Forms of self-employment in Portugal

In the present climate of restrained job creation, self-employment is considered by many as an option for entering or remaining in the labour market. A working paper examines the nature and desirability of this type of employment.

A significant trend in the Portuguese labour market is the consistent and clear importance of self-employment. According to Eurostat, the EU15 average for self-employment was 14%, but this average reached 25% in Portugal (Eurostat, 2002); only Greece had a higher percentage. Moreover, according to OECD/Employment Outlook 2000, during the 1990s, almost 7% of Portuguese employees moved into self-employment activities, and 3% of unemployed people re-entered the market through self-employment.

In general, self-employed workers develop a service or activity independently, and their relationship with the labour market is formalised through contracts. On this matter, Portuguese law states that a worker is formally connected to a counterpart by a services supply contract when ‘one of the parts is obliged to provide to the other certain results of its intellectual or manual work, with or without retribution’ (art. 1154 of the Code of Civil Procedure).

However, in real terms, the situation of this category of workers may vary. Some self-employed people are completely dependent on these contracts, while others carry out such activities as a second paid job. In addition, there are those who carry out such activities marginally (students, for example). Those who are entirely dependent on service contracts may be regarded as ‘false self-employed’ or ‘economically dependent’ workers as they frequently work for employers, through a typical subordinate activity, although they present themselves as independent workers for social protection purposes and provide receipts for their work (known in Portugal as ‘green receipts’). According to the working paper, the idea of ‘false self-employed’ workers defines a ‘type of employment based on both the ideas of salaried work and of self-employment, referring to a set of activities legally developed under many forms yet close to dependent work’.

Occupational aspirations, by age group and sex (%)
Occupational aspirations, by age group and sex
Occupational aspirations Up to 24 years old 25-49 years old 50 years Total
  M F M F M F M F Total
Same occupation, employee 25.8 38.0 48.6 47.8 46.6 47.5 43.9 45.6 44.9
Change occupation, employee 53.0 45.4 23.2 28.3 13.0 15.2 24.9 29.4 27.4
Maintain former situation     1.7 3.0 14.5 14.1 3.2 4.8 4.1
Self-employment 21.2 11.1 26.0 16.8 15.3 7.1 21.1 15.1 17.7
Retirement       0.3 0.8   5.3 1.6 3.2
Pursue studies   2.8   0.7 3.1   0.3 1.0 0.7
Any occupation, employee or self-employed - - - 1.0     1.1 0.6 0.8
Any occupation, employee - 2.8 - 2.0 -     1.8 1.0
No answer     0.6     1.0 0.3 0.2 0.2

Source: Rebelo, G., Emprego e Forma de Precariedade da actividade Laboral: o caso Português no contexto da UE, doctoral thesis, ISEG/UTL, Lisbon, 2001, p. 321.

Research on the precariousness of employment, which was carried out between 1998 and 2000 as part of a doctoral thesis, found that this new kind of work organisation does not seem to be greatly desired. A sample of unemployed people, including employees and economically dependent workers, were asked questions about their future occupational aspirations. The results show that 72.3% of the respondents wanted to work for an employer (either keeping or changing occupation), though this proportion is lower among male workers (68.8%) than among female workers (75%).

The preference for job security is maintained when age groups are considered, although it does diminish with age. A great majority of workers aged less than 24 years old wish to work for an employer - 78.8% of male workers and 83.4% of female workers. Among workers aged between 25 and 49 years old, the same preference for security prevails - 71.8% of men and 76.1% of women want to work for an employer, compared with 26% of men and 16.8% of women who wish to become self-employed. Even among the older group (50 years), the preference remains for the employee option - 59.6% of male workers and 62.7% of female workers.

According to the working paper, self-employment may emerge as a possible alternative in (re)integrating into the labour market within the present climate of restrained job creation. In effect, this introduces new types of employment, and may reinforce a segmented logic of ‘internal’ workers versus ‘external’ workers. It is thus important to assess to what degree enterprises can strategically manage their external labour force, guaranteeing union affiliation, reinforcing social security and providing access to training, within a framework of shared responsibility between the social partners.

Reference

Rebelo, G., Trabalho independente em Portugal - empreendimento ou risco? , (Self-employment in Portugal - entrepreneurship or risk?), WP No. 2003/32, DINÂMIA, June 2003.

Available at: www.dinamia.iscte.pt/eng

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