Ensuring better social protection for self-employed workers 2 nd - - PowerPoint PPT Presentation

Ensuring better social protection for self-employed workers

2nd meeting of the G20 Employment Working Group 8 April 2020

International Labour Organization Organisation for Economic Co-operation and Development

Outline

 Introduction: Challenges and opportunities  Trends in self-employment, dependent self-employment and

platform work

 Gaps in social protection provision for self-employed

workers

 Closing social protection gaps for self-employed workers:

G20 policy responses

 Ensuring an effective monitoring framework  Implications of the COVID-19 crisis for self-employed

workers and G20 country responses

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Introduction: challenges and opportunities

Challenges for social protection systems

 Major coverage gaps for self-employed workers; in many emerging G20 countries, compounded by

challenges of informality

 Increase in more diverse forms of employment associated to technological innovations, e.g. “crowd

work”, “gig work”, and other forms of on-demand labour G20 commitment to “promote inclusive and sustainable social protection systems, including floors” as part of a human-centred approach to the future of work

 Need for income protection and access to health care for workers in all forms of employment and

supporting workers through life and work transitions (e.g. between salaried employment and self- employment and vice versa, multiple employers etc.), especially in light of future labour market disruptions

 Effective mechanism to support workers in managing risks throughout their lives  COVID-19 crisis adds new urgency to the need for better protection of self-employed workers, in

particular more vulnerable ones 3

In most G20 countries, the share of self-employment has declined

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5 10 15 20 25 30 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 Italy Spain France Germany 5 10 15 20 25 30 35 40 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Mexico Korea Turkey Australia Canada Japan United Kingdom United States 10 20 30 40 50 60 70 80 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 India Indonesia Brazil Argentina China South Africa Russian Federation Saudi Arabia

% of total employment

Source: ILO and OECD (2020). Ensuring better social protection for self-employed workers. Paper prepared for the Meeting of the G20 Employment WG under the Saudi Presidency.

General downward trend in own-account work across G20

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0.0 5.0 10.0 15.0 20.0 25.0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 Italy Spain France Germany 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Mexico Turkey Korea United Kingdom Australia Canada Japan 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 India Indonesia Brazil Argentina South Africa Russian Federation Saudi Arabia

% of total employment

Source: ILO and OECD (2020). Ensuring better social protection for self-employed workers. Paper prepared for the Meeting of the G20 Employment WG under the Saudi Presidency.

High incidence of informal employment and working poverty among own-account workers

Increase in platform work (but overall shares remain low)

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Source: ILO and OECD (2020). Ensuring better social protection for self-employed workers. Paper prepared for the Meeting of the G20 Employment WG under the Saudi Presidency.

• 20
• 10

10 20 30 40 50 90 100 110 120 130 140 150 160 May 2016 Jun 2016 Jul 2016 Aug 2016 Sep 2016 Oct 2016 Nov 2016 Dec 2016 Jan 2017 Feb 2017 Mar 2017 Apr 2017 May 2017 Jun 2017 Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018 Jul 2018 Aug 2018 Sep 2018 Oct 2018 Nov 2018 Dec 2018 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 Feb 2020 % yearly change to month (RHS) Monthly average (index LHS)

Monthly averages of daily data for global new vacancies in English for online gig work, May 2016=100

Major gaps in social protection coverage for self-employed workers

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Source: ILO and OECD (2020). Ensuring better social protection for self-employed workers. Paper prepared for the Meeting of the G20 Employment WG under the Saudi Presidency.

AUS FRA JPN ITA TUR GBR USA CAN DEU KOR

Not applicable No access Voluntary / partial access Same as employees 5 10 15 20 25 30 35

• A. Maternity and family benefits

AUS FRA JPN ITA TUR GBR USA CAN DEU KOR

No access Larger gaps Some gaps Similar to employees 5 10 15 20 25 30 35

• B. Sickness (income replacement), invalidity

and work injury benefits

Self employment in % of total employment, 2017

AUS FRA DEU ITA TUR GBR U… CAN JPN GRC

No access Voluntary / partial access same as employees 5 10 15 20 25 30 35

• C. Unemployment benefits

Self employment in % of total employment, 2017

AUS FRA DEU ITA TUR GBR USA CAN DEU KOR MEX

Only voluntary Voluntary at low earnings Partial Similar to employees 5 10 15 20 25 30 35

• D. Old-age pensions

Self employment in % of total employment, 2017

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Challenges to extending coverage to self-employed workers

 Fluctuating earnings: make the calculation and collection of contributions more challenging  Double-contribution challenge: requirement of self-employed workers to pay both the

employer and employee share of contributions

 High level of diversity: self-employed workers differ in terms of circumstances, needs and

contributory capacities

 Limited administrative capacities in terms of declaration, record-keeping and contribution

collection

 Incompatible design of social protection systems: e.g. high levels of fragmentation can make

it more difficult for the self-employed to contribute or qualify for benefits

 Misclassification of the employment relationship: particular challenge for many dependent

contractors in the platform economy

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Adapting social protection systems to ensure adequate protection for workers in all forms of employment, incl. the self-employed

 Closing social protection gaps for self-employed workers  Achieving better health outcomes (see COVID-19 crisis)  Removing incentives to choose “cheaper” forms of employment over

better protected forms of employment

 Contributing to level playing field between enterprises in “new” economy

and “traditional” economy

 Ensuring equitable and sustainable financing of social protection systems

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Closing social protection gaps for self-employed workers: policy responses

1. Tackling disguised self-employment: addressing the issue of misclassification 2. Extending social protection to self-employed workers, including dependent self- employed workers 3. Ensuring an effective framework for monitoring progress in ensuring social protection coverage of workers in all forms of employment, including self- employment 4. Integrated policies to provide better employment and social protection for the self- employed

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• 1. Tackling disguised self-employment: addressing the issue of

misclassification

 Ensuring that employers and workers are aware of, and understand, existing regulations;  Strengthening the capacity of labour inspectorates to monitor and detect breaches;  Making it easier and less costly for workers to challenge their employment status by, for example

creating a presumption of employee status unless shown otherwise or placing the burden of proof

• n employers;

 Increasing the penalties for firms misclassifying workers;  Reducing incentives for firms and workers to misclassify employment relationships as self-

employment in order to avoid/reduce taxes and regulations.

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• 2. Extending social protection to self-employed workers, including

dependent self-employed workers

 Adapting legal frameworks and financial and administrative arrangements to ensure coverage for

workers in all forms of employment (e.g. Argentina, Brazil, China, France);

 Mechanisms to facilitate coverage for workers with complex or unclear employment relationships (e.g.

Germany, India);

 Adapted solutions for registration, contribution collection and benefit payment mechanisms, harnessing

the potential of digital innovation (e.g. Canada, France, Mexico);

 Reducing fragmentation, enhancing coordinating and ensuring portability of social protection rights and

entitlements (e.g. Argentina, Brazil, Canada, Turkey);

 Integrating self-employed workers into unemployment protection to support labour mobility (e.g.

Denmark, France);

 Guaranteeing at least a basic level of social security through a nationally-defined social protection floor

(e.g. Argentina, China, South Africa ). 12

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• 3. An effective framework for monitoring progress in ensuring social

protection coverage of workers in all forms of employment, including self- employment

 Clarifying and standardizing concepts and definitions (e.g. what is self-employment and

dependent self-employment?);

 Adding and/or adjusting questions into existing household and labour force surveys;  Using administrative data sources (such as tax and social security data) and linking them to

survey data, where possible;

 Institute measures to ensure that digital platforms supply the relevant authorities with

appropriate information on the work mediated through their platform, e.g. by partnering with the private sector, developing new data collection exercises (e.g. through special surveys or data crawling).

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• 4. Integrated policies to provide better employment and social protection

for the self-employed

 Social protection policies need to go hand in hand with measures in other policy areas, such

as labour law, tax policies, collective bargaining and skills, to fill regulatory gaps and to improve working conditions of some self-employed workers. Measures include for example:

 Strengthening workers’ voice and the role of workers’ organizations  Extending collective bargaining rights to self-employed workers (e.g. Canada, Germany)  Effective lifelong learning system and more investments in public employment services

(e.g. France)

 Promoting transition from the informal to the formal economy (access to business advisory

services, education and skills programmes) (e.g. India)

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Implications of the COVID-19 crisis for self-employed workers

15 Self-employed workers hit particularly hard by the health and economic crisis

 Dramatic impact of COVID-19 on sickness and job loss, affecting self-employed workers particularly hard  Major social protection gaps for self-employed workers  risk of further contagion because many workers

cannot self-isolate or are forced to continue working sick COVID-19 crisis adds to urgency of “ensuring adequate social protection for workers in all forms of employment”:

 Guaranteeing effective access to health care for all and ensuring income support for sick and quarantined

workers

 Unemployment protection benefits and short-term schemes for workers who lose their jobs or reduce their

working time

 Family and care policies to support working parents as schools are closing and elderly relatives are

particularly vulnerable

 Importance of inclusive social dialogue in tackling the causes and consequences of crisis

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G20 responses to the COVID-19 crisis: ensuring better protection for self-employed workers

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 Ensuring effective access to health care, such as by closing gaps in social health protection and

extending financial protection (e.g. Australia, China, Japan, South Korea and United Kingdom)

 Ensuring income security during sick leave, such as by extending sickness benefits financed from

general taxation to workers who are not entitled to paid sick leave otherwise, including the self-employed (e.g. Canada, Germany, United Kingdom)

 Providing unemployment protection, such as by extending coverage of unemployment protection

schemes to self-employed workers, combined with active labour market policies (e.g. Canada, France, South Korea)

 Ensuring adequate pensions, such as by advancing the payment or increasing benefit levels (e.g.

Argentina)

 Providing income support through social assistance and cash transfers (e.g. Australia, Italy)  Family leave and care policies (e.g. Italy)  Providing financial support to self-employed workers affected by a drop in demand (e.g. Australia,

Germany, France)

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Key references

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• OECD 2020. Supporting People and Companies to Deal with the Covid-19 Virus: Options for an Immediate

Employment and Social-Policy Response. Paris: OECD. https://oecd.dam-broadcast.com/pm_7379_119_119686- 962r78x4do.pdf.

• ILO, forthcoming. Social Protection Responses to the COVID-19 Crisis: Country Responses and Policy Considerations’

Geneva: International Labour Organization. (https://www.social-protection.org/gimi/ShowWiki.action?id=62)

• OECD. 2019. ‘The Future of Work: OECD Employment Outlook 2019’. Paris: OECD.

https://www.oecd-ilibrary.org/employment/oecd-employment-outlook-2019_9ee00155-en.

• ILO, and OECD. 2018. Promoting Adequate Social Protection and Social Security Coverage for All Workers, Including

Those in Non-Standard Forms of Employment, Paper Prepared for the G20 EWG Meeting, Buenos Aires, 20-21 February 2018’ Geneva and Paris: ILO and OECD. http://www.ilo.ch/wcmsp5/groups/public/---dgreports/--- inst/documents/publication/wcms_646044.pdf

• OECD, 2018. The Future of Social Protection: What Works for Non-Standard Workers? Paris: OECD.

http://www.oecd.org/els/the-future-of-social-protection-9789264306943-en.htm

• ILO, 2018. Innovative approaches for ensuring universal social protection for the future of work, Issue Brief prepared for

the 2nd Meeting of the Global Commission on the Future of Work (No. 12). Geneva: ILO, Geneva. http://www.ilo.org/wcmsp5/groups/public/---dgreports/---cabinet/documents/publication/wcms_618176.pdf

• ILO, 2016. Non-standard forms of employment: understanding challenges, shaping prospects. Geneva: ILO.

http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_534326.pdf