Poor rewards for self-employed knowledge professionals

According to a survey by the Institute of Economic and Social Research, self-employed knowledge professionals generally earn less than their colleagues working as employees, work longer hours and have poorer social security protection. The survey examined the annual earnings of over 4,000 knowledge professions in terms of their occupational status and professional profile. However, the survey design means that its results can only be considered indicative.

Background

In April 2011, the trade-union related Institute for Economic and Social Research (IRES), published a report on the quality of work of workers in knowledge professions (in Italian, 1.66Mb PDF). The report presents the findings of a survey of knowledge professionals carried out on behalf of the largest Italian trade union, the General Confederation of Italian Workers (CGIL). The survey differentiated knowledge professionals by occupational status (self-employed, employee and trainee) and looked particularly at their career and social security standing.

Survey methodology

The survey was carried out between October 2010 and January 2011 using free access questionnaires available on the CGIL and IRES websites. Due to the research design and the difficulties in identifying a reference sample, no sample design or ex post weighting were performed. Hence, the results can only be taken as indicative.

A total of 4,441 questionnaires was collected, of which 3,371 indicated the respondents’ profession and were included in the analysis. The respondents were made up of 2,935 self-employed, 898 employees and 323 trainees (Table 1). Due to the smaller sample size of trainees, the data from this group cannot be compared with those from the other two groups.

Profile of respondents

One respondent in three works in Rome or Milan, which are the largest Italian cities and those with the highest concentration of knowledge-based services. The respondents were grouped according 12 professional profiles (Table 1):

  • technicians (such as engineers, architects, geologists, biologists) accounted for almost 33% of respondents;
  • legal, business and consultancy service providers (23.1%);
  • translators and interpreters (12.6%).

Almost 80% of the self employed and over 60% of the employees held a post-secondary qualification.

Only 38.5% of respondents were members of professional bodies offering some social security protection and restricted access to the profession. Restricted professions are concentrated in legal, accounting and business services, and technical professions.

Table 1: Distribution by professional profile and occupational status (%)
  Self employed Employee Trainee Total
Not specified 10.1 24.1 27.9 15.1
Legal 7.7 2.6 20.4 7.3
Finance, accounting and marketing services 6.0 6.4 26.6 7.6
Other business consultancy services 5.7 14.1 8.7 8.2
Technical 36.4 30.5 9.0 32.8
Health and social work 4.0 6.5 2.2 4.5
Culture and fine arts 3.5 1.7 0.3 2.8
Media 4.6 3.6 1.9 4.2
Translators and interpreters 18.9 0.4 0.6 12.6
Teaching, training and education 1.3 3.9 0.6 1.9
Researchers 0.8 1.6 1.5 1.1
Blue-collar workers and low-skilled 1.1 4.5 0.3 1.9
Total number 2,935 1,183 323 4,441

Source: Di Nunzio et al (2011, p. 9)

Annual earnings

By occupational status

The amount of money earned is probably the most sensitive issue. Just 17.1% of self-employed respondents reported earning more than €30,000 per year and 44.4% reported earning less than €15,000. The comparable figures for employed respondents were 18% and 35% respectively (Table 2). Thus, the higher risk associated with being self employed (both in terms of social security and delays in payment, reported by over 62% of this group of respondents) is not compensated by higher earnings.

Table 2: Annual earnings by occupational status (%)
  Less than €10,000 €10,000–15,000 €15,000–20,000 €20,000–30,000 More than €30,000 Not indicated
Self-employed 22.7 21.7 17.3 18.4 17.1 2.9
Employee 14.4 20.6 21.8 22.3 18.0 2.8

Source: Di Nuncio et al (2011)

The self-employed respondents also reported lower work continuity than those who were employed, with 69.1% of the former and 84% of the latter working continuously or with short periods of inactivity over the past five years.

The wider financial difficulties of the self-employed were confirmed by the lower share of those ‘never’ applying for financial support from their family (46.2%) than employees (56.6%), notwithstanding their higher average age (42 versus 36.6).

As earnings increase for self-employed workers, they tend to correspond with longer working hours: from 8.1 hours per day for those earning less than €10,000 per year to 9.3 hours per day for those earning more than €30,000 per year.

By employment regime

There are wide earning disparities between contractual arrangements. Those working with interrupted or temporary contracts (temporary collaborators, translators and authors) and lower bargaining power (such as the VAT holders who are ‘minimal taxpayers’) are strongly concentrated among those earning less than €15,000 per year (Table 3). In order to be a minimal taxpayer, someone must have an annual turnover of less than €30,000, no collaborators and subject to simplified accounting rules.

However, people who are an economically dependent worker (IT0501NU01) and who have their earnings related to sales or company performance (associazione in partecipazione, associated in partnership) have the highest share of those earning more than €30,000 per year (Table 3).

In general, ‘standard’ self employed respondents earn more than collaborators on a continuous or project-related basis. Members of cooperatives display an earning profile closer to non-knowledge employees in the manufacturing and service sectors.

Table 3: Self-employed earnings by employment regime (%)
  Less than €10,000 €10,000–15,000 €15,000–20,000 €20,000–30,000 More than €30,000 Not indicated
Temporary collaborators 62.2 18.5 6.7 5.2 3.7 3.7
Minimal taxpayers,VAT holders 34.4 31.5 18.4 12.2 1.4 2.1
Authors’ rights sellers 36.1 26.8 17.5 8.2 5.2 6.2
Continuous collaborators 19.4 25.8 12.9 25.8 9.7 6.5
Project collaborators 18.6 37.2 23.3 9.3 9.3 2.3
Associated in partnership 13.8 20.7 17.2 6.9 34.5 6.9
Normal regime, VAT holders 10.6 14.9 18.8 24.7 28.8 2.2
Business activity, VAT holders 11.7 23.4 15.6 27.3 16.9 5.2
Cooperative members 20.7 37.9 3.4 24.1 13.8  
Total 22.7 21.7 17.3 18.4 17.1 2.9

Source: Di Nuncio et al (2011, p. 39)

Commentary

Knowledge professionals are usually perceived as facing limited social risks because their skills give them stronger bargaining powers. This survey shows that a significant proportion of knowledge professionals in Italy face high social risks due to their low bargaining power and lack of social protection. The Italian welfare state remains orientated towards employees and does not provide much protection for the self-employed, who make up a significant proportion of the country’s knowledge professionals (66% among survey respondents). Access to the restricted professions only partly explains this outcome. Rather, it is that Italian companies are poor at devising appropriate approaches to manage and reward knowledge professionals and, consequently, knowledge-based activities tend to be carried out by the self-employed. The large number of self employed knowledge professionals provides scope for debate about more extensive social security protections for the self employed such as pensions, unemployment benefit and training opportunities.

Reference

Di Nunzio, D., Ferrucci, G. and Leonardi, S. (2011), Professionisti: a quali condizioni? (1.66Mb PDF), Rapporto di Ricera no. 03/2011, IRES, Rome.

Mario Giaccone, Ires

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