Self-employed individuals work for themselves and not for any employer. They do business with another business entity or provide services as an independent contractor. They may also own their own business enterprise or share ownership or have a partnership in that business. They may work on a day-to-day basis or have a management team. Self-employed people include doctors, accountants, lawyers, writers, and business owners. They are responsible for paying their own taxes and social security. Professional services, agriculture, and construction are all part of the self-employed sector. In the United States, this sector accounted for around 30% of the workforce in 2015.
Reasons for Low Rates Of Self-Employment
Countries that have the lowest rates of self-employment among its population enjoy the highest income levels per capita. Europe has the lowest self-employment rate at just over 4%. Across the entire European Union (EU), however, 34% see it as desirable, while only 17% of Germans think the same. According to Eurostat, the EU has around 23% of its youth jobless. Some Europeans consider self-employment as an undesirable undertaking. There are several reasons why they are not looking at this employment alternative. Lack of support of finance, counseling, and network. Some prefer creative industries and Information and Computer Technologies.
Low Prevalence of Self-Employment In Europe
In several member states of the EU, less than 1 in 10 workers are classified as self-employed. Data from the International Labor Organization Statistics puts Norway at the top, with the lowest proportion of its population’s labor force as self-employed among all nations at 7.2%. Luxembourg is second, with 8.7% of its population’s labor force as self-employed. In third is Canada, with just 8.8% of its labor force being self-employed. Denmark is fourth, with 8.9% of its labor force as self-employed. Fifth is Estonia, with 9.0% of its labor force as self-employed. Sweden is sixth, with 10.3% of its labor force being self-employed. Seventh is Hungary, with 10.9% of its labor force working self-employed. Germany is eighth, with 11.0% of its labor force being self-employed. Ninth is France, with 11.5% of its labor force working self-employed. Latvia is tenth, at 11.5% of its labor force being self-employed. Eleventh is Lithuania, with 12.1% of its labor force working self-employed. Iceland is twelfth, with 12.3% of its labor force being self-employed. Thirteenth is Bulgaria, with 12.5% of its labor force being self-employed. Austria is fourteenth, with 13.3% of its labor force working self-employed. Fifteenth is South Africa, with 13.6% of its labor force being self-employed.
Implications of Low Self-Employment Rates
Low rates of self-employment in countries around the world especially seem to affect young people. Therefore, in turn, this could create a vacuum in the labor market that could retard skills development in a country’s workforce. Youth vagrancy is another aspect of low rates of self-employment. The missed opportunity to contribute to the economy, and the society in general, are two of the other detrimental outcomes of low self-employment rates in a country. Self-employment often is a process of developing skills that prepare young people for the transition to the corporate world or bigger employment opportunities. Self-employment itself is seen as a necessary flexibility to the labor market and help create jobs as well as develop skills in youth according to Marianne Thyssen, the EU Commissioner for Employment, Social Affairs, Skills and Labor Mobility. Self-employment contributes to a country’s economy.