The flip side of self-employment

The sociologist Dieter Bögenhold is advocating a critical discourse on the functions and effects of self-employment on national economies. After all, not all that glistens is gold when it comes to labour market statistics.

What makes an entrepreneur?
Entrepreneurship is extremely heterogeneous. From social, economic and biographical perspectives, it includes a variety of different situations and careers. But the one thing entrepreneurs have in common is that they are not dependent on a salary or wage. It also follows that entrepreneurs have a lot in common with the self-employed. The spectrum is extremely wide, ranging from a fast-food stand owner to Didi Mateschitz, the Austrian billionaire co-founder of Red Bull.

But is it always clear who is an entrepreneur?
All the statistics show a divide between employment and self-employment. But what is considered less often is the mobility between the two spheres. Furthermore, there are situations in which individuals can be both employed and self-employed. In one study, with Andrea Klinglmair, we labelled this phenomenon ‘hybridity’. And we want to continue to work in this area.

What role does a person’s occupational group play here?
In 2011, along with two Finnish colleagues, I spent some time looking at the labour market behaviours of freelance journalists, interpreters and artists. These three groups showed differing rationalities. The journalists were predominantly self-employed because they didn’t have jobs. As soon as they had the chance to become employed they took it. With artists it was the exact opposite: they habitually tended towards autonomy. Even when they found it hard to make ends meet financially due to being self-employed, they didn’t want to take on just any old job. The line between self-employment and being gainfully employed is not as rigid as the statistics would suggest. It is fragile and characterised by transitions from one sphere into the other. These phenomena have not been subject to much analysis to date.

Alongside hybrid constellations there are also the ‘part-time self-employed’. What do you think about this phenomenon?
There are also only limited statistics on the part-time self-employed. A significant number of self-employed people work part-time and are on low incomes, particularly amongst women. Viewed on their own, the incomes of many part-time self-employed individuals come close to the poverty line. However, when you view them as part of a household, self-employment frequently provides an additional household income.

What has all this got to do with the challenges of our current, changing labour markets?
The term entrepreneurship is commonly accepted as having positive connotations, even politically speaking: entrepreneurs generate innovations, jobs and growth. Entrepreneurs are seen as heroes, advancing society and setting positive economic trends. But this can also be viewed differently: many phenomena, when looked at more closely, show what we have long called the ‘Americanisation of the labour market’: People don’t just have one or two jobs; instead they cobble together a living from a wide variety of activities.

Can you back this critical perspective up with figures?
The dark side of entrepreneurship is visible in the figures: more than 70 percent of entrepreneurs in the EU-28 are one-person companies. In Austria and Germany, the figures are comparably low at under 60 percent. In the UK, however, almost 85 percent of all entrepreneurs are OPCs, or one-person companies.

Are shifts in society and at work changing the perspective of the term ‘entrepreneurship’?
All in all, digitalisation has brought about wide-reaching, radical changes in society – similar to the effect of the industrial revolution in the 19th century – and will eventually lead to the extinction of entire professions. At the same time, new areas of activity are being developed. The connections between our digitalised society and the economy have become increasingly complex. When you enter working life as a young person today, you can be relatively certain that it won’t be the job you go into retirement with. The employment of the future will rather be structured in biographical phases, and self-employed episodes could well be among these phases. And this goes hand-in-hand with an altered understanding of employment and income. On that basis, it can be assumed that a stable and relatively peaceful middle ground exists within the category of OPCs: these individuals are doing exactly what they want and are not striving to grow their business, even if they are never going to earn a fortune from being self-employed.

Are the self-employed creating more job opportunities?
No. The statistical findings show that actually the opposite could be the case. The increasing number of self-employed individuals is a response to the increasing amount of unemployment. Overall, where levels of unemployment rise, the levels of self-employment rise too. What is often sold as a cure for the disease of unemployment is actually not a cure at all, but rather a symptom. It isn’t possible to conceive it simply in terms of ‘good’ or ‘bad’, that would be an oversimplification.

How important is it then to have a differentiated perspective on entrepreneurship?
This is where science comes into its own, as otherwise we would remain stuck looking at the level of political discourse, which generally takes the line that the more entrepreneurs a national economy has the better. Self-employed individuals create a job for themselves and pay tax. If they are successful, there is a multiplier effect and unemployment levels sink further. The more self-employment is promoted, the more unemployment fall and the greater the economic growth. The problem is that, empirically speaking, this reasoning doesn’t always add up.

In international terms, the start-up friendly USA can serve as a model.
The OECD data from 2015 shows that America has the lowest levels of self-employment of any country; lower even than Russia. Higher levels of self-employment are typically seen in countries with lower economic growth and higher levels of structural problems within the labour market; for example in Greece or Turkey. It can therefore be assumed that a sound economic structure, which provides enough jobs, is the basis for growth, and not the other way round. But then questions about such causal connections are admittedly seldom asked.

for ad astra: Annegret Landes

About the person

Dieter Bögenhold has been a full Professor within the Department of Sociology since 2011. He works at the interface between economic and social research. His areas of expertise are research into start-ups and entrepreneurial behaviour and consumer research/the sociology of consumption, as well as innovation research and the history of sociology and economic thinking.

Bögenhold Dieter | Foto: aau/Waschnig