3.3
Yourfutureemployer–yourself
KenPhillips
KenPhillipsisco-founderandExecutiveDirectorofIndependentContractorsofAustralia(ICA).1Kenhasbeenasmallbusinessoperatorandconsultantformorethan30years,andformorethan20years,hehasoperatedasanindependentcontractorconductingresearch,commentaryandadvocacyonsmallbusinessissues,in
particular,regulatoryreformandworkplacemanagement.
Kenisapublishedauthorityonindependentcontractorissuesanddirectsresearchonrelatedcommercialandcompetitionissues.Hehasbeenacontributortoseveralbooksoneconomicandmanagementissues, andhewroteIndependenceandtheDeathofEmployment.2KenwasICA’srepresentativeatthe2003and2006InternationalLabourOrganisation(ILO)debateonthe‘ScopeofEmploymentRelationship’.TheILOoutcomesformedtheconceptualbasisforAustralia’sIndependentContractorsAct.
InpartnershipwiththeCanadian-basedFrontierCentreforPublicPolicy,KenconceivedanddevelopedtheEntrepreneurialIndex.3Launchedinlate2013,theIndexmeasuresandcomparesacrossjurisdictionstheextenttowhichregulationsaffecttheabilityofindividualstobeself-employedandhenceentrepreneurial.
Introduction
More and more,self-employment isbecoming theway ofdoing business. Lookat thechallengetothetaxiindustryoccurringbecauseoftheride-sharingsystemsofUber,Lyft and others.The ride-sharingbusiness modelis not justthe resultof atechnologi-calapplication.Thebusinessmodelisstructured aroundtheirdriverworkforces beingentirelyself-employedindependentcontractors.
TheUber/Lyft developmentisjustoneexampleofexcitingbutalsochallengingtimes.What’shappeninggloballyisthattechnologicalchangecombinedwithattitudinalshiftsintheworker–bossrelationshipareresultinginnewbusinessmodelsthat arecompet-ingwiththetraditionalcommand-and-control employmentpyramidstructures offirms.
Seenthroughoneprism,command-and-controlfirmswereinlargepartproductsofmilitary-styleorganisationalthinkingbornofpersistentwarenvironmentsofthefirsthalfofthe20thcentury.Suchorganisationalthinkingatthefirmlevel,combinedwithfree-marketmacroeconomics,producedspectaculareconomic results post-WorldWar II. Yet itcan be argued thatthe command-and-control firm hasreached the limitsofitsproductivity-deliveringcapacity.
Self-employmentcanbeseenasa‘rising-star’,notjustbecauseofincreasingnumbersofself-employedpeople.It’smorebecauseself-employedindividualsareatthecutting-edgeofculturalandattitudinalchangeinglobalworkforces.Thesuprem-acyoftheorganisationisfadingandbeingreplacedwiththeauthorityoftheindividual.It’saconfrontingideaparticularlyforcorporations,governmentorganisationsandmacro-policymakers.
However,thischapterisnotprimarilyintendedtoargueordefendthisassertion.Rather,thechapterlooksatthestatistics,profilingandtrendsapparentintheworldofself-employment.Forexample,acrossEurope,thenumberofprofessionalself-employedindependentcontractorshasrisen45percentsince2004–astatistic thatshouldcauseinterestinthesector.Thischapteraimstobringsomefactstoaninvestigationanddiscussionofself-employmentthatsofariscursoryandhasbarelystartedtostir.
Statisticsandtrends
Australia
TheAustralianBureauofStatistics(ABS)identifiesself-employedpeopleasthosepeopleworkingforthemselves,thatis,theyarenotemployees.Thisisabout18percentoftheAustralianworkforce.Surprisinglyperhaps,giventhepublicimpressionthatself-employmentisrising,thisfigureisdownonthenumbersofself-employedin1998,whichstoodatmorethan20percentoftheworkforce.
Whathasoccurred,however,isanincreaseinthenumberofindependentcontrac-tors,definedbytheABSasself-employedpeoplewhodonotemployothers,thatis,soletraders.Thesepeopleareoftenreferredtoasmicro-businesses,freelancers,contractworkersandotherterms.Thenumbersinthisgrouprosefrom6.7percentofthe workforce in1978to approaching ninepercentin2013,afterpeakingat10percentin2010.4Thenumberofself-employedpeoplewhoareemployerswasdownfrom11.8percentin1998to8.7percentin2013.
Whenlookedatinthebroadercontextofthetotalworkforce,thepictureportraysanAustralianeconomydominatedbythesmallbusinesssector,withthestructureinTable1.
Table1
BREAKDOWnOF THEAuSTRALIAnSMALLBuSInESSSECTOR
MillionpeopleSelf-employedindependentcontractors(non-employers) / 0.9
Self-employedemployers / 1.0
–Employeesworkingforself-employedemployers(1–5employees) / 3.3
–Employeesworkingforself-employedemployers(6–20employees) / 1.9
Totalworkersinsmallbusinesses / 7.1
–Workersinlargebusinesses / 2.6
–Workersinpublicsector / 1.8
Totalworkforce(2010) / 11.5
Specifically,whatcanbeseenistheimportanceoftheself-employedemployersbecause,eventhoughtheirnumbersaredownonafewyearsago,theystilldotheheavyhaulingwhenitcomestoemployingothers.Thisgroupconsistsofpeopleoperatingthe(easilyunderstood)notionof‘smallbusiness’,forexample,retailers,tradespeople,smallmanufacturersandthoseinthehospitality sector.
ArecentreviewoftheAustralianTaxationOfficetreatmentofself-employedpeoplegavesomefurtherilluminatingstatisticsonthesmallbusinessmake-up.TheBoardofTaxationidentifiesthat:
•97.5percentofbusinesses(around2.7million)haveaturnoverof$2millionorless;and
•Only72,000businesseshaveaturnoverbetween$2millionand$5million.
Ofallsmallbusinesses:
•36percent aresoletraders;
•13percentarepartnerships;
•23percentaretrusts;and
•28 percentarecompanies.
Inaddition:
•61percentofsmallbusinessesare non-employing;
•28percent employbetween oneand fouremployees; and
•10percenthavebetweenfiveand19employees.5
TheBoardofTaxationsays:
“TheprofileofAustralianworkersisalsoevolvingmoregenerally,withmore‘white-collar’workersadoptingformsofcontractingandself-employmentinmanysectorssuchasmanagementconsultancyandfinancialservices.Closelyconnectedtotheproliferationofcontractorsisthegrowthintheprovisionofpersonalservices.
“…employmentstructuresandworkpatternsevolveovertime(withcontractingandotherformsofself-employmentbecomingincreasinglywidespreadintheAustralianworkforce)…”6
ThetrendidentifiedbytheBoardofTaxationandhighlightedintheABSfiguresissomethingthat’semerging globally,atleastindevelopedeconomies.
Worldoverview
AccordingtoaKellyServicesreport7,20percentoftheworkforceisself-employedacross29countriesinEurope,NorthAmericaandAsia/Pacific.Furthermore,anaddi-tional50percentofemployeesindicatedtheywouldliketobeself-employed.Thisshowsthatthedesiretobeself-employedishigherthantheactualincidence.
Thisperhapsmaypartlyexplainwhythere’sagrowinginterestinpolicyandpublicdebateaboutself-employment.LookingattheAustraliandata,thepercentageofself-employedisnotactuallysubstantiallylargerthan,say,20yearsagoandIsuspect,althoughcan’tbesure,thatthisistheglobalsituation.Whathashappenedperhapsisashiftinattitudesamongemployeessomewhatagainstemploymentwithself-employmentincreasinglyseenasanaspirationalgoal.Thatis,self-employmenthasbecomea‘desire’ asmuchasitisareality.
ButstilltheAustralianshiftinself-employment,atleast,frombeingemployerstobeingindependentcontractors(non-employers)isimportant.Further,theevidenceisoverwhelmingthatindependentcontractingisheavilydominatedby white-collar, high-paid,professionals.Thisdestroysthelong-heldbelief(almostmyth)thatindependentcontractingislocatedinlow-paid,blue-collarjobs.
Putthesetwofactorstogetherandwhereindependentcontractinghasbecomesignificantisinthehigh-endservicingof,quiteoften,largefirmsandgovernmentdepartments.Thesedaysthere’sprobablynotamultinationalbusinessacrosstheglobethatdoesn’thaveasignificantdependenceonindependentcontractorsinvitalareasofthebusiness.The‘norm’hasrapidlybecomefirmswithblendedworkforcesofemployeesandindependentcontractors.ThisismostapparentintheUnitedStates(US).
UnitedStates
IntheUS,muchofthecommentaryinthisarearefersto‘freelancers’–definedaspeoplewhoworkforthemselvesanddon’temployanyone.Asmentionedearlier,inAustraliaweusetheterm‘independentcontractor’forthisgroup.TheUSfigurescanvarysubstantiallydependingwhatdatasourcesanddefinitionshavebeenusedandhowthe dataareinterpreted.
Forexample,a2013report8estimatesthereareabout17millionUSfullyengagedfreelancers/independentworkers.However,thatnumber“swellstomorethan40million,roughlyathirdoftheworkforce,whenyouincludetemps,part-timers,con-tractors,contingentworkers,andthosewhoareunder-employedorworkwithoutemployer-sponsoredhealthinsurance,401KsorFLEXaccounts”9,accordingtotheHarvardBusinessReview.10
Figure1
TOTALuSInDEPEnDEnTCOnTRACTORSByOCCuPATIOn(%OF TOTAL)
Anotherreport11saysthatslightlymorethan10millionAmericanworkers,orsevenpercentoftheworkforce,arefreelancers.ThisfigureisbasedondatafromtheUSCensus.Thebreak-upofthegroupisshowninFigure 1.
ThisoccupationalsplitissimilartothatinAustralia.Notefurtherthatwithconstructionandextractionbeingthelargestoccupationalgroup,basedonAustraliandata,myexpectationisthatthemuchlargerpercentageinthisgroupiswhite-collarprofes-sionalengineers and other consultants.In other words, look through the occupationalspreadandindependentcontractorsaredominatedbytheprofessionalgroups.
A2015surveyreport12bytheFreelancersUnion,alobbygroupfortheself-employed,saysthat34percentofUSworkers are freelancers. Theirbreak-upofthedatashowshowconfusioncanoccurbecauseofselectionofdifferentpartsofthesamedataandtheapplicationofthesameterminologyindifferentcontexts.Forexample,theFreelancersUnionssaysthatofthetotalUSworkforceofaround155million:
•21.1 million are independentcontractors;
•14.3millionare‘moonlighters’(alsohavetraditionaljob);
•9.3millionare‘diversified’workers(multiplemixofincomes);
•5.5millionaretemporaryworkers;and
•2.8millionarefreelancebusinessowners.
Again,thedatareflectthattheshiftawayfromthepermanent,steadystatusof‘employment’ismorewidespreadthansimplyamovetowardsindependentcontrac-tors. There isan entire mixoftermsbeingusedtodescribethismove,butithighlightsperhapsthereasonwhy50percentofemployeesreportadesiretobeself-employed.Manyareclassifiedasemployeesinonewayoranotherbuttheirworkenvironmenthasmostofthefeaturesofself-employedindependentcontracting.
United Kingdom
IntheUnitedKingdom(UK),thereisashiftdirectlytoindependentcontractingandit’scausingquiteafussinsomecircles.
TheUKisexperiencingajobsresurgenceasitpullsoutofthe‘greatrecession’of2008.Overthelastfouryears,allnewjobstheUKaddedtoitsworkforcehavebeenaccountedforentirelybyself-employedpeople.Theself-employedsectorhasgrownby570,000,toaround4.5million,a14.2percentincreasecomparedwitha4.3percent increase inthe numberof employees. Ofthe UKworkforce, 14.7 percent isnowself-employed–thehighestpercentagesincerecordsbegan.
It’sdifficulttoextractfromthedatawhetherthegrowthiswith(non-employing)inde-pendentcontractorsortheemployingself-employed.However,Isurmisethatgivenactualemploymenthasgrownatonlyafractionoftheself-employmentrate,theself-employmentgrowthismostlyfromindependentcontractors.
Whateverthetrend,itsignalsasignificantshiftinthenatureandmake-upoftheUKworkforce,probablyreflectingastructuralshiftinthenatureoftheeconomyitself.MargaretThatcheronceproudlydescribedtheUKasanationofshopkeepers.Nowitseemstobechanging,asitisinAustralia.IstheUKmovingtowardsanationofloneentrepreneurs?
This trend needstobekeptincontext.Clearlytheeconomyisdominatedby‘employ-ment’relationships,but there’s amovementgoingonatthecorebaseoftheeconomy.AndthismovementhasattractedcriticismandgeneratedamajordebateintheUK.
Thecriticism13comesprincipallyfromUKunionsandleft-leaningacademicsandmediaoutlets.Theirargumentisthatself-employmentislowpaid,thatpeopleareforcedintoitbecauseofa‘conspiracy’amongemployersnottouseemployees,andthattheshiftthreatenstheinstitutionalandmoralstructuresofsociety.
Canada
ThisUKdebatehasemergedinCanadaaswell,whereasimilarbutmorerecentsurgeinself-employmenthasbeenwitnessed.
InCanada,thepercentageofself-employedemployersismarkedlylowerthaninAustralia–withself-employedinCanadamakingup6.5percentoftheworkforce,and8.7percentinAustralia(2012comparisons).Butthepercentageofindependentcontractorsisidenticalat8.5percentofbothworkforces.
However,inJanuary2015,theCanadianjoblessratedroppedto6.6percentadding34,500jobs.Thiswasentirelyaccountedforbythefactthatself-employednumbershadrisenby41,000.Butagain,andasintheUK,theshiftisprovingcontroversialwithclaims14thatthisisallaboutlowpayandtheunderminingof society.
Europe
AcrossEuropeaswellthereappearstobeasteadyincreaseinself-employment,butfromalowerbasethanseenintheUK,USandAustralia.What’shelpfulinthisanalysisissome researchthat’s lookeddeeper into the self-employed makeup.The research15looksatonlyonepartoftheindependentcontractorsector:independentcontractors(non-employers)whoareprofessionals.TheresearchreferstothesepeopleasiPros(i.e.independentprofessionals).
What’sbeenobservedisthatthegrowthiniProsintheEuropeanUnion(EU)since2004hasbeenremarkable.Numbersincreasedby45percentfromjustfewerthan
6.2millionto8.9millionin2013,makingiProsthefastestgrowinggroupintheEUlabourmarket(refertoTable2).
Table2
GROWTHInIPROSBySELECTEDREGIOnS
Region / %EU / 45
Belgium / 53
Finland / 56
France / 85
Germany / 43
Italy / 12
Netherlands / 93
Poland / 88
Spain / 51
UK / 63
Table3
InCIDEnCEOFIPROSByPROFESSIOnALSECTOR
Sector / %Administrationsupport
Artsandentertainment / 9
22
Education / 4
Financialinsurance / 6
Humanhealth / 6
Informationtechnology / 12
Professional,scientificandtechnical / 25
Realestate / 16
Thisresearchalsoidentifiesthereasonsforself-employment.Whenaskedwhytheywishedtobeself-employed,theiPros responded asfollows:
•Independenceandfulfilment(68percent);
•Flexibilityoverwork(35percent);
•Income prospects (20percent);and
•Businessopportunities(ninepercent).
Thehighscorefor‘independenceandfulfilment’isconsistentwithallotherresearchavailableonthemotivatingfactorsforbeingself-employed.Thisshouldn’tbeasur-prisebecauseindependenceandfulfilmentarenearidenticalattitudinaldriversofdemocracyandconsumerismforexample.People’sattitudesunder‘private’aspectsoftheirlivesaretransferringtotheirworkattitudes.
Self-employeddemographicsandmotivations
Whenthedemographicsandmotivationsofself-employedpeoplearestudied,manymythsandmiscomprehensionsareexplodedbythefacts.Inthissection,IdrawonresearchfromAustraliaandtheUS,bothofwhichreinforcetheevidencefromtheEU.
Contrarytowhatisoftenstated,self-employedpeopleareoverwhelmingly:
•Older(i.e.notyounghighflyers);
•Highlyexperiencedinbusiness;
•White-collarandprofessional(i.e.notalltradies);
•Activeseekersofinformationandanalytical(i.e.notneedingtobemollycoddledby government);and
•Above-averageincomeearners.
Butitistruethatself-employmentisheavilyskewedtowardsmales.
AcombinationofresearchinAustralia16profilestheself-employedas:
•Two-thirds maleandone-thirdfemale;
•Mature –peoplepredominantly becomeself-employed from age35;
•Workinglongerhoursthanemployees;
•Havingahigherskillsbasethanemployees;
•Oftenhavingbeeninbusinessthreeyearsormore(57percent);
•Operatingacrossallindustriesbutmostlyintheservicesareas–evenwheninconstruction, for example, which isthe highest sector;
•Oftenhavingnochildrenlivingathome(51percent);and
•Overwhelminglychoosingtobeself-employed.
Otherfeaturesoftheself-employedinclude:
•They are motivatedtocontroltheirowndestiny;
•Self-employmentgivesthemlifestyleflexibility;
•Theirbusinesscyclesdonotfollowtraditionalpatternsofbusinesscyclesbutinsteadaretiedtotheirlifecycles;
•They arebigspendersandoptimisticandwillingtospend;
•Businesscompetencyishigh;and
•Theytakeaholisticapproachtotheirworkandseeaneedtobemulti-skilledandknowledgeable.
It’sinterestingtoobservehowlargeorganisations(governmentorprivatesector)needtorelateandcommunicatewiththeself-employed,particularlywherethelargeorganisationsusetheself-employedasserviceproviders.Largeorganisationshavetooperatein‘silos’ofresponsibilityanddecision-making;employeesspecialise.
Self-employedpeopleoperatewithdifferentdecision-makingprocesses.Theymusttakeineverythingandbeholisticinunderstandingbusiness.Inthisrespect,self-employedpeoplemustdevelopandhavehigh-levelbusinesscompetencyineveryaspectofbusiness.Problemshappenwhenthesystemsusedtorunlargeorgan-isationslimitthecontrolthatself-employedpeopleareabletoexerciseovertheirbusiness.
USresearchfrom201317quite closely replicates the Australian observations.Theresearchlooksattheself-employedwhodonotemployothers(independentcontractors).
The reportsaysof independentcontractors:
“Thesimultaneousgrowthinsize,satisfaction,commitmentandintenttochoosethepath,togethersuggestindependenceisfarfromacyclicaleconomicchoice.ItinsteadappearstosignalaconsciousstructuralshiftandrecognitionofanewmodelofworkandengagementbyinnovativeAmericans.
“…independentworkerscontinuedtocreativelyforgetheirowneconomicopportunitiesand perceived that the drawbacks to independence were less daunting than the anticipatedbenefits.
“In2012,itisclearAmericacontinuesitsmarchtowardanewageofcareerindependencewhereindividualswillnotjustmovefromjobtojob,butrathermovefromengagementtoengagementandclienttoclientasmastersoftheirowncareerdestiny.”
Theresearchreportsaysthatitsfindings“debunkthepopularmisconceptionthatworkersare forced intoindependenceduetojoblossorlackofalternatives”.
Thesefindingsincludethefollowing:
•86per cent ofindependent workers aresatisfied with their work;
•They know the challenges of independence – uncertain income 51 per cent, retire-ment 40 per cent, job security 36 per cent – but are up for the challenge;
•57percentsayit’stheirchoicetobeindependent;
•75percentwanttocontinueasanindependentworker;
•Only12percentwillbuildtheirbusinessintoanemployerbusiness(thisunsettlesthepublicpolicynotionthatpoliciestogrowsmallbusinessoughttobeaboutcreat-ingemployingbusinesses;muchofthegrowthinfactwillcomefromnon-employingsmallbusinesses);and
•Onein10intendtogrowtheirbusinesstoengagemore independents.
TheUSprofilingfollowsthatidentifiedinAustralia,namely:
•21percentare aged21to32,andthisincreasesaspeoplebecome older,peakingat36per centfor 50–66years;
•Independentworkershaveahigherlevelofskillsspecialisationthanemployeesdo;and
•Youngerindependentshavethehighesteducation.
However,thegendermixisdifferentfromAustralia,with:
•48percentwomenand52percentmen;but
•Thereisasmallerpercentageofwomenwhobecomeemployers(one-third).
TheoverwhelmingmotivationisthesameasthatfoundinAustralia,theUKandEurope:“Independentworkersactuallychoosethepathbecausetheywanttobetheirownboss,controltheirownscheduleandsculpttheirownprofessionalpath.”18
Thereportclassifiesthislargegroupasentrepreneursbutentrepreneurswhoworkontheirown:
“Thereisnoemployerprovidingasteadyincome,benefits,retirementprogramsandjobsecurity.Theyareontheirownandresponsibleforallaspectsoftheirprofessionallives…Only13percentstatedthattheywouldratherhavearegular,permanenttraditionaljobthanbeontheirown.Thisisdownfrom19percentin2011.”
What’strulyinterestingisthetakeindependentcontractorshaveonsecurity.Thereportobserves:
“First,becausethey’retheirownboss,manyindependentworkersfeelincontroloftheirdestinyandfreefromrandomcorporateactions,suchaslayoffs,reorganisations,andrelocations.Theyalsofeeltheyarenolongeratriskfromthebehaviourofbadbosses.
“Second,independentworkershavemultipleclientsandfeelmoresecurebecausetheyaren’ttiedtothefortunesofasinglecompany.
“Third,manyindependentsfeelthat,whiletheirincomemaygodown,theyareunlikelytoseetheirincomegoawayentirelyasitwouldiftheywerelaidofffromtraditionalemployment.”
Thisalternativeviewofjobsecurityreflectsthecontinuedbreakdowninthetraditionalemploymentcontract.Ittearsapartthethesisofthecommentariesmentionedearlierthatviewself-employmentasdangerousforsocietybecauseitchallengesthesocialfabricbuiltaroundjobsecurity.Self-employedpeopleseemrathertobeactingontheideaofjobsecurity(withoneemployer)beingasocialmyth.Self-employedpeopleseethemselvesasmoresecurebecausetheycontroltheirowndestinyandspreadthejobriskacrossmultipleclients.
Technologyinterfacingwithshiftingattitudesandaspirations
Thedataandresearchindicatethereisaperceptibleshiftinthewayworkisbeingorganised.Permanent,full-timeemployment,particularlytheideaof‘ajobforlife’isverymucha‘yesterday’idea.
Peopleworkinginthepublicsectorareprobablylivingremnantsofaworkconceptthatiscrumbling,ifnotcrumbled,intheprivatesector.Eveninbigbusinesses,theideaofpermanencyismoreimaginationthanreality.TherearefewCEOsoflargelistedcompanieswho last more thanfive years, forexample. Permanencyfor employeesinthosecompanieslastsaslongasthenextdownsizingorrestructuringasfirmsadjusttothedictatesofthemarket.
Insmallbusiness,thisismuchmoresothecase.Forsmallbusinesses,theimpactofmarketchangesisimmediateandpersonal.Thereisno‘protection’,theoreticalorreal,fromtherealitiesofthemarket,bestexplainedasthewhimsofconsumers.And
it’ssmallbusinessthatismostimportantbecauseit’sherewherethemajorpercent-ageofpeopleworkbyasignificantfactor.
Withinthesmallbusinessdemographic there’s onegroupthatprobablybesthighlightstherealityofchangeinmarketeconomies:theindependentcontractor.Thesepeopleworkfor themselvesas ‘businesses ofone’. Theyoperate by beingentirely adaptabletotheirclients’needs.Theyareandhavetobe,personallyandindividually,onewiththemarket.
Thestatisticsshowthatthisgroup–independentcontractors–isgrowing.Thegrowthisnotaslargeassomemightthink,particularlyseeminglypanickedsocialcommenta-torswhoopposethedevelopment.It’sarelativelysmallbutidentifiabletrendyetitreflectsamuchlargershiftinsocieties:thedeathofemploymentlong-term,perhaps?
Thesignificantreasonsforthisaretheexistenceoffreerandbetterfunctioningmarketeconomieswherenoonecanignoreconsumers.There’samajorattitudinalshiftthatrecognises‘secure’workasmythandthatinsteadsecuritycomesfromtheself.Andtherearetechnologicaldevelopments.
Technologyiscreatingmassiveeconomicfreedomfortheindividual.Theimpactoftheinternetandallthatgoeswithit,suchasmobileandcloudtechnology,cannotbeunderstated.
Peoplecananddorunbusinessesfromhomeortheirlocalcoffeeshop.Skypeenablesphoneandvideophonecommunicationacrosstheglobeatalmostlessthanthecostoflocalcalls.Anyindividualcanrunaconsultancy,servicingbusinessfromhomewithclientsaroundtheworld,andtheydo.
Massmediahasbecometruly‘mass’.Thebignewspaper,televisionandentertain-mentgiantsareallchallengedandthreatenedbywhatindividualsareabletodoonYouTube,Facebook,Twitterandmore.Anyonecanbeamediabusinessofone.Individualmusicians,bloggers,comediansandwhoeverelsedotheirownthingindirectcompetitionwiththemultinationalgiants.Peoplemakemoneyoutofthis.Somepeople make substantialmoney. Thesetechnologies mean thatthe sizeof thecollec-tivemassofindividualsoverwhelmsthebigconglomerates.
Onlineandmobilebanking,insurance,creditcardsandotherfinancialserviceshavereduced therisksofbeinginbusinessasan individual.Anyonecanprovideaserviceandhavetheircustomerpayonthespot,almosteliminatingbaddebtriskandalsoinvoicingdelaysandrecord-keeping.
Theonlineshoppingbreakoutmeansthatindividualscancreatetheirownproduct,marketitonline,haveitmanufacturedanywhereintheworlditischeapest,haveitshippedanddeliveredwithoutevertouchingtheproduct.There’snoneedtofundstockbuild-upbecausethere’snoneedtoholdstock.Paymentshappenonlineinstantly,significantlyreducingcreditanddebtrisk.
Sofar,commentaryaboutonlineshoppinghasfocusedonthebigplayerssuchasAmazon.Butnoonelooksatwhat’shappeningatthemicrolevel.Watchthisareaexplode forindependentcontractorswiththe fulldevelopmentof3Dprinting.
Conceiveofatime,notmanyyearsaway,whereeveryhomewillhavea3Dprinter.Forexample,ifsomeoneneeds abuttonfortheirshirt, theywillgoonlineand findthebuttontheyneed,printitandpayforitfasterthangoingtotheshops.Ipredictthiswillresultinanexplosionofnewmicro‘manufacturers’.Individualswilldesignproducts,showcasethemonline,selltheproducts,butnotholdstockorhaveto‘manufacture’.Bigbusinesswillrushintothis,butindividualsintheirmillionswilldothesame.3D
printingisabouttoliberatetheindividualasabusiness,shatteringthemanufacturingsectorinthesamewaythattheinternetandmobiletechnologyturnedthenewspaperand musicindustriesupsidedown.
Macroandmicropolicychallenge
Inallofthis,thereareprettysubstantialchallenges.Thebigchallengesdon’treallyaffectthesmallbusiness sector. Peopleinthissector(thesignificantlylargernumbersofworkforces)individuallyadjust,re-orientateandshifttheirattitudesandactivitiestoreflectmarket(theirindividualcustomers)demandsonaconstantbasis.It’snoteasyor‘relaxing’.Butit’swhattheyhavetodotosurviveandfinanciallysucceed.
Forlargefirms,thechallengeishuge.Theideaofmaintainingtheauthorityofthefirmwhiletheindividualswithinorsupplyingtothefirm‘rulesupreme’isatotalconceptualconflict. YetIobserve many(notall)at the‘bigendof town’recognisingthetrend andadapting.Theydothisbecausetheyarelisteningnotjusttotheconsumermarket-placebuttotheworkforcemarketplaceaswell.Someunusualexamples,suchasKochIndustries,havemovedaheadofthisideaandtheyclaimtohavegrownasaresult.
Forgovernmentorganisationshowever,theideaofthesupremacyoftheindividualworkerisaconceptualthreattotheirveryexistence.Againmyobservationisthatgovernmententitiesarefailingtoevenattempttoadapt,andareinfactresistingadaptation.
Thechallengetomacroeconomicpolicyandpolicymakersishuge.SinceWorldWarIIatleast,macroeconomicthoughthaslargelyheldthelinethatfree-marketcompetitionismadeupofcommand-and-controlfirmscompetingforconsumers’largess.Butglobally,around97percentofbusinessesaresmall(withfewerthanfiveemployees)andaround60percentofbusinessesarenon-employingbusinessesofone.Thepeoplewhorunthedominantnumberofbusinessesarenotcommand-and-controlfirms.Theyaremore‘consumer-like’thananythingelseinthewaytheybehave.Thismustturnonitsheadtheprevailingacceptancebyeconomistsofhowamarketeconomyoperates.Todate,there’slittleevidencethateconomicpolicymakersseethis,understanditorhaveevenadaptedanyoftheirthinkinginthisdirection.
Conclusion
This is a brave new world of work. There’s a challenge to established local and globalinstitutionsbuiltaroundthepresumptionofemploymentandthesuppressionofthedesiresoftheindividualtothedictatesofbigorganisationalstructures.Justasindi-vidualconsumersaretheheroesthatdrivecompetition,thereisarefocusingonthesupremacyandauthorityoftheindividualintheworkenvironment.Thisishappeninginalayeredwaythroughtheworksituation.However,it’sindependentcontractorswhomost highlight the socialand economic movement underway.
endnotes
1Visitthewebsite:
2Phillips,K2008,IndependenceandtheDeathofEmployment,ConnorCourtPublishing–originallypublishedasaneBookbyVoltanin2005.Learnmore:
3See
4IndependentContractorsAustralia2013,‘IndependentContractors:HowMany?(Australia)’,IndependentContractorsAustraliawebsite:
5TheBoardofTaxation2014,Reviewoftaximpedimentsfacingsmallbusiness:areporttotheGovernment,August,AustralianGovernment,accessibleattaxboard.gov.au/content/reviews_and_consultations/impediments_facing_small_business/report/downloads/taximpediments_report.pdf
6IndependentContractorsAustralia2015,BoardofTaxationReview of Australian Tax Office treatment ofsmallbusiness people,February,accessible at digging-out-the-ato-board-of-taxation-review-recommendations
7KellyServices2009,KellyGlobalWorkforceIndex.
8MBOPartners2014,The2014StateofIndependenceinAmericaReport,October,Virginia,accessibleatinfo.mbopartners.com/rs/mbo/images/2014-MBO_Partners_State_of_Independence_Report.pdf
9Florida,R2013 ‘TheGeographyof America’sFreelanceEconomy’, The Atlantic,25February, accessibleatwork/2013/02/geography-americas-freelance-economy/4118/
10Johnson,W2013,‘Independentworkmaybeinevitable’,HarvardBusinessReview,19February,accessibleathbr.org/2013/02/independent-work-may-be-inevit
11ThisisaccordingtoestimatescompiledbyEconomicModelingSpecialists(EMSI).EMSI’sfiguresarebasedondatafromtheUSCensus.
12ChicagoTribune2015,‘Freelancingbythenumbers(infographic)’,ChicagoTribune,17February,accessibleatmy.chicagotribune.com/#section/-1/article/p2p-82845096/
13Blanchflower,D2014,‘Reasonstobeconcernedbytheriseofself-employment’,TheIndependent,27April,accessibleatwww.independent.co.uk/news/business/comment/david-blanchflower/david-blanchflower-reasons-to-be-concerned-by-the-rise-of-selfemployment-9924635.html;
Seymour,R2014,‘Inthiseconomy,beingself-employedisnotachoicebutanecessity’,TheGuardian,22August,accessibleatwww.theguardian.com/commentisfree/2014/aug/22/self-employment-not-choice-necessity-lacklustre-labour-market
14Grant,T2013,‘MoreCanadiansturningtoself-employmentinshakyjobmarket’,TheGlobeandMail,6October,accessibleatarticle14717312/
15Leighton,P2014,‘FutureWorking:TheRiseofEurope’sIndependentProfessionals’,IndependentContractorsAustralia,accessibleat
16IndependentContractorsAustralia2010,ResearchFindings:SummaryTable,accessibleatDownloads/Research/researchgrid.pdf
17IndependentContractorsAustralia2013,SummaryofMBOReport2012, 18March,accessibleatau/Research/Profile/summary-of-mbo-report-2012
18Ibid.