When Are You Getting a Real Job? the Acceptance of Self-Employment in Denmark and the Incapability of Danish Labour Market Institutions

Self-employment is a small but stable feature of many European economies and theories of self-employment describe it in either positive terms – innovation and flexibility – or negative terms – atypical employment and driving out direct-employment. Some occupations, such as journalists, and sectors, such as construction, are more likely to have a higher number of self-employed persons; a fact that reflects the particular work organisation and traditions of these occupations and sectors. Institutionally, self-employment is well integrated into the labour market, welfare and legal institutions. Access to these institutions is possible for both direct- and self-employed persons but it differs in two aspects. First, direct-employed persons are typically able to access public services while self-employed persons have to make private arrangements, for example for pensions and health care. Second, this means that there are also differences within the group of self-employed persons and these differences are determined by the individual capacities to pay for these private welfare arrangements.

The situation for self-employed persons in Denmark is not much different and there are similar associations, sectoral specifics, tensions and problems. There are forms of professional self-employment that also provide innovation and flexibility and a few forms of atypical employment, which is in competition to direct-employment. However, there are less internal divisions between different groups of self-employed in Denmark and instead the divisions between self-employed and direct-employed are more pronounced. In fact, the proportion of self-employment is smaller, it is less accepted as elsewhere although there seem to be little atypical forms, and disadvantages are shared by all self-employed. Moreover, there is little knowledge about self-employment in Denmark despite its liberal and flexible labour market, which would be seen to be more favourable a diverse set of employment forms. Based on interviews with stakeholders and self-employed persons, the paper will draw out the specifics of the Danish case.

The paper argues with a systems theory approach that self-employment in Denmark describes a phenomenon where self-employment has been largely ignored by the labour market institutions as part of their organisation and traditional focus. Self-employment is difficult to be accommodated by the labour market institutions in contrast to direct-employment because their design was not meant for self-employment. Most institutional analyses rest on the assumption of an equilibrium between institutions, either as the aim of institutional development, or as the background for institutional conflicts. When self-employment is not fully integrated into institutions it cannot be part of the equilibrium nor of conflict; instead, it falls into the cracks between the institutions. In sum, the paper contributes to theories of self-employment and the institutional organisation of labour markets while raising important questions about the future of service economies with their multiple employment models.