2. 2
Digital Cowboys
Developments in the labour market for self-employed workers
Digital Cowb oys • Cha pter •
3. 3
| Colofon
Digital Cowboy
Developments in the labour market for self-employed workers
| Author
Dennis Bouwman
| Publication
Dennis Bouwman
Oktober 2008
Translated by Paula Maathuis
@ 2009 Dennis Bouwman
No part of this publication may be reproduced, stored in a retrieval sys-
tem or transmitted in any form or by any means, electronic, mechanical,
photocopying, recording, scanning or otherwise, except as permitted
under Sections 107 or 108 of the 1976 United States Copyright Act, with-
out either the prior written permission of the Publisher, or authorization
through payment of the appropriate per-copy fee to the author: Dennis
Bouwman, Postbus 685, 7500 AR Enschede, the Netherlands.
Requests to the Publisher for permission should be addressed to Dennis
Bouwman, Postbus 685, 7500 AR Enschede, the Netherlands, or online at
info@digitalecowboys.nl
4. Contents
Page
Foreword 5
Chapter 1 The importance of self-employment 7
Chapter 2 A description of self-employment in the ICT sector 11
Chapter 3 Trends and developments in self-employment 17
Chapter 4 Trend I: Diversity in forms of working relationships 22
Chapter 5 Trend II: The rise of employment agencies for freelancers 30
Chapter 6 Trend III: The paradox of terms of employment for self-employed workers 35
Chapter 7 Trend IV: The importance of growth and development 40
Chapter 8 To a strategic agenda for self-employment within ICT 46
6. Foreword 5
Work has become more flexible and workers have become more inde- and flexible. Diverse, because it doesn’t consist only of employers and
pendent. When and where work is done, and in which form, don’t matter employees. flexible not because of an increasing number of employees
much, as long as it is done. These are the most important trends in the la- with temporary contracts, but because of an increasing number of self-
bour market for the coming years. More and more employees want to be employed workers.
self-employed. The growth in entrepreneurship is a result of the growth in The labour market is the domain in which FNV Zelfstandigen operates.
the number of self-employed workers. Although self-employed workers As a group caring for the interests of self-employed workers, our job is
don’t legally exist in the Netherlands – in legislation no description can be to follow trends and to translate these trends into concrete services for
found – more and more people are choosing this flexible and free manner our members on both the individual and collective levels. We are the pio-
of work above fixed forms of employment by others. neers of the self-employed labour market sector. We are therefore proud
An important reason for becoming self-employed is the wish to be en- to present to you Digital Cowboys, Developments in the labour market
gaged in a craft, with real work. Self-employed workers flee from labour for self-employed workers. Our vice-president, Dennis Bouwman, also a
organisations. They want control of what they do and how they do it. self-employed worker in the ICT sector, offers you a look into develop-
They want to take on assignments which provide personal development ments in this sector, known as a frontrunner in economic developments.
and to do so independently. Within labour organisations there is a shell Which developments and which initiatives must we, as an association for
of flexible forces, the self-employed workers, around the core of fixed self-employed workers, develop in conjunction with the public and pri-
employees. vate sectors to ensure that the self-employed worker can truly be a self-
Because of these developments the labour market has become diverse employed worker? Or should we simply let the self-employed worker be
7. 6 an entrepreneur and interfere as little as possible? This publication an-
swers these questions.
Above all, Digital Cowboys outlines a framework to support self-em-
ployed workers in their entrepreneurship. As an association we take this
issue to heart and resolve to use the coming period to further improve
the protection of our members’ interests.
| Linde Gongrijp
Director FNV Zelfstandigen
Digital Cowb oys • Chap ter 1 • The i mp o r tance o f self - em p loy m ent
8. Chapter 1 7
The importance of self-employment
At present the labour market is changing rapidly. Although at first This publication is about the trends and developments for self-employed
sight there seems to be an evolution, in a broader historical perspec- workers in the labour market. ICT is not only interesting because of the
tive it must be asked whether the flexibility of the labour market is developments in this sector, but also as a trendsetter for developments
characteristic of our modern times. After all, self-employment was in the labour market in general. As an association within the trade union
very common until the industrial revolution. Traders, bankers, fish- FNV, FNV Zelfstandigen plays the role of pioneer in the labour market.
ermen, smiths, and farmers were often self-employed. This is not only logical for a young association, but is also appropriate to
the association’s target group: self-employed workers.
| Self-employment: exceptional or standard? Both the ICT sector and the rise of self-employed workers show charac-
Even in these modern times, from an international perspective, self-em- teristics of receiving too much hype. Open any newspaper and there are
ployment sets the tone of the labour market. In developing countries, articles about automation, digitalisation, and their applications. Ask any
most citizens survive by producing or selling goods, or by offering per- politician what he thinks of self-employed workers, and he will react en-
sonal services. It is therefore remarkable that the employer-employee thusiastically, speaking about the modern employee who does his job
relationship has set the standard in the western world. Nevertheless, po- without hindrance from others and at his own risk.
litical parties in the Netherlands, from left to right, unanimously expect
self-employment to increase rapidly. We live in the age of information | Research project FNV Zelfstandigen
technology. Both the current developments in work relations and the im- This publication aims to make clear what is going on in the labour market
portance of information technology explain my choice for the ICT sector for self-employed workers. It analyses this labour market and examines
as research subject. the subject of four observable megatrends. The publication is a result of a
9. 8 research project on the developments of the labour market in ICT, carried Additionally, quantitative research of self-employed workers was carried
out by FNV Zelfstandigen. out. In this research, questions were not only asked about developments
The research project consists of literature and news article reviews, in- in the labour market. Special attention was paid to conclusions and as-
terviews, and quantitative studies of self-employed workers (member sumptions which emerged from the qualitative interviews with self-em-
panel). The emphasis of this project was on the latter two parts. ployed workers.
Literature review focused on research in several recent publications Finally, the combined results of the four research methods were analy-
regarding developments in the ICT sector, the labour market for self- sed.
employed workers, and the labour market for ICT workers. The results
are used as background information for the interviews and member re- | Reading guide
Digi tal Cowb oys • Ch ap ter 1 • Th e im p o r t an ce o f self - emp loy me nt
search, as well as for the descriptions of the ICT sector, the labour market, In Chapters 2 and 3, the ICT sector, and trends and developments of this
trends, and future expectations. News article research used recognized labour market, are discussed. There follows a description of four trends:
professional ICT literature, especially Computable, Automatisering Gids diversity in work relations (Chapter 4), the rise of conciliation offices
and IT Executive, as well as daily papers such as de Volkskrant and Finan- (Chapter 5), the paradox of terms of employment (Chapter 6), and the
cieel Dagblad. personal growth of self-employed workers (Chapter 7).
The largest part of the project was spent on interviews with self-em- Finally a strategic agenda is set to anticipate developments in self-em-
ployed workers and organisations. There were extensive interviews with ployment. The strategic agenda is aimed at both individual self-em-
seven self-employed workers: two project managers, three software ar- ployed workers and self-employed workers as a sector. The problems and
chitects and developers, a website designer, and a web host. The inter- successes of self-employment are relevant not only to the self-employed
views are examined in this publication. Interviews were also held with worker, but also to the whole of society.
three employment offices, directors of FNV Bondgenoten, and other so-
cial interest groups.
10. 10
Digital Cowb oys • Ch ap ter 2 • A de sc r i p t io n of self- employment in the IC T s ec tor
11. Chapter 2 11
A description of self-employment in the ICT sector
The ICT sector was central to the research project. As stated in the on a more executive level. The programmer is faced with totally different
previous chapter, the ICT sector has always been an example to developments and trends than the project and interim managers.
and trendsetter for other market sectors. Outsourcing, individual-
oriented collective agreements, and personal bonus systems are ex- | Three groups of self-employed workers
amples of labour market developments in the Netherlands, which The ICT sector is characterized by a great diversity of companies, of all
initially existed only in sectors like ICT and financial services, after forms, shapes, and sizes. This is also evident in the diversity of self-em-
which they also became common in other sectors. ployed ICT professionals who were interviewed for the FNV Zelfstandi-
gen project. These professionals varied from the owner of a one-man
The choice of ICT as research area was not only made because of the hosting company, to a self-employed software engineer who is active
interesting companies and developments in the sector, but because of throughout Europe, to a website constructor, to a self-employed interim
this industry’s role as trendsetter for developments in the labour mar- project manager. They all engage in different activities and reflect differ-
ket in general. Before the developments and trends in the world of self- ent definitions of the ICT sector.
employed workers are discussed, a description of self-employment in the From the interviews with self-employed workers and conciliation offices,
ICT sector is provided. The ICT sector has a number of specific character- roughly three groups of self-employed workers can be distinguished:
istics, with which it distinguishes itself from other sectors. web designers and web hosts, architects and developers, and interim ICT
This chapter gives a simple description of self-employment in the ICT sec- project managers.
tor, divided into three different types. The self-employed project manager
as ‘high professional’ differs from the ‘artisan’ programmer, who is active
12. 12 | Self-employed web designers and internet hosts
The first group within the self-employed ICT professionals is web de-
IT or ICT? signers and internet hosts. Internet hosts (hosting providers) offer web
space and web services, such as photo books and web logs. They main-
Information and communication technology are more and more a continuation
of each other. That’s why the term Information and Communication Technol- tain files for websites, which are owned by individuals or companies who
Digital Cowb oys • Cha pter 2 • A descr ip ti o n of self - emp loy ment i n t he IC T s e c to r
ogy (ICT) is often used instead of Information Technology (IT). Post and telecom
don’t have their own web servers. The size of this group is very difficult
activities are included in the definitions and research of the Dutch Ministry of
Economic Affairs and the Dutch Central Office for Statistics (CBS). These make to determine; factual data about the size and qualifications is scarce. This
up a significant part of the total activities of the ICT sector. In this book postal
group is not mentioned in the statistics of the Central Bureau for Statis-
activities are not included. Telecom activities are more and more part of auto-
mation activities. Just consider the developments in VoiP (telephone over the tics in the Netherlands.
internet). Communication devices are business-like services, and aren’t includ- The group of internet hosts is very small, unlike the group of self-employed
ed in the definition of the ICT sector.
web designers. Estimates by the self-employed workers themselves sug-
gest that roughly half of the self-employed workers in the ICT sector are
web designers. Many of these self-employed web designers combine
their web design work with other assignments. This assumption is sup-
ported by the results from the digital research panel, in which half of the
self-employed ICT professionals show the characteristics of web design-
ers; that is, they do executive work for many different clients. In explana-
tion, these workers point out that as the work becomes more large-scale,
co-operation becomes more fixed. Moreover large employer companies
seek large ICT companies to do the work, while smaller companies work
more often with smaller ICT companies. Bigger, more complex projects
are therefore executed by big companies, in which a multidisciplinary
13. team often works together, whereas self-employed workers tend to han- The interviewees state that secondment and outsourcing abroad often 13
dle smaller cases, such as web design. take place. Although the software developer stated that this doesn’t
bother him, he does notice that many of his large clients are sensitive
| ICT architects and developers about outsourcing. He thinks outsourcing is an alarming development
The second group of self-employed workers in the ICT sector consists of for the Dutch economy. He is concerned about companies that arrange
architects and developers. Programmers (developers) and the system an- outsourcing because their approach is aggressive. Finally, the software
alysts (architects) are part of this group. The Central Bureau for Statistics developer states that he talks to many professionals ICT colleagues in
in the Netherlands gives numbers for this group in its yearly report on his environs who work for large software houses. He states that these
De Digitale Economie (The Digital Economy): in 2005, the total number companies, which used to have a reputation for software development
of self-employed ICT architects and developers was 21.800; at a rough and system management, are now more and more occupied with sec-
estimate the number in 2008 was about 25.000. ondment.
Number ICT professionals in Number of self-employed
| Self-employed ICT project managers
The Netherlands ICT professionals (9%)
Programmers 87.800 7.900 The third group within the self-employed ICT professionals is the self-
System analysts 154.300 13.900 employed project managers. Depending on the level of specialization
Number of ICT architects and developers in 2005 (source: De Digitale Economie 2006) within the ICT sector, this group also calls itself “(register) information
scientists”. The third group is, according to interviews with self-employed
The architects interviewed stated that they work in companies of differ- workers and the data of the Vereniging voor Register Informatici (the
ent sizes, thus the tasks they are assigned differ enormously. With larger Association for Register Information scientists), also the group with the
clients, half of the ICT professionals work as architects or executors and highest level of education and which mostly hires itself out for long-term
the other half as project managers. With smaller clients, a personal match assignments with one client.
is much more important: ‘small seeks small’. In the smaller companies the When one does not look purely at the specialized ICT project managers,
demand is also different: here more ‘statute-labour’ is required. but also at project managers for whose projects ICT or company process-
14. 14 es form an important part, then the total number of ICT project manag-
ers is, according to the interviewees, about 10,000.
Characteristics of the ICT sector There are quite a few changes occurring in the domain of tasks. Self-em-
ployed project managers see a movement in the ICT sector from ‘hard’ (ap-
The ICT sector is so diverse that the differences within it are at least as numer-
ous as the similarities. There are significant differences in the character and plication development, website building and techniques) to ‘with it’ (ICT
working methods of ICT companies. Whereas within bigger companies more
supportive of company processes, which have to fit in with the strategy of
and more frequent takeovers and mergers take place, the smaller parties are
Digital Cowb oys • Cha pter 2 • A descr ip ti o n of self - emp loy ment i n t he IC T s e c to r
often niche entrepreneurs who work with subcontractors. the organisation). The aim of ICT, then, according to the project manag-
ers, is much more about change management and business; for example
A known general characteristic of the ICT sector is economic conjuncture sensi-
tiveness. There is a so-called short-cyclic character of activities: a rapid change handling business cases, business goals, and business enablement.
between boom and recession. In a boom there is a shortage of ICT profession- The project managers also sense four developments within the ICT sec-
als. In a recession the supply is greater than the demand. At the same time the
intake of young qualified workers remains lower than the expected demand tor as a whole. These are
for staff. 1. A strong trend to increase companies’ efficiency and costs with the
Company branches characterise themselves further by strong competition be-
help of ICT
tween specialists in the area of maths, information, and systems management 2. An increasing focus on what companies see as their core business,
on the one hand and in organisational structure and communications on the
influencing the use of ICT
other hand. Because of the ongoing nature of technological developments,
continued investment in human capital is necessary to attain profit in the long 3. Increasing numbers of ICT professionals involved with the tangent
term. Short term conjuncture cycle investments aren’t always efficient because
plane between ICT and business
companies have shortages or surpluses of staff. Investments will not occur au-
tomatically, because within ICT knowledge is volatile and work relationships 4. The increasing importance of change management in organizations,
are sometimes short; undoubtedly there is a connection between these two
with a resulting influence on the need for competent ICT professionals
characteristics.
This last development means that ever higher demands are made on ICT
The Central Bureau for Statistics (CBS) in the Netherlands describes a number
professionals, especially in the fields of competence, behaviour, and cer-
of lesser known characteristics of the ICT sector in De Digitale Economie 2006
(The Digital Economy 2006). The profile of ICT professionals clearly differs on a tification. According to the project managers, this is justified because of
the magnitude of money and risk involved.
15. number of points from that of the average working Dutch person. ICT profes-
15
sionals work considerably more often in a fixed working relationship and less
often as a flexible employee or self-employed worker. They also work 35 hours
or more per week more often. Their age is somewhat lower and their level of
education is higher, compared to the total active working population. The big-
gest difference lies in the percentage of women working in the ICT sector: the
total working population of women is 42%, but in ICT this is merely 11%.
Number of ICT professionals in the Netherlands Number of self-employed ICT professionals (9%)
Information scientists 26.600 2.500
Other ICT project managers - 7.600
Total number ICT project managers - 10.000
Number of ICT project managers in 2005 (source: De Digitale Economie 2006)
16. 16
Digital Cowb oys • Chap ter 3 • Tren ds an d develo p ment s in self - e m p l oy m e nt
17. Chapter 3 17
Trends and developments in self-employment
The previous chapter described the ICT sector and its labour mar- | The rise of open innovation
ket. The ICT working population appears to be highly educated and The scientific literature on economic developments and labour market
very stable. A large demand for ICT professionals remains, but the policies is vast. Much of this literature was reviewed for this research proj-
number of young ICT professionals is decreasing while many people ect. Only a small part has a tangent plane with the labour market of self-
over 45 are looking for work. In spite of a downfall in the outlook in employed workers.
the coming years, it is expected that this will have little influence on Of interest is the study of ‘open innovation’ by Henry Chesbrough. In his
the quantitative supply and demand in the labour market. Historical book Open Innovation, Chesbrough considers the contrasting principles
data (in the recession at the start of the 21st century the ICT working of closed and open innovation. He observes a slow transition from closed
population scarcely decreased) and the decreasing growth in num- innovation principles to the new open innovation principles.
bers of young ICT professionals seem to support this expectation. For self-employed workers, open innovation offers many possibilities for
Quantitatively, trends and future expectations for the labour mar- work and innovation. Also for companies which adhere to the open in-
ket seem almost monotonously stable. novation principles, the innovative power of self-employed workers, who
move between different companies, offers great opportunities. Eventu-
Qualitatively speaking, based on the research and news articles studied, ally, this open innovation principle seems to create a ‘proliferation of
combined with many interviews and conversations with self-employed knowledge’, which produces a win-win situation for companies and self-
workers, the labour market in the ICT sector seems to be stirring violent- employed workers.
ly. In this chapter, we will examine these developments and expectations In the interviews with self-employed workers it is stated that assign-
for the future. ments for clients which bring the open innovation principle into practice
18. 18 are both much more successful and much more likely to produce con- the part of the tax office, which now considers the hired self-employed
tented workers. The interviewees also state that more and more clients worker as a disguised employee, which can lead to an additional tax as-
are bringing the principles of open innovation into practice. sessment.
| The secondment worker prefers to be his own boss A further development is the rise of commercial mediators. In Chapter 5
Almost all ICT architects and developers have noticed that the smaller, we will discuss the rise of employment offices.
nicer companies (with about 100 employees) are disappearing. Because
Digital Cowb oys • Chap ter 3 • Tren ds an d develo p ment s in self - e m p l oy m e nt
of this development the stimulus to work for these smaller, more creative | Big puts out to small: the rise of tender chains
companies has disappeared and still more ICT professionals are choosing One of the most interesting developments in the labour market for self-
to be self-employed. employed workers is the rise of the tender and client chains. The links
between ICT companies and employment offices have led slowly to the
At the beginning of November 2007, Financieel Dagblad reported that creation of a whole chain between the ultimate client and contractor.
more and more secondment employees are choosing to become self- In this way, big puts out to smaller, and so on. This is especially true for
employed. According to company economist and advisor Kees de Kruijff, the programmers and the developers. They work as self-employed work-
this is a result of the worsening of the terms of employment for second- ers through employment offices for bigger companies, sometimes even
ment employees. The commitment of secondment worker to the second- through several employment offices.
ment office is not strong in any case and the secondment worker doubts
the worth of the secondment office, De Kruijff believes. | Personal skills become more and more important
De Kruijff estimates that, a year after takeover, from five to eight percent The interviewed self-employed project managers stated unanimously
of secondment workers choose to become self-employed. But even those that the ICT sector is slowly changing from ‘hard’ (engineering) to ‘soft’
who take that step still often have to deal with a commercial mediator, (business). This means that more demands are made on the behavioural
because companies don’t always want to do business with an individual competence of ICT professionals. In addition, certification is more and
freelancer. That’s too much bother. Moreover, there has been a change on more important. This applies not only to certification for technical skills,
19. but especially for management skills, which are tested with 360 degree ment and negative experiences with ICT in the past. ‘The time has passed 19
analyses, for example. when you could work somewhere without being tested.’
Also, the technical programmers and developers state that their clients
As a reason for this increasing need for certification, the project manag- increasingly think that social skills and the ability to imagine oneself in
ers mention, among other factors, the report of the Dutch Government other situations are important. For the ICT technicians this is a cultural
Audit Office about serious losses on ICT projects by the Dutch Govern- change; irreversible, but also difficult.
Contrasting principles of ‘closed’ and ‘open’ innovation
Closed innovation principles Open innovation principles
The smart people in our sector work for us. Not all smart people work for us. We think it’s necessary to work with smart
people in and outside our company.
To profit from Research & Development, we have to discover, develop, and Research & Development outside our company can create much more in-
exploit innovations ourselves. novation value; R&D inside our company is necessary to be able to use a
part of that innovation value.
Whenever we discover an innovation ourselves, we are the first to bring it To profit from innovation, it isn’t necessary to start research ourselves.
to the market.
The company that gets an innovation to the market first wins. It is more important to make a better business model than to get to the
market first.
We win when we create the most and the best ideas in the industry. We win when we use ideas from in and outside the company best.
We must defend our intellectual ownership, so that our competitors can’t We must profit from the use of our intellectual ownership by others, and
profit from our ideas. we must buy the intellectual ownership of others’ ideas if this improves
our own business model.
20. 20 | Networking in a flexible labour market Carnoy also notes that the success of the flexible labour market depends
A second development, which is occurring more and more, is the impor- perhaps even more upon networks and contacts outside the workplace.
tance of networking and cooperation. A case study of the labour rela- Those who can make their skills known through a network of companies
tions strategies in Silicon Valley by Martin Carnoy offers a number of con- have a much better chance of finding work. Also, for workers with lower
clusions that are also interesting for the Dutch situation. levels of education, social networks outside the workplace appear to be
The culture of labour market flexibility is not only directed by the tradi- more and more important in flexible markets.
tional explanations of rapidly changing markets and intensive competi- All in all, many people find work through networks. The key does not lie
Digital Cowb oys • Cha pter 3 • Tren ds an d develo p ment s in self - e m p l oy m e nt
tion, but also by high turnover rates and the mobility of the most com- in networking itself, but in workers making others aware of their knowl-
petent employees between these companies. As a result, knowledge and edge and skills via these networks; it is a way to find work. This also seems
innovation power spreads rapidly through the local economy. Special- to be true for canvassing by self-employed workers in the Netherlands,
ist flexibility seems to have greater benefits for this group than for the for the more highly educated as well for the less educated.
employers, although generally it is assumed that flexibility is especially
beneficial for employers. | Conclusion
Especially for less educated employees, the assumption is often that flex- This chapter discusses interesting developments in the labour market for
ibility is beneficial for employers. In the United States of America, the self-employed workers. These were the developments mentioned most
flexibility of this group has led to lower salaries and worsening of terms during the project and interviews and which caused the most indigna-
of employment. From this, Carnoy concludes that the success of flexible tion or anxiety.
labour markets is clearly dependant on a certain education- and skill The developments can be divided into four different categories. In the
level. next chapters these four trends will be examined further.
22. 22 Chapter 4
Trend I: Diversity in forms of working relationships
The first trend that can be seen in the ICT sector labour market is the volved, but the collective labour agreement developments in the ICT
shift from being employed by others to being self-employed. sector invite workers to become self-employed. Barely increasing wages
Digital Cowb oys • Chap ter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re t i ns hi s
and little improvement in terms of employment are also important fac-
Within the sector there is great concern about the outflow of experi- tors. Still, most interviewees state that money is less important than it
enced ICT professionals who become self-employed workers. Although seems. “It is true that you make more money as a self-employed worker,
each month there are many vacancies filled, this number is lower than but there are also more risks. And my wife does like it when I can pay the
the outflow to self-employed work. We will discuss the reasons why so mortgage at the end of the month.”
many employees become self-employed workers further.
Therefore, financial reasons don’t really seem the main reason to take
From the trade and industry point of view, the flexible employment of the step. The interviewees state that “small, nice businesses of about a
self-employed workers plays an important role. “Self-employed workers hundred people” are disappearing. Thus, the stimulus to work for these
are useful for their ability to adapt to the cycles of the ICT market”, says smaller, more creative companies is gone and more and more ICT pro-
Kasteel, the chairman of the board of Ordina. fessionals have become self-employed. If we also take into account the
large amount of secondment and consulting taking place by the software
For the self-employed worker himself, finances play an important role. houses of old, and that in the evenings there are obligatory teambuilding
An ICT professional receives a much higher income as a self-employed sessions “to see the colleagues once in a while”, then the step from being
worker than as an employee. It is true that there are also more risks in- an employee to being self-employed is very small.
23. Recruiting by making noise: employee problems at Ordina | The rise of different types of working relationships 23
Ordina’s Chairman of the Board, Kasteel, expressed the expectation that
Ordina is an interesting example of the bottlenecks in the employment poli-
the market is going to help decrease the number of workers wanting to
cies of ICT companies. Ronald Kasteel, Ordina’s chairman of the board, thinks
that structurally there are too few people educated in the relevant skills. “The become self-employed and may even turn that trend around. However
problem is getting worse because of the individualization of society. Because
the market seems to be developing in another manner. On 29 June 2007,
of that, more and more people are becoming self-employed workers.”
Bas Linders of ICT Office wrote in Een Paar Apart, the position paper for
Because of the loss of workers to self-employment, the turnover of personnel
the top dialogue between ICT companies and trade unions, that Human
at Ordina is 15%. If the company wants to address the decline and expand the
number of personnel, Kasteel states that there must be about 800 to 1000 new Resource Managers (HRM) are looking for contract forms for this new
employees recruited yearly. As an important solution to the personnel short- group on the labour market and that a standard on that point had not
age, Ordina mentions the takeover of entire ICT divisions from customers. “Re-
cently we took over an ICT division of Rabobank, about 150 people, after we been developed yet.
signed a seven-year contract with the bank to, among other things, take care of
the whole administrative processing of their mortgage portfolio.” The question is whether a standard contract form is necessary for the
The alliance between Ordina and American trade companion Cognizant is new.
“This club has 80% of its personnel in India and is growing at the rate of over
self-employed worker. After all, the fact that it’s an assignment between
14.000 employees per year. We have agreed that they will do work for us in two employer and self-employed worker is in itself a form of economic agree-
areas: system development and control and maintenance of systems. For now
ment. Still, the rise of different forms of labour relationships within the
it’s about 50 to 100 people. We think with that we can render about five to 10%
more turnover. So it is not a replacement of work that is done in the Nether- ICT sector is striking, which confirms that Human Resource Managers
lands, but an acceleration of the growth.”
seem to have found contract forms for self-employed workers. In addi-
Finally, Kasteel mentions the ICT professionals who are now self-employed tion to the classic employer/employee relationship, there are now also
workers. The self-employed workers are useful in being able to adapt to the
secondment, payroll, and self-employment. In between there are also all
cycles of the ICT market. Ordina places about 13% of their assignments to self-
employed workers by contract, but keeps a bigger number within the company. sorts of constructs like midlance (basic wage with bonuses) and working
Kasteel expects that the market will act as a brake to decrease the numbers of
from a BV (Dutch legal form of a Limited or Incorporated company) or a
those wanting to become self-employed and that there may even be a turn-
around in the future. “On the one hand, there is the trend that clients like the partnership construction. These constructs aren’t, economically nor fis-
cally, forms of self-employment or freelance work. The form of labour is
24. 24 still employer-employee, with increased flexibility and decreased risk for
the employer and higher recompense for the employee. As this is not,
in fact, self-employed work, but is often said to be, we also speak of “so-
government want to work with fewer different ICT contractors. They want one
called” self-employed work.
contact person and won’t give self-employed workers separate assignments.
Besides that we are less nice to the self-employed workers that we hire. Just like
us, they aren’t paid by the hour any more, but depending on the results. There-
fore you’ll have to work harder for your money than before. And then maybe it
Digital Cowb oys • Cha pter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re l at i o ns hi p s
is more agreeable to have more security.”
Source: Financieel Dagblad, 20 October 2007
Form of labour relationship Legal contract party Employer in practice
Labour contract with employer Employer Employer
Payroll contract Payroll company Employer (usually stays the same)
Secondment contract Secondment agency Employer (changes with new assignments)
Self-employed worker Client Client
Self-employed through employment agency Employment office Client
Constructions like ZZP Oké and Uniforce1 Client through own BV (Dutch legal form of Limited) Client
Constructions like FreeICT2 Client through Partnership construction Client
1. ZZP Oké and Uniforce are organizations which created a construction by which people work for a client as employees in their own BV. This is done by
forming a ‘one-person secondment agency’ for every freelancer. The freelancer is working through this BV, which, among other things, remits value-
added tax, income tax and employer taxes. Clients receive an audit certificate.
2. FreeICT has developed a partnership-model as a labour market-model, in which acquisition and negotiations take place through the partnership.
25. | The role of the ‘Verklaring Arbeidsrelatie’ (VAR) 25
(declaration labour relationship)
Midlance: an example of an HRM construction
The rise of new contract forms for self-employed workers in the ICT sec-
The secondment agency InWork has launched a new labour market form. Mid-
tor invokes the question of what the biggest trigger for this development lance is a variant of the freelance developments and is midway between a free-
lance/self-employed worker and an employee.
is.
InWork observes that in four years the number of self-employed workers has
Conversations with employment offices don’t leave any doubt. The Verk- grown by nearly a quarter. Also, the profile of the new self-employed workers
has changed markedly compared to a couple of years ago. “More and more na-
laring Arbeidsrelatie (VAR) (declaration labour relationship) is causing so
tive males (between 25 and 45 years old) are becoming self-employed, in the
much confusion that clients would rather hire someone by an acknowl- search for more freedom, self-realization and, especially, higher earnings!”, In-
edged construct than directly as a self-employed worker with a VAR. This Work analyses.
However, “Freelancing isn’t ideal for many. Midlance is the golden midway
is in spite of the fact that with a VAR the self-employed worker as well between freelance and a regular job. A midlancer has the security of a fixed
as the client can be certain beforehand of the question of whether the employment. He receives a monthly paycheck and has good terms of employ-
ment.”
income from a labour relationship is taxed as taxable profit from entre- InWork states that several research agencies predict that midlance is going to
preneurship, taxable income, or taxable results from other work. be the trend in the labour market for self-employed ICT professionals in 2008.
Actually midlance is nothing other than an individual performance recompense
Many self-employed workers think that the application of a VAR is an
system, with a traditional employer-employee relationship.
administrative bother. Even though they state that other administrative
Source: press report, beginning of February 2008
burdens are much more complicated, the VAR is needlessly complicated. InWork
For clients, the VAR is, above all, unclear and insecure. The employment Bron: Persbericht InWork, begin februari 2008
offices, partly for marketing purposes, hook in cleverly on this insecurity.
Employment office P/Flex, a division of Randstad, acknowledges they
hook into the indistinctness of the labour relationship and the risk that
the client runs. They refer to an amendment of law per the first of January
2007 through which the burden of proof of the VAR is with the client. In
26. 26 commercials by P/Flex in 2007 this sense of indistinctness was strength-
ened by examples of situations and solutions from P/Flex.
Although the (Dutch) tax office clearly states that the VAR gives secu-
Hooking in on the insecurity around the VAR rity to the client beforehand about the labour relationship, there is much
mistrust over this from clients. It seems therefore that this insecurity
HARDERWIJK – Freelancers, interim workers, and about the VAR is crucial. The question that then remains is if the solution
Digital Cowb oys • Cha pter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re l at i o ns hi p s
self-employed workers who, for whatever reason, don’t is right. Do we have to develop all kinds of new labour constructs, or do
want to work with a so-called Verklaring Arbeidsrelatie we have to improve the information about clientship and the VAR? The
(VAR) (declaration labour relationship) can from now latter seems in any case a good recommendation, in order to offer clarity
instead work with a Verklaring Uniforce Registratie about the VAR.
(VUR) (declaration Uniforce registration).
| Changing labour relationships and security
The UWV, the Dutch tax office and the Uniforce Group have signed an agree-
Although large diversity in labour relationships is typical for a dynamic
ment on this, so they reported Tuesday. With that the VUR is a new official na-
tional labour form for self-employed workers and their clients. According to economy like the ICT sector, this diversity seems to be a predictor for
the undersigners, the VUR forms are “a perfect completion of the grey area”
other economic sectors. Gerard Everts and Ton Wilthagen, in De Toekomst
between a labour agreement as employee and as self-employed worker.
van de Arbeidsrelatie: Een essay over wederkerig risicomanagement (The Fu-
Clients ture of the Labour Relationship, an essay about mutual risk management),
Many people have difficulties with a VAR, finding that it fills them with ques-
give an interesting analysis of this situation. They discuss multiple devel-
tions and that the VAR work is restrictive; for example, to new clients.
The VUR is a looser form of labour agreement. In particular, specialists in the opments in the labour market.
area of financial services, personnel policy, automation, and interim-manage-
ment are often hired for their knowledge and experience.
Everts and Wilthagen observe new risks in the labour market, like the
Source: Automatiseringsgids, 19 August 2008 tendency toward internationalisation and the accompanying interna-
27. tional competition, migration of labour, and the rise of new economies. 27
They also observe increasing individualisation and the call for custom-
made goods. The need for flexibility is increasing. Meanwhile, the Dutch
A day later the Dutch tax office gave a totally different explanation. In a press
government has withdrawn and is opting for freedom of choice and per-
report, the Dutch tax office stated that the VUR is not a new fiscal labour form.
sonal responsibility. Deregulation, liberalisation, and privatisation are “Yesterday, in the media, the impression was wrongly given that there is a new
fiscal labour form; the VUR”; thus the press report. “The VUR would be a so-
key words.
lution for freelancers, interim workers and self-employed workers who don’t
want to work with a VAR. However a new fiscal labour form with legal (therefore
national) basis has not been introduced in conjunction with the VAR. It is the
Further, they state that the labour market’s adaptability and manoeu-
product of a individual presenter.”
vrability are too limited. They believe that people want security. After all,
the classical labour relationship always characterizes itself by striving for Source: Press report Dutch tax office, 20 August 2008
long-term fixed contracts, with few risks for the employee. Within this
relationship workers have not been encouraged to be mobile.
1. Precaution (prevention). These are efforts to make sure employees
In contrast, Everts and Wilthagen argue for a transitional labour market, remain usable.
also based on the flexicurity concept (Centraal Planbureau, 2005). Flexi- 2. Protection. These are measures which, for example, cover resignation
curity represents the mixture of a flexible labour market with good provi- conditions and collective labour agreements, which make sure that
sions and assurances in the area of social security. traditionally unbalanced power balances are righted.
Everts and Wilthagen conclude that risks in the labour market must be 3. Recovery. This includes compensating losses of income, assistance in
divided between employer, employee and, from a general perspective, finding new jobs, and restoring the capacity to gain new incom
society (the government). They quote the Wetenschappelijke Raad voor
het Regeringsbeleid (WRR) (Scientific Counsel for Government policies),
which makes a distinction between three essential aspects of risk divi-
sion.
28. 28 | Guaranteed basic provisions for self-employed workers also take part more in guaranteed basic provisions, like pregnancy leave,
which have previously only been available to employees.
Finally, the WRR also draws a few conclusions for self-employed workers. The characteristics of the self-employed worker are thus shifting more
To make the flow in the labour market – in, out and through – much more and more towards those of the employee. For some that may seem an
flexible in the future, there must always be social security for employees. unwanted development, but frmo an international perspective it is not
When this security is lacking, the system itself is not successful because illogical. In Denmark, even employers can derive rights of social security
Digital Cowb oys • Cha pter 4 • Tren d I: Divers it y in fo r ms o f wo r k ing re l at i o ns hi p s
of resistance from employees. This is the main reason why the (Dutch) for some employees, and therefore don’t run their companies solely at
government has to ensure, by flexicurity, that there are basic provisions their own risk. While the self-employed worker is becoming more simi-
for all workers, whether self-employed or not. Everts and Wilthagen ar- lar to the employee, the employee is becoming more similar to the self-
gue that it would be curious if society were to deny paid pregnancy leave employed worker. Though there is nothing wrong with differentiation of
or better career regulation to self-employed workers. labour forms, clarity and transparency are required. If a form of labour
becomes a trick on the part of HRM specialists, it is better to legally re-
| Where is the limit to flexibility? strict the problems for everybody or to permit labour construction for
This chapter notes a large rise in forms of labour relationship. The reasons everybody.
behind these developments are also analysed. Indistinctness, as well as
the insecurity surrounding existing labour relationships, has been dis-
cussed. Changes in the labour market affecting the whole of society, in
which flexibility and risk management are more and more prominent,
were also discussed.
While employee relationships become more flexible, the social security
position of the self-employed worker strengthens. From the flexicurity
point of view the role and (social) security of the employee will change
sooner or later in future years. At the same time, self-employed workers
30. 30 Chapter 5
Trend II: The rise of employment agencies for freelancers
Digital Cowb oys • Cha pter 5 • Tren d II: The r ise o f emp loy ment a ge nc i e s fo r f re e l a nce r s
One of the strongest trends for self-employed workers in the labour Especially in large companies and the government it amounts to a form
market in recent years is the rise of employment agencies for free- of secondment. These companies choose this form via an employment of-
lancers. This chapter describes how employment agencies work and fice because they want to avoid bother and believe this way offers some
the changes occurring in this market which affect the position of kind of continuity. Money interests them much less. In smaller compa-
self-employed workers. nies the contacts are often much more direct. In some larger companies,
it may also be the case that there is no intermediary. In these instances,
| Employment offices in practice contracts of around 100,000 Euros are often involved. Direct hire is then
Traditionally, self-employed workers receive assignments through their usually more efficient, more direct, and cheaper.
personal networks. Mostly, assignments seem to come officially from
employment offices, while in practice they derive from indirect personal Many employment offices have a number of big companies as clients,
contacts. However, it is true that the lower the self-employed worker’s who at first let personnel be staffed via the employment office. Actually,
level of knowledge is, the more that worker seems to depend on second- in that way the employment office operates as a temporary employment
ment work. The employment offices and the self-employed workers both agency. There is also a rising market for freelancers – “which grows by the
state this. However, the independently acquiring self-employed worker hour”- which these regular customers also want to use. They offer three
also often doesn’t escape having an intermediary between the client and reasons. Firstly, the company usually does not have the resource capac-
himself. ity and does not know where to find the specialised ICT professional
Within ICT, self-employed workers recognize a distinction between em- required. Secondly, companies are hesitant to do business directly with
ployment by the employment offices of smaller and larger companies. self-employed workers. Thirdly, companies want to put the administra-
31. tive duties out to contract. For these reasons they sign a contract with the 31
employment office, after which all self-employed workers are mediated
via this one office.
Definition of an employment agency
From interviews with employment offices, it is clear that, in their view,
An employment agency is an office which first brings a contractor and a client
employment and secondment are the same thing. Employment offices into contact, for a fee, and then steps back. The contract agreement between
contractor and client is signed by both parties (Article 7:400 Dutch Civil Code);
state that they contact the tax office about this frequently, and see this
the contractor is not under the authority of the client because otherwise there
labour form as a grey area. In the end the differences are negligible. would be a labour contract between the client and the contractor (Article 7:610
Dutch Civil Code).
“Eventually the self-employed worker is working under the supervision
A variant of the employment agency is the intermediary agency. This also
of an ATOS Origin or KPN”, it is said. For the tax office, the question is who brings contractor and client in contact, for a fee, but then keeps the contractual
the real client is: the ‘material’ client or the ‘formal’ client. relationship in the form of a contract agreement of assignment (Article 7:400
Dutch Civil Code) until the end of the assignment. The client is neither under
the authority of the employment agency nor under the authority of the client.
Legally, if a contract is signed in the Netherlands between a self-em- If there is authority between the contractor and the employment agency, then
the employment agency is officially a secondment office and there is a labour
ployed worker and the employment office, and there is no contract be- contract (Article 7:610 Dutch Civil Code) between contractor and employment
tween the customer and the self-employed worker, the employment of- agency. If there is authority between contractor and client, then the employ-
ment agency is actually a temporary employment agency and there is a tempo-
fice is the only client. The lack of different clients can form a problem for
rary employment contract (Article 7:690 Dutch Civil Code) between contractor
the self-employed worker. Due to Dutch law the self-employed worker and intermediary agency.
then isn’t really a self-employed worker, but someone who is employed
by another. Then, of course, income taxes and employment security con-
tributions have to be paid.
From the interviews with the self-employed in the ICT sector about their
experiences, it would appear that they are actually very content with
the role that employment offices play and the quality that they provide.
32. 32 However, they also expressed their concerns about a few negative de-
velopments. These concerns relate to the fear of a monopoly of employ-
ment offices, the greater and heavier risks of entrepreneurship passed
Why do self-employed workers work by clients to self-employed workers, and the extensive chains of indirect
via an employment office? client and contractor relations that come into existence.
Digital Cowb oys • Cha pter 5 • Tren d II: The r ise o f emp loy ment a ge nc i e s fo r f re e l a nce r s
The traditional view that employment offices aren’t good, that they financially
exploit the self-employed, and that the self-employed would rather take on as- | Dependency on employment offices increases
signments without the use of employment offices, is no longer current. In the
In the interviews with ICT professionals, a much heard fear was that the
interviews, while the point was emphatically made that the self-employed do
worry about some negative developments, it was clear that they do in principle relationship with the employment office was becoming too tight. A self-
value the services of the employment offices highly. Many ICT professionals
employed worker can’t make a decision to take on an assignment on be-
and project managers get in contact with clients or potential assignments via
their own networks. Often, they then make use of the employment office. On half of an employment office. It may become impossible to gain an inter-
the one hand, they do so to benefit from a sort of safety net to ensure a fixed esting assignment without an employment office. With these concerns in
income each month, and on the other hand, to benefit from the handling of ad-
ministration. For them, a fixed monthly income and assignment security seem mind, we interviewed a representative group of self-employed workers,
to have a higher priority than self-employment and freedom. Additionally, a from both inside and outside the ICT sector.
number of engineers state that they aren’t good at acquiring work and there-
fore are glad to give this task to professional employment offices, so that they
Within the ICT sector, almost half of the self-employed have had experi-
can concentrate on the work they are good at. ence with clients who only wanted to do business via an employment
office, while this number for all sectors is 25%.
The statement that almost half of the ICT self-employed had experience
with clients who only wanted to do business via an employment office is
interesting in itself. A comparison with historical data isn’t possible, be-
cause there is no previous research into the experience of self-employed
workers with employment offices. In the interviews with employment
offices, they themselves also said that they are indispensable. From the