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The Trends In Self-Employment Essay, Research Paper

The Trends in Self-Employment

The lack of stability in the traditional workplace is resulting in a change in the way people do business. Instead of looking to large corporations or government offices for full-time paid work, people are taking matters into their own hands. Self-employment is growing as an opportunity for everyone who needs work. Two popular sub-categories of self-employment are home-based businesses and electronic commerce.

With reduced employment opportunities in larger companies and government, many people seeking employment have started looking towards self-employment and small firms as a large source of jobs. In Canada, 3 out of 4 new jobs created in the 1990 s have been in the form of self-employment (McJobs to My Own Job). While some self-employed workers turn to this type of employment by choice and earn high incomes, most of the increase in self-employment in the 1990 s has been driven by the lack of employment alternatives such as paid work and permanent work. In 1990, the rate of self-employment as a share of total employment was twelve point one per cent and rose to fifteen point four per cent in 1995 (Pro-Quest, 4). The growth of self-employment has been attributed to high and rising unemployment rates especially among older workers and well-educated young people, lack of suitable work, and low wages, among various other reasons. Eighty-five per cent of all jobs created in Canada since 1979 are accredited to small businesses and medium sized business (Internet 11).

Self-employed workers, on average, are more likely than paid workers to work on a full- time, full year bases. Many self-employed workers also work extra long hours. One in three (32.1%) of self-employed men and one in five (32.1%) self-employed women work more than ten hours or longer days, six or seven days week. This is compared to five point three per cent of paid working men and one point two per cent of paid working women. Self-employed workers are twice as likely to work long hours than paid workers are (ProQuest, 4).

The strong performance of self-employment relative to paid employment over recent years in Canada has sparked a wide interest in many people starting up their own businesses or going to work for small business owners. Over the 1990-1996 period, self-employment grew by three point three per cent per year on average, while paid employment grew only by zero point two per cent per year(Internet 1). Over this period of time there was a net increase of 511,000 in the total number of people employed and approximately 387,000 (75%) of these people reported themselves as being self-employed (Internet 1)

There are two types of self-employment, employers who are self-employed (ESE) and own-account self-employment (OASE). During the 1976-1996 period, growth in employers who are self-employed (ESE) had been more rapid than in own-account self-employment (OASE). But in the early 1990 s growth in own account self-employment (OASE) grew rapidly while growth in employer self-employed (ESE) fell to almost zero (Internet 1). Despite the overall growth in self-employment, growth trends in owner own account self-employment (OASE) and employer self-employed (ESE) have diverged significantly since early 1990 s (Internet 1). But the weak economy since the early 1990 s contributed to the slowdown in the growth of employer self-employed (ESE) and to the pickup of own account self-employment (OASE) growth (Internet 1). However, it is difficult to measure this effect and therefore, it is impossible to say with any degree of precision what proportion of these trends will reverse themselves as paid-employment recovers. The on going weak level of activity in the economy may have given rise to these new trends in employment.

There is an increased draw towards owning one s own business, and working primarily from the home. Technological advances such as fax machines and the internet allow people from all over the world to network and market their products and services to a global community, even while they sit at home in their pajamas. Even though home-based businesses are a new trend, a recent study by Entrepreneur Magazine showed that home-based businesses already account for $454 billion in revenue and the number of home-based businesses is continuously growing. Home-based businesses have increased from twenty six point four million home-based businesses in 1993 to forty point two million home-based businesses in 1999 (Internet 4).

Millions of people are taking the steps and setting up their own customer service-orientated businesses from their homes. The reason so many people are turning towards home-based self-employment is because of the benefits. It holds all the same benefits as owning your own business except they can do it in the comfort of their own homes. They can also avoid job insecurity and changes that today s corporations are going through, have control, make decisions, work the way they chose, control how much time the invest, how much money they want to make, and they can make their own schedules. Home-based businesses also require little overhead so people don t have to worry about working so hard to recoup their costs. In the US alone there are over four million documented home-based businesses, but there are at least fifty million including all the home-based businesses which are undocumented. The rapid growth in the use of the Internet is and will be a major factor spurring on the creation of more home-based businesses (Internet 4).

Another type of self-employment, which is growing rapidly, is electronic commerce. When you think of companies that are on line you usually think of company names that end in .com. But more and more companies are marketing them selves on line and buying and selling on line. The Internet and e-commerce are still in their infancy but they are rapidly becoming mainstream business tools. According to one of Canada s largest surveys on small businesses and e-commerce, the SES, sixty one per cent of Canadian small businesses are currently using the Internet in their business transactions and communications. Seventy eight per cent of small business owners believe that the impact of the Internet will be positive on their businesses. Only twenty seven per cent of Canadian small business owners have conducted financial transactions on-line in the past year. But, forty one per cent of small businesses are planning to do so in the coming year (Internet 6).

Up to now, small business owners have seen the Internet largely as a communications research tool, not as a medium for buying and selling This is changing, however. Canada s entrepreneurs are being very strategic in how they make use of the Internet and that increasingly means getting involved in e-commerce. E-commerce in Canada is quickly growing from infancy to young adulthood (Internet 6).

The key stumbling block that prevents the adoption of the Internet is a lack of perceived need, small business owners don t think there are insurmountable barriers to making use of the Internet and e-commerce. Many simply don t see the technology as being relevant to them yet (Internet 6). But, sixty one per cent of businesses surveyed are currently using the Internet and seventy seven point eight per cent of those businesses have said that the internet has a positive impact on their business (Internet 6). Small businesses and independent professionals, who are always short on time, might be interested in the convenience of the Internet. But to be successful, Internet service markets will have to overcome cultural barriers. People in this day and age are used to getting advice on the Internet for free, and they will most likely hesitate to pay money to a service provider whom they have never actually met face to face (ProQuest 49)

When dealing with self-employment and the different sub-categories, there are many policy issues that arise. These policy issues in a large corporation or government office seem small and slightly unimportant. But to small business owners these policies are important and a very big deal. In a large corporation, insurance is provided for you as soon as you joint the company. But in a new small business, whether the business is located in a storefront or a home, life and health insurance are the last thing on someone s mind. But getting health insurance when you are on you own can be a grueling experience. Comparison-shopping is a must and most new entrepreneurs just don t have time for this in the early stages (ProQuest 3645)

E-Commerce has many privacy policy issues on the go right now during its primary stages. The new EU Privacy policy, dealing with the European Union Data Protection Directive, came out last year and its purpose was to protect data about individuals that is entered into website, stored on the Internet, or disseminated over corporate intranets (Internet 7). There is a real need for improvement in privacy policies, but the level of protection [required by the Directive] is above and beyond what the U.S. would require, (Internet 7).

Self-employment as a whole is increasing. I believe this is because people are realizing the benefits involved. The largest one being that when you start your own business, you are the boss your own boss. Also, the satisfaction of earning your own money and being successful because of your hard work is so rewarding. But not all small businesses are success stories. Many new small businesses, whether in a store, a home, or on the Internet, fail with in the first year or two. To prevent this a lot of hard work and planning is involved in the first stages of creating a business. I think that the statistics given above from all of the sources indicate that self-employment is the way of our future. And home-based businesses and electronic commerce will be the ways that people will prefer to do business.


1. Diverging Trends in Self-Employment in Canada, Human Resources Development Canada. James Gauthier and Richard Roy, August 1997 www.hrdc-drhc.gc.ca/arb/research/arb-97-13e.html

2. Self-Employment: Labor Supply and Heterogeneity, Andrew Pearlman Dissertation Prospectus, September 1997 www.econ.yale.edu/ peralman/prospectus/

3. From McJobs to My Own Job : The Growth of Self-Employment, www.clc-ctc.ca/jobs/summer96.html

4. Home Office Trends, www.flirtation.com

5. Self-Employment Program- Policy Manual, www.wcb.pe.ca

6. SES-E-Commerce press Release, www.sesresearch.com

7. EU Privacy Policy Could Shape E-Commerce, www.techweb.com

8. Assessing the Case for Asset-Based Social Policy in Canada, www.sedi.org

9. E-Commerce Times: Privacy Policy, www.ecommercetimes.com

10. U.S. Government Policy on E-Commerce, www.jrood.edu

11. Business & Entrepreneurship, www.niagrac.on.ca

12. Lemonade Stands on Electric Avenue, Leonhardt, David. Issue 3639. Print Media Edition: Industrial/ technology edition, New York, July 26, 1999.

13. Women Entrepreneurs Share Successes, Challenges, Sladek, Sarah L., www.finance-commerce.com

14. Staying Insured When You re on Your Own, Hoffman, Ellen. Issue 3645. Business Week, New York, September 6, 1999.

15. Out on the Bleeding Edge, Wahl, Andrew. Volume 72, Issue 17. Canadian Business, Toronto, October 29,1999.

16. Business: At Your Service, Volume 352, Issue 8134. The Economist, London, August 28,1999.

17. Entrepreneurship and job creation, Issue 209. The OECD Observer, Paris, December 1997.

18. The Growth of self-employment, Volume 10, Issue 4. The Worklife Report, Ottawa, 1997.

19. Following Their Homing Instincts, Volume 86, Issue 6. Nation s Business, Washington, June, 1998.

***Note- The internet sources are cited in the paper according to number I the bibliography and the journals are cited under ProQuest and issue number (which are bolded in Bibliography).

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