Seeking Citizenship: the Position of Independent Professionals in Europe
A Comparison between Italy, Germany and the UK
Abstract
The transition to on-demand service economy, supported by an unprecedented technological development and the digital revolution, have modified the traditional independent professions and have generated new ones. These transformations have fostered the proliferation of highly qualified and hyper specializedfreelance workers in the European economies. Within an Eu project framework, the analysis of this phenomenon has highlighted three critical questions, connected to the position of the “second generation self-employed” in the labour market: 1) the contested definition of their legal status and the(ad hoc) regulation adopted; 2) the difference of their position within each national social protection system; 3) the complexity of the collective representation and the rise of new associative experiences in a context of great labour market fragmentation. The article explores these emerging issues from a socio-economic perspective, comparing three European countries, which embody different welfare state regimes and diverse regulation models of professions, between universalism and selectivity. The early results show a mixed picture characterized by common challenges and partly divergent responses that, however, denote some positive signals of change andnew ways of reducing the insider-outsider dualism.
Keywords
Independent professionals;labour market; social protection; employment relations.
Introduction
The population of professional independent workers in Europe has known a remarkable growth over the last decade. The rise in the number is especially relevant when compared with the trend in other employment categories in the aftermath of the financial crisis. Between 2008 and 2016 the increase of professional self-employed workers reached the peak of +24.8%, while over the same time lapse the number of subordinated workers and of independent non-professional workers has respectively experienced a more limited increase of 11.1% the former and a decrease of 0.9% the latter (Eurostat 2016). The expansion of independent work has been relevant not just from a quantitative perspective, but also in its structural composition by industry and occupation. Self-employment has become an important, if not the most spread, contractual arrangement within an array of new highly-skilled sectors and professions beyond the traditional ones.
Such surge of the phenomenon however has not drawn the attention expected, neither in the political sphere, nor in the academic reflection. Across European countries, national policy makers have only recently started to acknowledge the increasing relevance of self-employment and to address the new emerging socio-economic demands. This segment of the labour market has expressed concern about the systems of social protection attached to their independent status on the one hand, and about their employment-related protections on the other. At supranational level efforts have been made to bring the issue into the political agenda of the Member States. In 2014 the European Parliament, with the Resolution ‘Social protection for all, including self-employed’, urges Member States to provide social security protections to self-employed workers, ranging from mutual assistance to cover accidents, illnesses and pensions, continuous training and measures to oppose the ‘bogus’ self-employment. Importantly, in the Resolution the Parliament stresses that access to social security is a fundamental right for the whole labour force, as well as a key pillar of the European social model.However, at country-level the picture is still blurred and fragmented, featured by the necessity to update the legislative framework and the social protection system to the current development in the labour market. The proliferation of independent professional workers has not been accompanied by a congruent definition of the regulatory framework to fill the gap between the highly skilled professionalism and the low social status attached. As pinpointed also by international observatories as the OECD, “concerns have been expressed over the working conditions, training, security and incomes of some self-employed” (OECD 1999: 155). Furthermorethe demand of collective representation emerging from this segment of the labour market has challenge the traditional infrastructures of industrial relations.
Hence, the analysis of this phenomenon in Europe has highlighted three main critical questions, connected to the labour market position of the new self-employed: 1) the contested definition of their legal status and the ad hoc regulation adopted; 2) their position in the social protection system; 3) the complexity of the union representation within a context of great labour market fragmentation. In such framework the article explores these three issues from a comparative perspective, considering the different institutional responses across three European countries − Italy, Germany, and the United Kingdom − that embody different systems of welfare and diverse models of labour market and professions regulation.
The article opens with a review of the literature on the interlinks between the transformations of the economy, the surge of the professional independent work and the new emerging challenges. After having briefly introduced the research design, the empirical evidence will be presented across Italy, Germany and the UK. Within each national context, the attention will focus on the legal status of self-employed professionals, on the configuration ofthe social protections’ system applied these workers and on their collective representation in the labour market. A concluding section discusses the results from a comparative perspective.
Economic Transformation,Raise of Independent Professionals and New Emerging Challenges
The expansion of the service economy (Piore and Sabel 1984), supported and strengthened by the innovative power of new technologies (Castells 1996, 2007), has changed the role of the traditional professions and it has generated new ones. At the same time the increasing markets fluctuation and the intensification of global competition are not only creating new professional opportunities, but they are also generating higher risks of skills obsolescence. Simultaneously the fragmentation and the instability of working careers is escalating, as the domination of the system upon workers (Harvey 1989; Sennett 1998) and the emphasis on "employability" (Boltanski and Chiapello 2005) as a strategy for professional survival. Despite peculiar differences, such paradigmatic changes relapse both on traditional employment and on self-employment, whose traits are characterized by an extreme sensitivity to the institutional regulatory system and to the market environment.
In Europe, self-employment has drawn a renewed attention since the nineties when the transition from industrial economies to service economies triggered the proliferation of new and non-standard professionals(Bologna and Fumagalli 1997). At that time, the growing use of self-employment was seen by many economists as an adaptive response of enterprises to the excessive rigidities of labour market, especially in southern Europe (Grubb and Wells 1993). Moreover, self-employment appeared to be a possible, albeit partial, answer to the rising unemployment rates in many European countries:accordingly different kinds of institutional incentives to support the new business (also through tax relief for the new self-employed) multiplied.
Beneath the apparent steady ration between self-employment and the total labour force, significant changes are interesting the structural configuration of self-employment.Remarkable changes are reported between different economic sectors and between countries, but also affect liberal independent professionals as well as new self-employmentprofessions not regulated by registers,such as artists, designers, computer scientists and consultants. Moreover, different degrees of transformation pertain to low skilled self-employed working throughout digital platforms and those working with service contracts (Rapelli 2012).
The analysis of the European Labour Force Survey data (ELFS) reveals that while self-employment in Europe during the years of international economic crisis 2008-2015decreased by about 600thousand units, independent professionals (I-Pros)[1], have steadily grown (Table 1).
Table 1. Self-employed and I-Pros in UE, IT, DE, UK (a.v. thousand; age 15-64)2008 / 2009 / 2010 / 2011 / 2012 / 2013 / 2014 / 2015
Self-employed
(UE 28) / 31,121.8 / 30,812.6 / 30,954.7 / 30,631.2 / 30,650.6 / 30,390 / 30,635.4 / 30,519.9
I-Pros (UE 28) / 7,251.9 / 7,508.4 / 7,783.5 / 8,029.3 / 8,318.2 / 8,404.8 / 8,763.4 / 8,959.1
I-Pros IT / 1,540.5 / 1,502.4 / 1,539.1 / 1,544.5 / 1,604.7 / 1,541 / 1,550.9 / 1,568
I-Pros DE / 1,270.7 / 1,333.2 / 1,332.4 / 1,395.9 / 1,404 / 1,342.7 / 1,317.4 / 1,323.7
I-Pros UK / 1,206.3 / 1,349.7 / 1,431.2 / 1,489.1 / 1,571.1 / 1,605.7 / 1,777.1 / 1,816.1
Source: Our calculations based onEurostat data, 2017
However, the proliferation of the new independent professionals, considered as the most innovative and dynamic part of knowledge workers, has highlighted three critical aspects which negatively influence their careers, producing entrapment dynamics in weak professional and social paths (Borghi et al. 2016).
Social and professional marginalization has becomea real risk for a significant part of independent professionals, following career paths increasingly oriented towards an international dimension. Nevertheless, such growing mobility in Europe has not been backed by an homogenisation of the national regulatory frames, which still define in many different ways what self-employment is and what configurations can assume. This blurred situation often leads to unsatisfactory categories that poorly represent hybrid and widespread situationslocated in between the traditional company and the new professional work, between consultancy work and economically dependent self-employment.
A second issue concerns the marginal, or even lacking, inclusion of independent professionals in the social protection system.This represents a critical aspect in relation to the needs of professional self-employed currently in business, who often lack protections against sickness or maternity for instance. Furthermore it constitutes also a long-term problem if a sustainable andaccessible pension schemes won’t be foreseen for this category of workers experiencing fragmented careers, exposure to market trends and skills obsolescence.
A third emerging critical question concerns the complexnetwork of collective representation for independent professionals. In the last decade the visibility of self-employed professional workers in the public debate has raised thanks to the initiativesand campaigns of the new freelancers’ organisations who highlightedboth critical issues and potentialities of this labour market segment, getting notable achievements in some cases. The process of establishment of representative bodies for independent professionals has progressed at diverse speeds across countries. At its embryonic stage in some contexts and more institutionalised in others, overall the collective representation still have to cope with a significant fragmentation that reflects the segmented professional contexts where self-employed are engaged.
The overall picture in Europe is characterised by variegated and mixed configurations across countries as far as the three critical dimensions are concerned. Hence, the article explores these emerging issues in comparative perspective, starting from the national dimension. Italy, Germany and the United Kingdom are selected as countries of analysis, since they embody different welfare state regimes and diverse models of labour market and professions regulation. Empirical evidence is based on 20 structural interviews carried out with key informants (experts, trade union officials) across the three countries in 2016/2017 and (8 in Italy, 7 in Germany and 5 in the UK),complemented by an extensive documentary analysis of secondary sourcesincluding collective agreements, media debate, legislations, internal paperwork, and academic literature.
Steps Towards New Labour Rights in Italy
Independent work has historically represented a relevant source of employment in Italy. Its development has followed three main phases (Ranci 2012). Since the end of World War IIuntil the 1970s, the large majority of the independent work was composed of ‘small bourgeois’ in the retail and craft sectors (Sylos Labini 1974). During the 1970s and the 1980s the development of the industrial districts has triggered the growth of self-employment in the small manufacturing enterprises. A third phase started in the 1990s, and currently expanding, is characterized by the proliferation of highly specialized professional independent workers in the tertiary sector, following the post-industrial transformation of the economy (Bagnara et al. 2008; Bologna and Fumagalli 1997).
Despite the numerical incidence of self-employed workers and the central role played in the economic development (Semenza 2000), such a centrality has never been fully acknowledged in the public debate and in the political sphere (Accornero and Anastasia 2006). The interplay between the deficit in the political representation, the weak involvement in the policy making processes, as well as the misleading cultural influence suffered by independent workers might contribute to explain the underestimation of this important part of the productive and occupational system (Ranci 2012).
Instead, a critical interpretation has traditionally characterized the phenomenon in Italy. First, the growth of self-employment has long been associated with the widespread diffusion of small and medium enterprises which characterised the Italian productive system. The small size of the companies was symptomatic of the inherent incapacity of the industry to expand and to invest in order to sustain the competitiveness in a global market (Maida 2009). Second, independent work has been interpreted as a permanent area of fiscal parasitism. The world of the liberal professions in particular is associated with the idea of political nepotism and fiscal privileges they enjoy. Third, the academic debate has been dominated by the opinion that the raise of the independent work resulted from the proliferation of ‘bogus self-employment’ (Pallini 2006). Such misconception deals with a double development in the Italian labour market since the 1990s: the diffusion of economically dependent self-employed workers (Pedersini and Coletto 2010) and the introduction of semi-subordinate contractual arrangements in the labour market as a way to raise employment. Economically dependent self-employment corresponds to an intermediate blurred area of independent work, where the workers are generally hired through a service contract featured by an exclusive contractualrelationship with a unique customer. Accordingly such a work relationship turns out to be only formally independent, but substantially characterised byeconomic dependency from one single employer, who also sets organizational constraints. Semi-subordinate contracts have been exploited to establish flexible working relationships and to reduce the labour cost, enabling to employ cheaper self-employed workforce as an alternative to subordinated workers.
However the specious application of these contracts, although relevant, is not a satisfactory argument to explain the diffusion of self-employment in Italy that steadily counts from 1.5 to 1.6 million workers in the aftermath of the financial crisis (table 1). Professional activities account for the 42.9% of the independent workforce in the advanced services sector, which is distributed as follow: 12.4% in human health and social work activities, 10.1% in service activities, while the remaining share is similarly divided between the financial sectors (4.8%), information and communication (5.7%), education (5.1%), arts, entertainment and recreation industry (7.6%) (Eurostat 2017).
As far as the legislative framework is concerned, self-employment is disciplined by the Civil Code where a ‘genuine self-employed worker is defined as a worker who legally commit herself to perform a service or a work under payment, without being subject to any form of subordination towards the customer, working with her own assets and mainly through her own work (Art.2222). The Civil Code also establishes a dual system of intellectual professions (regulated and non-regulated professions), a distinctive feature of the Italian configuration (Feltrin 2012). On the one hand the law determines the regulated professions, whose practice is subordinated to a state examination and to the enrolment in a professional register. The state delegates to the associations the power of control over the profession (art. 2229). This is the case of more than 30 professions, a peculiarity in Europe. On the other hand a large and heterogeneous group of non-regulated professions has developed, not subject to the same legislative recognition.Only recently the law no. 4/2013 has revised the legislative discipline for non-regulated professions, by assimilating their regulation to the regulated professions in order to reduce discrepancies.
Such dualism in the system of professions is crucial since it mirrors important differential also in the social protection system applied to the two groups. Regulated professionals in fact, compulsory members of their registers, belong to their own private, professional, social security funds. These private funds offer members an array of protections including maternity (despite limited) and a pension fund. Conversely, the whole array of non-regulated professions has long been excluded from this system of protection (Bologna 2015). The picture is characterised by an overall lack of protections in case of unemployment and sickness, as well as the exclusion from pension fund managed by the professional associations. Only in 1995 the Dini reform (law no. 335/1995) instituted the Separate Management Fund of the National Institute of Social Security (INPS), a public pension fund whose contribution was made compulsory for all independent workers not members of a private fund. Despite this intervention, the disparity persisted rooted in the diverse configuration of the two social security systems. The social security rates imposed by the Separate Management Fund are in fact higher than the rates established by the private funds.
The 2016 law called ‘Measures for the protection of self-employed without employees’ ˗ currently under Parliamentary approval ˗ would introduce new important protections for the autonomous work, including the total deductibility of training costs, the access to EU funds, parental leaves up to six months and benefits in case of illness and injury.
The collective representation of independent workers is particularly fragmented and lacking. The professional orders have long played a role in representing and lobbying for the interests of their members on occupational basis. Alongside, first and second level associations emerged, such as Confassociazioni ˗ the Confederation of Professional Associations officially recognized by the law 4/2013 ˗ and Confprofessioni, a confederation which brings together regulated professions. The latter is recognized as social partner in collective bargaining and has signed diverse national collective agreements for employees in professional firms.
The trade unions have instead showed a certain degree of organizational inertia in reorienting their actions and strategies towards the self-employed segment of the labour market and the new independent professionals (Ambra 2013). In the late 1990s, the three main union confederations started to reconsider their recruitment and representation strategies to include workers with non-standard employment relationships. To this purpose they established specific structures (for example Nidil-CGIL and ALAI- CISL), but that were mainly oriented towards precarious and atypical workers rather than independent workers with VAT number. Only recently the unions’ strategies have specifically targeted the self-employed, as in the case of the Consultative Body for the Professional Work set up by the CGIL and the on-line community of independent workers vIVAce! created by the CISL. Furthermore bottom-up innovative experiences of collective representation have emerged, aiming at aggregating transversally the heterogeneous segment of the non-regulated professionals, such as trainers, consultants, researchers, computer scientists, creative workers (this is the case of the association ACTA for instance).