Rise of the sole trader

Half of Dutch companies rely on freelance workers. In the first of a three part series, labour economist Ronald Dekker tells PHILIP HOFMAN what drives thousands of Dutch employees into self-employment each year.

Carpenters, IT experts, human resource managers, road workers - it looks like they are all at it these days. At what, you ask? At becoming their own boss. By the third quarter of last year, Holland counted 27,000 more businesses with one owner - and no staff - than a year earlier. As the number of traditional small businesses such as shops and cafés has remained relatively stable, much of the small business surge can be attributed to employees who have gone freelance. These one-man bands are called zelfstandigen zonder personeel (entrepreneurs without personnel) in The Netherlands, or simply referred to as zzp'ers. According to the CBS, the Central Statistics Bureau, their numbers have risen from 397,000 in 1996 to 708,000 by the third quarter of 2010.

Age of employment
Nine out of ten Dutch workers are still employees though, and most are well looked after in terms holiday entitlements, possibilities for working part-time and sick leave. But is the increase in freelance workers across a wider range of industries and professions, a sign that the age of traditional employment is coming to a close in The Netherlands? “Most certainly not,” says Doctor Ronald Dekker of Tilburg University. “Undeniably there are more zzp’ers today, but to say that self-employment will become the measure of all things on the labour market is nonsense.” Nonetheless, the zzp trend gets a fair amount of media attention. “Sure it does,” Dekker says, “many media people are zzp’ers themselves.” Culture and assorted services, as the CBS labels the industry which includes media, is indeed one of the main sectors which have seen a clear rise (+8%) in freelance workers from 1996 to 2009. Others are construction (+9%) and business services (+3%). In absolute terms, most zzp’ers work in business services. The traditional and declining agriculture and fishery industry still has the highest percentage (approx. 35%) of sole traders.

Freelance drivers
Dekker says three forces drive people towards freelancing. First, companies operate in more volatile markets and need flexibility to survive. “Cars may nowadays have a shelf life of five years instead of ten, and some mobile phones are marketed for only six to eight months,” he explains. Dutch suppliers to such industries have to be very adaptable, tapping into different competences for short periods at a time. “Some companies have organised this internally with a pool of core employees who can be deployed flexibly, but temps and zzp’ers also serve that purpose.” Thus, choosing zzp’ers over employees is not just a cost saving issue, Dekker says. Another driver of zzp growth lies in workers themselves. Becoming a zzp’er can be a positive or negative choice, depending on whether someone is forced by circumstances, or decides out of free will. A survey by EIM Business & Policy Research shows that 95 percent of zzp’ers made a voluntary choice for becoming self-employed. “I would take that figure with a pinch of salt,” says Dekker. “Those who lose their jobs and become zzp’ers after a string of unsuccesful job applications can later come to see it as a positive change.” Finally, larger trends such as globalisation, increasing competition, technological development, standardisation and individualisation all fit working with zzp’ers.

Low-end offers
Half of all Dutch companies used the services of a zzp’er in 2010. A CBS poll published last December shows that specific knowledge and experience of zzp’ers is the primary motive for companies hiring them, closely followed by the need for flexibility. Despite several economic trends favouring zzp’ers, Dekker expects their numbers to grow at a modest pace, tailing off at around a 15 percent of all workers. “But I do not expect to see that being reached in the next ten years,” he adds. The labour market is expected to tighten considerably when the economic crisis passes, enabling zzp workers at the top end of the market to increase their freelance rates, says Dekker. “But I expect many at the lower end to accept job offers to go back to the security of regular employment.”