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

Ensuring better social protection for self-employed workers 2 nd meeting of the G20 Employment Working Group 8 April 2020 International Labour Organization Organisation for Economic Co-operation and Development

2 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

3 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

4 In most G20 countries, the share of self-employment has declined % of total employment 80 30 40 70 35 India Mexico 25 60 30 Indonesia Korea Italy 20 50 25 Brazil Turkey Spain 40 15 20 Argentina Australia France 30 China 15 Canada 10 Germany 20 South Africa 10 Japan 5 Russian 10 5 United Federation Kingdom Saudi 0 0 0 United Arabia 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 States 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.

5 General downward trend in own-account work across G20 % of total employment 35.0 70.0 25.0 India 30.0 60.0 20.0 Indonesia Mexico 50.0 25.0 Turkey Brazil Italy 15.0 20.0 40.0 Korea Spain Argentina 15.0 30.0 United 10.0 Kingdom France Australia South Africa 10.0 20.0 Germany Canada 5.0 Russian 10.0 5.0 Federation Japan Saudi 0.0 0.0 0.0 Arabia 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 High incidence of informal employment and working poverty among own-account workers 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.

6 Increase in platform work (but overall shares remain low) Monthly averages of daily data for global new vacancies in English for online gig work, May 2016=100 % yearly change to month (RHS) Monthly average (index LHS) 160 50 150 40 140 30 130 20 120 10 110 0 100 -10 90 -20 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 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.

7 Major gaps in social protection coverage for self-employed workers B. Sickness (income replacement), invalidity D. Old-age pensions A. Maternity and family benefits C. Unemployment benefits and work injury benefits 35 35 35 35 TUR TUR MEX TUR TUR 30 30 30 30 Self employment in % of total employment, 2017 Self employment in % of total employment, 2017 Self employment in % of total employment, 2017 25 25 GRC KOR 25 KOR 25 KOR ITA ITA ITA ITA 20 20 20 20 GBR GBR 15 15 GBR 15 15 GBR FRA AUS FRA FRA FRA DEU 10 DEU 10 JPN DEU DEU 10 DEU JPN 10 JPN AUS AUS CAN CAN CAN AUS CAN USA U … USA USA 5 5 5 5 0 0 0 0 Not No access Voluntary Same as Similar to Only No access Larger gaps Some gaps Similar to No access Voluntary / same as Voluntary at Partial applicable / partial employees employees voluntary employees partial employees low earnings access access 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.

8 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 NB Manually place “ilo.org” device in front of image

9 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

10 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 NB Manually place “ilo.org” device in front of image

11 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 on 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.

12 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 ). NB Manually place “ilo.org” device in front of image