Navigating Autonomy: The Surging Trend of Self-Employment Amidst Labour Market Dynamics

Over the past decade, a significant surge in the number of self-employed individuals has reshaped the employment landscape. The COVID-19 pandemic has further accelerated this trend, prompting more individuals to embark on entrepreneurial ventures. Factors such as the tightening labour market, coupled with the desire for increased autonomy and flexibility, have emerged as key catalysts for this notable increase.

Recent data from the Netherlands reveals a substantial growth in the self-employed workforce, reaching 1.6 million individuals in the current year, a significant leap from the 1.23 million reported in 2013, according to statistics agency CBS. Diverse sectors have witnessed this surge, with professionals in accounting, finance, economics, business consultancy, and organizational and policy advising comprising the largest group, totalling 123,000 individuals.

Source: Freepik

The construction sector follows closely behind, boasting 120,000 self-employed individuals, predominantly including carpenters, wallpaper installers, painters, pipe fitters, and plumbers. Additionally, personal services contribute significantly to the self-employed workforce, with 105,000 individuals choosing entrepreneurship in roles such as cooks, bartenders, hairdressers, waiters, tour guides, and beauticians. Medical professionals, including doctors, therapists, and specialized nurses, constitute 96,000 individuals, while salespeople and creative professionals in the fields of authors and artists account for 89,000 and 83,000, respectively.

Professor Olaf van Vliet from Leiden University sheds light on the driving force behind this trend, stating, “People crave more flexibility; they yearn to determine when and how much they work.” The quest for autonomy prompts employees to explore self-employment possibilities in various sectors, enabling them to exert more influence over their work schedules.

Van Vliet emphasizes the fiscal allure of self-employment, citing the self-employed deduction as a significant financial incentive. Despite its phased-out nature, this deduction allows self-employed individuals to deduct a portion from their profits, thereby reducing tax liabilities.

Highlighting the magnitude of the shift, CBS chief economist Peter Hein van Mulligen points out the substantial shortage in specific sectors, particularly noticeable in healthcare and construction. Individuals are leaving traditional employment with the mindset of offering their services as freelancers, anticipating better earnings.

Source: Freepik

Van Mulligen anticipates the continuation of this trend, especially if labour market conditions remain tight. Contrary to common perceptions, this shift towards self-employment is not limited to younger demographics; older and experienced professionals are increasingly choosing this path, further solidifying the evolving dynamics of the employment landscape.

In summary, the remarkable surge in self-employment reflects a broader societal shift driven by a confluence of factors. As the labour market continues to evolve, the appeal of self-employment persists, offering individuals the autonomy and flexibility they seek, ultimately reshaping the very fabric of the workforce.

To capitalize on available talent worldwide companies can implement solutions such as Employer of Record (EOR) service. By establishing a more robust link between these trends and the utilisation of these solutions, businesses can effectively harness talent from various locations, presenting a promising avenue for growth and efficiency.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is an outsourcing legal entity that delivers specific HR administrative and payroll functions. The EOR partner acts on behalf of the actual employer to carry out all administrative employment tasks. An EOR allows businesses to focus on strategic initiatives to grow the business.

For companies adapting to the rise of self-employment, embracing flexibility in work arrangements and acknowledging the fiscal motivations behind freelancing is crucial. Offering remote work options, competitive compensation structures, and cultivating a pool of freelancers can enhance collaboration.

To find out more about BIPO’s total HR solutions, including our award-winning Employer of Record service, visit us at www.biposervice.com