Better work and life

EU Presidency conference on:

Better work and life: Towards an inclusive and competitive enlarged Union - 12-13 May 2003, Alexandroupolis, Greece

Co-organised by the Greek Ministry of Labour and Social Affairs and the European Foundation for the Improvement of Living and Working Conditions

Speech abstract - Roberto Pedersini

European Industrial Relations Observatory - Fondazione Regionale Pitero Seveso

‘Economically dependent workers’, employment law and industrial relations

The complete study is available on the EIRO site:
[http://www.eurofound.europa.eu/eiro/2002/05/study](/search/node/eiro OR ?oldIndex2002/05/study)

The concept of 'economically dependent workers' refers to those workers who do not correspond to the traditional definition of 'employee' - essentially because they do not have an employment contract as a dependent employee - but who are economically dependent on a single employer for their source of income. The debate focuses on emerging employment arrangements which are 'midway' between self-employment and dependent employment. 'Economically dependent workers' have some characteristics of both in that: (1) they are formally self-employed (they usually have a sort of 'service contract' with the employer); and (2) they depend on a single employer for their income (or a large part of it). In some cases, economically dependent workers may also be similar to employees from other points of view:

• lack of a clear organisational separation - ie they work on the employer's premises and/or use the employer's equipment;

• no clear distinction of task - ie they perform the same tasks as some of the existing employees, or tasks which were formerly carried out by employees and later contracted out to 'collaborators';

• the 'service' they sell individually to employers falls outside the traditional scope of 'professional services' - ie the tasks are simple, do not require specific skills and no professional knowledge or competence is needed.

The existence of such employment arrangements has been highlighted by the International Labour Organisation (ILO) - see for example, the discussion at the March 2001 session of its governing body - and is documented in a number of European countries, such as Italy, the UK, Germany, Spain and Portugal. The issue was also mentioned, alongside teleworking, in 2000 in the European Commission's first-stage consultation of the social partners on 'modernising and improving employment relations' (though the second-stage consultation focused essentially on telework). For the Commission, 'the development of a category of 'economically dependent workers', who do not, or may not, correspond to the traditional notion of 'employee' raises a number of difficult issues, for employers, workers and governments.'

The issue is relevant from the industrial relations point of view since economically dependent workers do not generally benefit from the protection granted to employees both by law and collective bargaining, including provisions on health and safety, information and consultation, working time, vocational training and social protection. They also fall outside the traditional reach of trade union representation

The first point which emerges from the EIRO study on 'economically dependent workers' is the great variety of situations, both across countries and within individual countries. The main features of employment relationships that may include economically dependent work, as well as the types of workers involved, are often specific to the national context. However, a significant heterogeneity may also be present at national level. In the blurring boundaries between dependent and self-employment, we can find a full range of job positions, going from 'bogus self-employment' which conceals dependent work and usually concerns a low-skilled, less expensive and less protected labour force, to emerging jobs in the ICT or consultancy sectors which generally involve well-educated and well-paid autonomous workers. According to the existing evidence, which is very scarce and fragmented, the phenomenon seems to concern, on average, around 1% of total employment.

In essence, the debate over economically dependent workers represents an aspect of the crisis of the standard distinction between dependent and autonomous work and clearly signals the difficulties of tackling the changes in the labour market and the economy with the traditional tools of labour law (and industrial relations). In other words, it voices an emerging demand for regulation and protection which comes from the 'grey area' between dependent employment and self-employment. This is an area which has apparently been growing in the past few decades, even if this increase may have slowed down in the most recent years, if we consider aggregate data on total self-employment.

This rising demand for regulation and protection requires, first of all, a statutory response, which should provide a clarification of the broadening meanings and forms of employment. Such a response might be progressed through social dialogue and the involvement of social partners, along a path which has to some extent been followed in Ireland and Denmark. Whatever the approach, there are apparently three options in this domain:

• an extension of (most of) the provisions and protections typical of dependent employment to new forms of employment, including self-employed workers who may be regarded as 'economically dependent' . This is the option generally favoured by the unions, which believe that this would be the best way to grant workers an appropriate endowment of rights and protection. However, since it may lead to a reduction in the differences between forms of employment, this approach might contrast with the European employment strategy's objectives of adaptability and support for entrepreneurial activity;

• the definition of a third intermediate status which would stand mid-way between dependent and autonomous work and would benefit from an intermediate level of regulation and protection. In this case, the main problem seems to be connected with the identification of the features which would characterise this status. As mentioned above, there is such a variety of employment relations and job positions that it would be very difficult to find a clear-cut and satisfactory definition, even more so if this attempt were undertaken at European level;

• the establishment of a common set of basic rights and protections that would apply to all workers, irrespective of their formal employment relationships (in addition to the existing regulatory framework for dependent employees). This is an option which is being discussed in Italy in the framework of a proposal to define a so-called 'work statute' (IT9709310F) and which is also implicitly supported in the UK by a suggestion to use the term 'worker' instead of 'employee' in legislation establishing labour rights and protection (it has been estimated that this might protect up to a further 5% of all those in employment). Here, the difficulty lies mainly in the definition of the set of rights which should be extended to all workers. In an extreme interpretation, in fact, this approach would simply overlap with the first option.

In any case, while the question of a total system of protection waits to be addressed, there have already been significant steps in granting some essential coverage to these kinds of worker, notably in the areas of social security and health and safety regulations.

However, there is a second and important area of response which is raised by the above mentioned demand for protection (and representation): that of industrial relations and notably of trade unions. The growth in non-standard forms of employment, among which economically dependent work may be classified, is challenging trade unions' representation and regulatory capacity in the labour market. However, the example of economically dependent workers shows that the unions, in order to cope with these new demands for representation and protection, are effectively trying to extend their reach beyond the limits of standard employment and to recruit members among the self-employed and various kinds of freelance workers. In this, they are proving able to follow innovative strategies, using an original combination of:

• incentives which arise from the early traditions of the trade union movement (like the provision of social security coverage and of some sorts of job placement support - such as 'job banks' );

• new services (eg different forms of professional advice);

• new tools (especially the internet).

If they are successful in this organising effort, further developments will probably follow in the area of collective bargaining, as the cases of Italy and UK seem to suggest.

Eventually, the combined effect of possible changes in the statutory framework and in industrial relations may have an important impact on the work and life prospects of many self-employed workers, including economically dependent workers.

Roberto Pedersini is researcher in Economic Sociology at the Faculty of Political Sciences of the University of Milan, Department of Political and Social Studies. He teaches Industrial Relations at the Faculty of Sociology of the University of Milano-Bicocca.

Since December 1996, he is one of the correspondents of the European Industrial Relations Observatory (EIRO, a project of the European Foundation for the Improvement of the Working and Living Conditions) for the Italian National Centre, and notably for the Fondazione Regionale Pietro Seveso (FRPS). For this project, he wrote several articles on Italian industrial relations, which have been published on the EIRO web site ([http://www.eurofound.europa.eu/eiro/](/search/node/eiro OR ?oldIndex)).

His main fields of research are industrial relations and economic institutions and regulation. His publications include articles on the institutional design of privatisation and liberalisation processes, as well as on the impacts of those processes on industrial relations.