and over 30 per cent in Denmark, Spain, France and the Netherlands. Given this persistent
importance of agriculture, we would argue that it is better to include agricultural employment, and if indeed it is subject to different influences than other types of self-employment, to try and take account of those influences in the analysis.In practice, however, as can be seen by comparing Figures 2.3 and 2.4 (which exclude agriculture) with Figures 2.1 and 2.2, the exclusion of agriculture from the data makes very little difference to the ranking of the trends in the various countries. Indeed only in the case of Ireland does the ranking, and the direction of the trend appear to change; that is the general downward trend in overall Irish self-employment has been dominated by the pattern in agriculture, and non-agricultural self-employment has, by contrast, been on a steady upward trend since the mid-1970s (albeit a less sharp one than in the UK).
2.4 Self-Employment Rates
We have noted the considerable variation observable in recent self-employment trends in EC countries. The relative importance of self-employment as a mode of employment (i.e.
compared with dependent or wage employment) also varies considerably across the EC. In crude terms, and looking at the position in the most recent year for which we have comparable data (1989), we can divide the EC countries into three broad groups (Figure 2.5):
EC Self-employment rates &growth rates: 1963-89 (allsectors)
•vanft aeir«iiip latt 1M3.89 (%) - log acsle
QR X
30
X
-X^
I
Hgh s4l-oanploynnnt
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X X Eunio
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X F
^UK
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"^DK X X
L
1 1 1
^ UMraaS-atrptoymant
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(4) 0) 0 2 4 tf 8
annual self-ampgtowih nia 1983-89 (%) SouRo: Emopem Ldnw Ran Swvegn
Nnc aipila * tatgpd dia to 1II4W only
10
Figure 2.5
• five countries (the four southern EC countries Greece, Italy, Portugal and Spain -plus Ireland) with much higher than average self-employment rates (over 20 per cent);
• three countries - Belgium, France and the UK - which have self-employment rates within a few points of the EC average (between 12 and 16 percent),
• the remaining countries (Denmark, Germany, Luxembourg and the Netherlands), which all have self-employment rates much lower than the average (below 10 per
cent).
Figure 2.5 also shows that there is no clear relationship across EC countries between the extent of self-employment and its rate of growth - that is, it does not seem to be the case that countries with relatively high self-employment rates have also experienced relatively fast growth in self-employment in recent years, or vice versa.
EC Self-employment rates &growtii rates: 19B3-89 (excl. agriculture)
•Mogo tdU-caf nte Ue}-80 (X) - kf Kilo
„ on
n. XX ^"10 Awraoa Mtf-wrptoymgni
X Mat tipifa 4 llBittpl 4di tor tSIM» eriy
Figure 2.6
Figure 2.6, which looks at non-agricultural self-employment rates and growth rates, confirms that in general terms agriculture plays little role in determining this ranking of countries. Thus whilst self-employment rates in countries with a large agricultural sector (particularly the Southern European countries and Ireland) are reduced somewhat by the exclusion of agriculture from the data, their non-agricultural self-employment rates remain for the most part considerably higher than those in the Northern European countries. Indeed, with the notable exception of Ireland, which has a non-agricultural self-employment rate very close to the EC average, the threefold grouping of countries described above persists whether or not agriculture is included in the analysis.
EC Self-employment rates and agriculturalempi
svttBge iian.*gilc. aelf-ea^. me 1989.89 (S) - logscde
30 OR
•grtcoltme is % of all eegplL (198989 ivga.)
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Figure 2.7
One interesting pattern which does emerge across the EC countries, however, is that it would appear that there is a positive relationship between the non-agricultural self-employment rate and the overall importance of agriculture in total employment. That is, economies where agriculture is important in employment terms tend to have higher self-employment rates outside agriculture than those where agriculture is less important Figure 2.7 shows this relationship clearly.
How is such a relationship to be explained? Two candidates suggest themselves as explanations:
• one possible explanation for the strong pattern revealed in Figure 2.7, is that there exist small-scale rural industries associated with agriculture, and the servicing of agriculture, in which self-employment rates are high, and that in countries with important agricultural sectors, they contribute to a relatively high overall rate of self-employment.
• perhaps more plausible here, however, is the hypothesis advanced in ILO 1990, namely that the countries with a lower share of agriculture are generally higher
income countries, and that:
".. in non-agricultural activities, self-employment exhibits a declining trend with higher income. As income grows in the course of economic development, markets expand, output shifts to more capital intensive products and production is organised in larger-scale enterprises, all drawing workers away from self-employment. The share of self-employment in total non-agricultural
employment is generally high in low-income countries {JLO 1990, p.8).
Similar arguments are also advanced in Acs, Audretsch and Evans 1992.
EC Self-employment rates and GDP
kvents Doo-tgilc. self-«ap. nto I9S3-89 (X) - log icda 30
9 SflOO VOflOO ISflOO 20/100
CHlFper 1S87(US$) SevMt Aaopott Lites Fast SMy^flLO
NoMc Sififa A Foa^I te OBlx
Figure 2.8
Figure 2.8, which plots self-employment rates against GDP per capita in the 12 EC countries, would appear also to give superficial support to these arguments, showing a fairly clear negative cross-section relationship between the two variables. One problem with this argument, however, is that it implies that there is an inexorable trend towards declining self-employment as national incomes grow. Whilst the argument may be valid when comparing developing with developed economies (as is the case in ILO 1990), it is less clearly the case when comparing countries within the EC, which are in terms of the ILO comparison, all relatively "high income" countries. Thus as we have seen above, within the EC, among both the generally richer northern countries, and the generally poorer southern countries, it is possible to find countries exhibiting growing employment and others exhibiting self-employment decline.
Thus, whilst such a simple argument based on income levels may have some validity in explaining broad differences between countries at a point of time, it is clearly an insufficient explanation for recent trends in EC countries. A more detailed analysis, allowing for the possibility that self-employment rates in some countries may increase during the course of economic development and GDP growth is clearly required. A further question, of course, is whether such increases should rightly be regarded simply as short-term/cyclical deviations from an historical downward trend (this issue of the cyclical - or otherwise - dynamics of self-employment, is considered further in Chapter 4 below).
In any event, an adequate explanation calls for further decomposition of aggregate self-employment, which is an important partof the analysis presented in the present report- thus, for example, as suggested in our discussion of in Chapter 1 (section 1.1) above, a more detailed sectoral breakdown may be an important part of the explanatory process. The ILO explanation for declining self-employment with economic growth, quoted above, seems most relevant for example, for explaining trends within industrial sectors. In so far as economic growth and increasing incomes also go along with a shift of sectoral balance, however, with the service sectors (with relatively high rates of self-employment) increasing their share of total employment at the expense of manufacturing sectors (with relatively low self-employment rates), there may also be a contrary pressure towards increasing self-self-employment.
A PROFILE OF SELF-EMPLOYMENT IN EC COUNTRIES
In this chapter we use cross-sectional data from the ELFS (mainly for the years 1983 and 1989) to construct a comparative profile of the self-employed in the different EC countries.
In particular we look at:
• their personal characteristics (gender, age, marital status, and nationality);
• the characteristics of the activities in which they are engaged (including industrial sector, whether or not they employ others, their hours of work, whether or not they receive work-related training, and their job-search activity);
• their regional representation within individual EC countries.
It is unfortunate that there is a number of variables which are clearly important in building a complete profile of the self-employed and their activities, and in developing a taxonomy of different types of self-employment, but which cannot be used in the present analysis. In some cases the problem arises because the variable in question is not included in the ELFS - the most notable example here is that the ELFS contains no information on the earnings of respondents (and although some of the national surveys which are used as the basis for the ELFS do contain such data, there are major problems of comparability in using earnings data from the original national sources).
In other cases, the relevant variables are included in the ELFS, but the resulting data are currently regarded by EUROSTAT as not sufficiently comparable across countries to be released for analysis. The crucial variables for the present study affected by this problem are those relating to occupation (and this is undoubtedly the most serious omission from the analysis presented here), and to educational qualification level
It is also worth pointing out that the analyses presented below are essentially simple bivariate analyses of the relevant cross-sectional data. Thus, for example, we look at relationships in individual countries between self-employment rates and other variables (age, gender,sector etc), taken one at a time. This means that it is not possible to distinguish statistically between the separate influences of these different variables on the self-employment rate. Thus, to take
It is at least arguable that for the kind of analysis being undertaken here, the lack of strict international comparability on the occupation and education variables would not have been a serious problem, since our key interest is in whether self-employment propensities vary between occupations and between educational levels, and this simply requires us to be able to rank the different occupations/qualifications in different countries. Thus, for example, if the hypothesis of interest was whether self-employment rates increased with educational level in all counuies, it is not necessary to know whether the German Abitur is equivalent to the French Baccalaureat or to British A levels.
Rather it is sufficient to know that these qualifications can be ranked in terms of level within each country (in each country they are, for example, lower than university degrees), and the hypothesis of whether self-employment rates increase with educational level can then be examined in comparable fashion in each country. For an Anglo-German comparison of self-employment using occupational and qualification data from national (non-comparable) data sources, see Meager. Kaiser and Dietrich 1992.
a simple example, if self-employment rates vary with marital status, and also with age, it is not clear how much of the "marital status effect" is really an "ageeffect", since it is also clear that marital status varies strongly with age (workers in the youngest age groups are much less likely to be married, for example). Further breakdowns of the data into multi-way crosstabulations can only partly solve this problem, since what is really required is a full multivariate analysis with individual level (micro) data. This is not possible, since data
confidentiality restrictions in some member states mean that individual ELFS data cannot be
released for any of the countries for secondary data analysis (even where, as in the UK for example, there is no restriction on the release of the micro data from the national survey on which the ELFS is based"). Nevertheless, in those countries where such multivariate analysis has been undertaken with national Labour Force Survey micro-data (as in the case of the UK, for example - see Meager 1991), the multivariate results show that all of the variables used in the analysis below generally retain an independent influence on the self-employment rate.
3.1 The Personal Characteristics of the Self-employed
3.1.1 Gender
Females as % of total so
40
30
20
10
Santcoi BawpamLifcout Bowd Sawoyi Nats EUSB sdodai LAP
Figure 3.1
Female share In self-employment
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