New research offers insight into true costs and benefits of independent professionals

New research offers insight into the true value of the total output for the Dutch economy of highly skilled self-employed workers, working for mostly large clients in business services (zp'ers). This amounts to 17.3 billion euros per year for the current population of 110,000 independent professionals. Although the social position of self-employed professionals is regularly under fire, the report "The Economic and Social Value of Independent Professionals" - which SEO conducted on behalf of HR tech service provider HeadFirst Group - makes clear what contribution this group of workers has for society. It shows, for example, that at the bottom of the line they provide additional revenues worth as much as 4.4 billion euros. This knowledge can contribute to better regulation in the future, and prevent obstructive policies.

"In our research we make clear the significance independent professionals have for our society and economy. This turns out to be undeniable, since their contribution to the economy has a value of euro per year. Without their input, some of this production would no longer take place or would be moved abroad. This would be at the expense of numerous jobs and lead to a great loss of knowledge. That is something we cannot afford, with the current tightness," said Marion van Happen, CEO of HeadFirst Group. "Zzp'ers are needed more than ever at a time when the labor market is screaming for qualified personnel. For example, specialists in different sectors are crucial, to make the transitions our society faces succeed. This applies to all workers - regardless of the form of contract. Unfortunately, there are still many misconceptions about the highly educated self-employed population. For example, it is wrongly assumed that they cost society more than they provide. The report shows that the real and great value of independent professionals for the economy and our society cannot be underestimated."

 

The social costs and benefits
According to the study, the social costs and benefits of independent professionals amount to a positive balance of as much as 4.4 billion euros per year. This positive balance is mainly the result of the additional production and profit realized through the use of the current population of 110,000 independent professionals. This is mainly the result of higher labor force participation. Without the possibility of self-employment, some of this production would no longer take place or move abroad. In addition, this positive balance of 4.4 billion euros per year also has to do with higher average productivity (+10 percent) compared to a situation where they would be working in another form of contract. Finally, government and society benefit from a higher profit and income tax, compared to a situation without self-employment. This is because more is worked, produced and earned - both by independent professionals and clients.

 

Call to politics
With this data, HeadFirst Group contributes to the political debate on the labor market, where impending regulations may severely limit self-employment. Van Happen: "We call on politicians to pay attention to the great value of independent professionals and to listen to the needs of clients. They appreciate the flexibility and possibilities of specialized professionals. This report shows that on balance there is a social added value by the possibility to work as an independent professional. Although less social contributions are paid, this is more than compensated by more tax revenue. Regulations for the base of the labor market - to combat false self-employment, for example - can have consequences for the rest of the market, however, and this can lead to loss of welfare. In addition, our earlier report on the entire self-employed population showed that the number of forced self-employed is minimal, contrary to what many policymakers believe. This group of workers deliberately chooses this form of contract precisely because of the degree of professional autonomy and flexibility it offers. Customization in legislation is therefore essential to combine protection of vulnerable workers with facilitating entrepreneurship."

 

Facts and figures about self-employed workers
The report contains many other interesting insights about highly educated self-employed people. An overview:

  • It is estimated that over 110 thousand highly skilled independent professionals are now active in the Dutch labor market. This amounts to 10.2 percent of all self-employed people and 1.1 percent of all employed people.
  • Highly educated self-employed workers work for the government (22 percent), business services (19 percent), financial services (15 percent) and in the healthcare and IT sectors (both 9 percent).
  • Most highly educated self-employed workers work annually for a limited number of mostly larger clients. Most work for one client (38 percent) or two to five clients (45 percent). Only a small proportion work for five to 10 clients (10 percent). The part that works for a limited number of clients often does so for (very) large companies.
  • Half of the highly educated self-employed are between the ages of 35 and 55. In addition, the proportion over 55 (33 percent) is almost twice as large as the proportion younger than 35 (17 percent).
  • Almost a third of highly educated self-employed workers have been active in this form of work for more than 10 years and 13 percent even more than 20 years.
  • Three in five highly educated self-employed workers work full-time; 32 percent are employed between 20 and 35 hours per week and 7 percent work less than 20 hours per week.
  • Highly educated self-employed workers would, in a null alternative - if it were no longer possible to work as a self-employed worker - work in another form of employment in nine out of 10 cases. Almost a third would return to permanent employment, while 20 percent would be active as seconded workers. In addition, 12 percent are expected to be working in a regular temporary contract, while 10 percent would be inactive, working abroad or in (early) retirement.