divorce/separation one of the two partners in a "family business" is likely to take the business. Moreover, the ratios in Table 3.4 suggest that in the majority of countries, the self-employment rate falls off more among divorced/separated women than amongst men;
the reason for this is not entirely clear, but it is at least consistent with the male being more often the "dominant" partner in such businesses, and therefore more likely to inherit the business on divorce or separation.
3.1.4 Nationality
There is in several countries a research literature examining the question of self-employment among ethnic minorities and immigrants (see, for example: in the UK, Jones and McEvoy 1986, Waldinger et al I990\ in Germany Erischsen and Sen I987\ and particularly in the USA, Bates 1985, Borjas 1986, Light 1979, Min 1984). Aronson 1991 notes:
"The low self-employment rates of minorities contrast sharply with those of immigrants, who, currently as well as historically, have used self-employment as a means of assimilation" {Aronson 1991, p 82).
This statement, whilst accurately summarising the fmdings of many US studies, seems not to be generalisable to other countries. This may reflect the fact that the distinction between
"ethnic minorities" and "immigrants" is less clear-cut in countries where mass immigration is of more recent origin than in the US. More importantly, however, there appear to be significant variations within individual countries according to groups of different ethnic origins. Thus, for example, the Labour Force Survey data for the UK analysed in Meager 1991 show clearly that compared with the majority white population, workers of afro-caribbean ethnic origin have consistently lowerself-employment rates, whilst workers of asian (predominantly Indian, Pakistani or Bangladeshi) origin have self-employment rates consistently much higher than average.
The whole issue of self-employment among such minority groups, its extent and direction of change Ls, however, of potential general importance for policy. There is firstly a question of whether self-employment amongst minority communities (who are typically disadvantaged in labour market terms) is an important and beneficial mechaitism for economic improvement and integration (and therefore, implicitly, to be encouraged). This is often argued in the US context (as in the quote from Aronson 1991 above), where self-employment rates among immigrant groups appear to be initially high and then to diminish with increasing economic integration. Secondly, there is also a contrary view, expressing the possibility that self-employment among ethnic minority communities (particularly when those rates are
disproportionately high) are themselves merely a symptom of persistent disadvantage and discrimination. Hiey may, moreover, actually reinforce that disadvantage through an economic separatism (with ethnic minorities entering self-employment and forming small businesses with the support of capital and labour inputs from their own community, and predominantly serving that community's markets with ethnic goods and services - see Jones and McEvoy 1986, and Wilson and Stanworth 1988, for some discussion of these issues in a UK context).
It is unfortunate that the data from the ELFS do not allow us to tackle the question of ethnic origin/minority status directly. The variable which comes closest for these purposes is
"nationality", which distinguishes nationals of the country in question from nationals of other EC countries on the one hand, and nationals of non-EC countries on the other. The extent to which this variable accurately picks up ethnic minorities is likely to vary between countries.
Thus in the case of the UK, for example, it is a particularly poor indicator, since a high proportion of members of ethnic minorities are UK nationals. In the case of Germany, by contrast, it is likely to be a rather better indicator since many of the large ethnic minority groups (e.g. workers of Turkish and Yugoslav origin) will not have acquired German origin.
Table 3.5: Self-employment rates by nationality (1983 and 1989)
1983 1989
France 13.4 13.8 3.4 12.8 8.1 7.8
Netherlands 9.6 9.1 3.9 10.1 8.2 5.0
Belgium 15.0 13.6 8.6 16.1 15.8 14.1
UK 10.1 12.9 12.3 13.1 18.3 15.4
Ireland 21.3 20.3 * 22.1 24.8 *
Greece 36.6 * 22.9 34.4 * 21.6
Spain - - - 21.6 22.6 27.2
* denotes cell sizes too small for reliable estimates to be made Source: ELFS
Note: data for Italy not available, cell sizes for Portugal and E)enmark too small
These differences are confirmed in Table 3.5 which shows self-employment rates by nationality for those countries where the data were available, and where there were sufficient numbers of "foreign workers" for estimates to be made. The German data in the table are similar to those presented (from the German Mikrozensus) in Meager, Kaiser and Dietrich 1992, whilst the UK data bear very little relationship to the ethnic origin data (from the UK Labour Force Survey) presented in that report.
Nevertheless, if we accept these limitations of the data, and the likelihood that the UK is an extreme case in this respect (with large numbers of workers with ethnic origins in ex-British
colonies, but who are UK nationals), the table shows some interesting patterns. Firstly it is clear that in most countries the self-employment rates for nationals of the country are rather similar to those of foreign workers from other EC countries - in most cases the latter have slightly lower self-employment rates. Intra-EC migrants, it would seem, are generally slightly less prone to self-employment than are their host country counterparts.
When we look at foreign workers who are nationals of non-EC countries, however, the picture changes markedly. In all countries, with the exception of the UK and Spain, their self-employment rates are considerably below those of nationals of the country in question. Also of interest is the fact that in four of these countries, where data for both years are available (Germany, France, Netherlands and Belgium), the self-employment rates among this group of foreigners grew much faster between 1983 and 1989 than those of nationals of the country in question. Thus in 1983 German workers were 2.9 times more likely to be self-employed than non-EC nationals living in Germany (the comparable figures for the other three countries were: France, 3.9; Netherlands, 2.5; Belgium, 1.7). By 1989, however, German workers were only 1.7 times more likely to be self-employed than non-EC foreigners (whilst the figures in the other countries fell similarly: France, 1.6; Netherlands, 2.0; Belgium, 1.1).
The reasons for these developments have yet to be fully identified, but several hypotheses have been put forward to explain the growing self-employment rates among foreign workers in Germany (see Bilchtemann and Gout 1987, Meager, Kaiser and Dietrich 1992), which may also have some explanatory force in the other countries. In particular, it can be argued that the longer foreign workers live in the host country, the more likely they may be to make the investment of setting up in their own business. In the German case, at least, this argument is strengthened by the fact that many such foreign workers originally entered Germany with
"guest worker" status, with their right to entry and residence tied to their being in (wage) employment. In this case, therefore, the foreign workforce would have had a relatively low self^employment rate during the early years of large scale immigration to Germany. Secondly, it is clear that in most countries, foreign woikers were disproportionately affected by the growth in unemployment during the 1980s, and may well, therefore, have experienced a stronger labour market pressure to enter self-employment than did their indigenous
counterparts.
As far as the UK pattern is concerned (which appears to be an exceptional one), self-employment among UK nationals is lower than among both EC foreigners, and non-EC foreigners (with EC foreigners having the highest rates), and self-employment rates among both groups of foreigners increased somewhat faster than those for UK nationals during the
1980s.
3.2 The Activities of the Self-employed
In this section we extend our profile of the self-employed by going beyond their personal characteristics to look at the some of the characteristics of the work they do, and the circumstances under which they do it. Once again, we are limited in our comparison by the range of variables which is included within the ELFS, and there are a number of key variables (as we have already noted, these include the occupations in which the self-employed work, and the incomes they receive from their self employed activities) which are unfortimately not available from the ELFS (although in some cases we are able to use - non-comparable - data
from national sources).
In this section, then, we concentrate on five sets of variables", according to which the LFS enables us to compare the activities of the self-employed. Firstly we look at two variables which help identif^y the kinds of "business" operated by the self-employed, namely the industrial sectors in which they work, and the size of business they operate (as indicated by whether or not they employ oAers). Secondly, we look at three variables which will throw some light on some of the supposed disadvantages of self-employment, and the extent to which the self-employed are themselves satisfied with their lot. TTiere is a popular notion, expressed by many previouscommentators on the subject, that the self-employed are typically poorly-remunerated, insecure in their livelihoods, receive (or give themselves) little training compared with their employed counterparts, and that self-employment demands an enormous commitment of time and energy from the self-employed person. Whilst the ELFS does not provide much evidence on these issues (we have already noted the absence of income data), we analyse below three relevant variables, their hours of work; the extent to which they receive work-relatedtraining; and whether or not they are lookingfor alternative employment.
In each case we are able to compare the characteristics of the self-employed according to these variables with that of their counterparts in dependent employment.
3.2.1 Industrial sector
In all member states, self-employment rates vary greatly by sector, as shown in table 3.6 below. Taking 1989 data, the table shows that in all countries, the highest self-employment rate is in the agricultural sector, although within agriculture there is also a strong inter-country variation in self-employment rates (between 37 per cent in Germany and 74 per cent in Ireland). Outside agriculture, in general terms, it is clear that self-employment rates are lowest in the manufacturing sectors (NACE 20 - 40), and higher in construction (NACE 50) and the service sectors (NACE 60 - 90) - see Figure 3.4 below, where these sectoral variations are summarised. The variations are much what would be expected; thus, for example, extremely low self-employment rates in parts of the manufacturing sector are consistent with significant capital requirements, enuy barriers and scale economies in these sectors. Many service sector activities, by contrast are labour intensive, with low capital requirements, and lend themselves more readily to small scale operation.
For the most part, the sectoral patterns revealed in the table are very similar across the EC, with a similar ranking of sectorsd self-employmentrates within individual countries. Countries with higher than average overall self-employment rates tend also to have higher than average rates in individual sectors, and vice versa. There are, however, some interesting exceptions.
Thus we might note, for example, that the UK which has an overall self-employment rate slightly below the EC average, has by far the highestself-employment rate in the construction sector, whilst Italy, a country with a much higher than average overall self-employment rate records the lowest self-employment rate in the financial services sector.
" Note that only in the first of these cases (industrial sector) is it appropriate to make
use of the self-employment rate (which is here to be interpreted in the sense of the "density"
of self-employment within a given sector).
Table 3.6; Self-employment rates by sector of activity (1983 and 1989)
Sector Germany France Italy Netherlands Belgium UK
(NACE division) 1983 1989 1983 1989 1983 1989 1983 1989 1983 1989 1983 1989 00: Agric. etc 34.6 36.6 53.9 57.8 48.8 48.8 50.2 47.4 67.0 66.5 47.6 51.2 20: Minerals/
chemicals etc
2.1 2.0 1.2 1.5 5.3 6.0 » * 1.5 1.9 2.0 3.0
30: Metals & eng 2.4 2.7 2.6 2.7 6.4 8.6 1.6 2.0 2.7 3.8 2.4 4.2
40: Other nianuf 6 J 6.9 7.3 7.6 15.7 16.0 4.0 4.6 8.7 8.1 4.7 8.4
SO: Constrvction 8.8 10.3 18.1 18.7 23.9 25.5 7.8 7.9 19.7 23.4 27.6 39.8
60: Distrib.
hotels etc
16.3 15.7 20.0 19.2 45.4 45.8 16.3 13.4 34.3 36.0 15.7 15.9
70: Transpl &
All sectors 9.0 9.1 12.8 12.5 23.9 24.6 9.5 10.0 14.7 16.1 10.2 13.2
Ireland Denmark Greece Spain Portugal EUR9'
1983 1989 1983 1989 1983 1989 1983 1989 1983 1989 1983 1989
00: Agric. etc 70.2 73J 51.8 48.8 56.9 55.3 48.9 - 70.0 49.2 50.8
30: Construction 19.4 25.4 17.7 14.1 27J 30.6 20.0 - 18.6 19.2 23.3
60: Distrib.
All sectors 21.3 22.2 11.6 9.2 36.6 34.3 21.6 26.3 14.2 14.8
* indicates cell sizes too small for reliable estimates to be made (NB Division 10 - energy, water etc excluded on size grounds) + EUR9 excludes Spain and Poetical (as well as Lxixembourg)
Source: own calculations from ELFS
Clearly, there may be important institutional reasons for these variations - thus in the UK's case we may cite the well-documented use of "labour only" subcontract labour, engaged on a self-employed basis as a substitute for directly-employed labour, in the construction industry (a use which, moreover, increased considerably during the 1980s as shown both by table 3.6, and by other research - see Bennett et al 1988, and Evans and Lewis 1989). This development has been associated with major structural changes in the sector, with large building companies
80
60
40
20
Sectoral self-employmentrates (1989): ranges
Self-«aiployinsit late (%)
Agriculture etc Metals A cnghiWTtng Construction Tnn^xxt 8l comms Otbei setvlcea Minemls/cbemicala Other mannftchiring Distrib, hotels etc etc
JL
SeooKBLn
+
EUR9J .
Figure 3.4
greatly reducing their directly employed workforces under competitive pressures, and with building contracts increasingly being delivered by a network of "managing contractors" and
"sub-contractors". The letter, under cost pressure from the former, have an incentive to reduce overhead and non-wage costs through the use of self-employed labour rather than employees.
There is, then, in this sector at least, an important doubt as to whether the high level and recent growth in this type of work in the UK, does in fact represent "self-employment" in the sense of our definition in Chapter 1, since it is clear that many of these self-employed do not exercise the degree of autonomy and independence over their labour implicit in that definition (see Rainbird 1991). The example does however indicate the possible importance of country-specific institutional arrangements at a sectoral level, since it is clear that developments
similar to those observed in construction in the UK either have not occurred, or are far less widespread in the building industry in other EC countries.
This wide variation in sectoral self-employment rates raises the important question of the role of changes in the sectoral balance of the economy and of employment in influencing the overall level and rate of self-employment. Thus, in general terms, given that in all counuies there has in recent decades been an important shift in the balance of employment from manafacturing to service sectors, and given that, as we have seen self-employment rates in the latter tend to be higher than in the former, we might expect ceteris paribus, most countries to have exhibited growing self-employment rates.
Chapter 2 showed there was indeed some tendency for self-employment rates across the community to increase in recent years, but that this tendency was by no means uniform. This raises the further question, then, of whether differential rates of self-employment growth (or decline) between member states can be (partly) explain by different patterns and speeds of
change in ihe sectoral balance of employmenL There are several factors which may influence the picture here. Inter-country variations in the relative importance of agriculture are likely
change in ihe sectoral balance of employmenL There are several factors which may influence the picture here. Inter-country variations in the relative importance of agriculture are likely