Employment ≠ Security

Thu, 19 Jan 2012

Self-employment in a globalised world can be both a survival strategy and a successful way to self-fulfillment

When the two brothers Ron and Walt, brought up on a Missouri ranch, started their business with borrowed money in the depression-shaken 1920s, or the Federal National Mortgage Association was founded with the American New Deal funds in the run-up of WWII, it looked like yet another start-up attempt of Americans cherishing the American dream. Their initiatives turned into the Walt Disney Company, one of the world leaders in media entertainment and into Fannie Mae, a top-rated enterprise for mortgage securities, currently the number 5 of Fortune 500.

While those two examples may seem beyond comparison for anyone considering self-employment today, they point at a fact that can be crucial for a start-up: you might consider opening your own business because you don’t want to be unemployed. In a globalised work-environment this is more valid than ever, because also the old equation of Employment=Security while Self-employment=Risk is losing ground. With a decreasing number of employers offering permanent contracts (less than 50% in the EU-27 in the last year, down from still 64% in 2001) and a growing choice of employment models ranging from temporary agencies to franchise, the classical nine-to-five setting in one company for four decades seems to be turning into a faint memory.

That is actually good news. It moves away from a hard-line labour market, in which you are either “in” (often the life-long carefree package) or “out” (which might mean long-term unemployed), towards a more diverse workforce. This does include a real chance to become a successful entrepreneur and contribute to the changing world of work instead of being a victim of it. Disadvantaged groups and precarious world regions have proved this a success already, as for example the increasing self-employment rates of women in the USA and China show, or the successful support of micro-enterprises in Africa’s poorest countries.

Today’s global entrepreneurs face a number of work trends that are highly favourable. One could say that work has never been that detached from time and space. Teleworking/home office, circular migration, and flexible working hours allow individual approaches in dealing with your work-life balance. Social networks let services run through the globe and allow you to meet people that you would not be able to see in a classical office.

Creativity is a driver in this de-standardised, gloom-mongers call it dispersed, workforce. A higher rate of exchange creates synergies, boosts the readiness to learn, and innovates existing approaches, rather than making you think within company silos. Some future prognoses talk about a work setting, where production is entirely left to 3-D printers run by software. People would concentrate on development according to their manual, mental or emotional intelligences. In that reality, job descriptions and CV’s will lose their relevance, business cards will not have to show hierarchical positions, and projects will replace posts.

Still, self-employment is not the resounding global phenomenon it could be, at least not in the developed world, where long-term unemployment definitely is a serious problem. Only 12% of the total workforce in Europe is running a freelance or an own company according to Eurostat. The average OECD countries rate is even lower. Three reasons might explain part of the problem.

First, a diversified workforce with a higher rate of self-employment is at the same time one, where the individual is in focus. Classical job-seekers need to work on their self-marketing, if they want to be respected as “individual enterprises”. They need to show that their skills are transferable, that they are really motivated, and that the expert knowledge they offer, makes a difference. The internet has shifted power to the individual. Now individuals need to use this power to add value. The job market wants to become more transparent, but is also getting more demanding to new entrepreneurial solutions.

Second, new ways of employment require new ways of security. In the past, trade-unions cared for worker protection in a setting of powerful and often nasty employers. The current world of work needs mechanisms, which keep the supposedly self-regulatory, global market from turning into a nightmare of low pay, cross-border exploitation, and e-crime. Governments might want to play a more active role in this.

Finally, setting up your own business needs time, even on entrepreneur-friendly ground. The most entrepreneurial musicians of the world, the Rolling Stones, were touring for ten years, before they got a serious return-on-investment. As Keith Richards puts it in his memoirs Life: “We had to pay to be the Rolling Stones.”

Even with a lot of creativity and the perspective of diverse work possibilities to unfold this creativity, every idea will take a while to take off the ground and every profile of a new entrepreneur will need a proper brush-up. Labour markets (and employers) should appreciate that in their policies.

Walt Disney once said during an interview: “I don’t like formal gardens, I like wild nature”. He might have been thinking of the future creative labour market.

by Miguel Peromingo