Self-employed turning to one another to get through illness and hard times

A new movement is emerging in the UK, in which the self-employed are turning to one another for business and financial support, according to new analysis by the RSA think-tank.

Commissioned by the Federation of Small Business (FSB) to examine how self-employed workers might manage the risks they face, the RSA found that growing numbers of workers are turning to collective sick-pay funds to manage ill health, cash pooling schemes to deal with late payments and micro-loan services to plug gaps in bank finance.

Published today, the RSA’s report The Self-Organising Self-employed concluded that, to date, both the state and the market have struggled to keep pace with the rising numbers of the self-employed. Although successive governments have been vocal in their admiration of people who strike it out alone, holding up their attributes as ‘self-starters’ and ‘strivers’, this had led to a ‘non-interventionist, hands-off policy agenda, with the self-employed broadly left to their own devices’.

Researchers concluded that the open market was also constrained by the level of support it can provide. Whilst there are plenty of financial products that the self-employed could in theory draw upon to help manage risks (including income protection insurance, private pension plans, invoice factoring services and personal accident cover), many of these products have strict eligibility criteria and can be prohibitively expensive.

With the self-employed now counting for 1 in 7 of the workforce and with their numbers expected to swell over the next decade, the RSA called on the government and large trade unions to examine how they might better support the launch and scale-up of grassroots initiatives that support the self-employed through tough times.

The report shines a light on several self-organising schemes operating on the fringes of our economy, including the concept of Bread Funds, a Dutch innovation that allow small groups of self-employed workers to stow away money in sick pay funds, which can be drawn upon should anyone in the network fall ill. Beginning with just 30 members and one group in 2006, there are now 12,500 members spread across 260 groups in Holland, with plans to launch in the UK later this year.

Community Union’s partnership with the Welsh IndyCube co-working space is highlighted as another best practice example. Their new support package will give IndyCube’s business members access to Community Union’s legal support team as well as an affordable invoice factoring service that will eliminate the problem of late payments for some.

The RSA and FSB concluded, however, that for these schemes to join the mainstream a cultural shift is required with government and local authorities backing the movement. The report called for towns and cities to become ‘hot-spots of self-organising’, challenging local authority leaders to think about positioning their area as hubs of self-organising activity, with a collaborative effort from the council, local educators and business support groups stimulating bottom-up interventions.

Commenting on the report, RSA Associate Director, Benedict Dellot said:

“Whether it is tech developers sharing workloads, interpreters and translators pooling marketing costs, or freelancers of all kinds clubbing together to create collective sick pay funds, the scope for self-organising to improve the lives of the self-employed is huge. With our political institutions gripped in turmoil, now more than ever workers need to look to themselves for a helping hand. It will take a Herculean effort of will and imagination for self-organising to go from the margins to the mainstream, but it is right to be ambitious. What’s to stop us from realizing a future where co-operative membership is the norm for business owners, where there is a collective sick pay fund in every town, and where user-own platform cooperatives give gig workers a stake in the on-demand industry they toil for.”

Commenting on the report, FSB National Chairman, Mike Cherry said:

“It is heartening to hear of, and see, collaborative and enterprising initiatives like these cropping up in the UK. However, the stark reality is, the Government has not been quick enough to recognise the ‘sea-change’ towards self-employment and many are being left behind. The self-employed have fewer rights and fundamentally take on far more risk than employees. For example, when they fall ill they lack access to critical benefits such as sick pay that many employees take for granted. The Government needs to do more to actively support the self-employed including introducing changes that would break down the regulatory barriers to self-organising arrangements. This will help reduce the risk for many self-employed and giving them the peace of mind that employees have when faced with hardship in their life."

The report highlighted how in other European countries, mass self-organising is already a reality. In the Emilia Romagna region of Italy, cooperatives account for a third of GDP produced, and around two thirds of the population is a member of a cooperative. In Bologna, 85 per cent of the city’s social services are provided through cooperatives. The self-organising movement scene is equally impressive in the Basque region of Spain, where tens of thousands of workers owners and cooperatives operate under the banner of Mondragon Corporation, the report said. Examples of self-organising case studies contained within the report, include:

• Bread Funds, Holland – A collective sick pay fund that the self-employed contribute to in small groups of up to 50. Money can be drawn upon when members fall ill, and practical support is also offered to help sick members share their workloads.
• SMart, Belgium – A one-stop shop service for the self-employed that includes a mutual guarantee fund made up of contributions from individual members. This can be used to settle invoices within 7 days in the event of late payments from clients.
• RICOL, UK – A London-based language co-operative run by and for self-employed language professionals (interpreters, translators and language teachers). RICOL markets the services of its members and connects them to clients, but at a fraction of the cost of a typical agency.
• Coopaname, France – A cooperative that agrees to technically employ its self-employed members, thereby giving them access to social security protections usually reserved for employees. It also encourages project collaboration and co-tendering among its members.
• Swindon Music Cooperative, UK – A group of independent music teachers who have clubbed together to pool the costs of marketing, administration and debt collection. It also coordinates peer-to-peer learning among teachers and arranges professional development training.
• Outlandish and CoTech, UK – Outlandish is a worker coop where tech developers pool all their assets into one organisation, with members receiving a profit share that reflects their contribution. CoTech is a ‘coop of coops’ that allows tech coops like Outlandish to share staff time.
• Loconomics, US – A platform for booking local services (akin to TaskRabbit), which is cooperatively owned and governed by the same service professionals that use it, including personal trainers, child carers and therapists.
• IndyCube and Community Union – Community Union has teamed up with IndyCube co-working space to give their self-employed members access to a package of affordable invoice factoring and legal advice.

Notes to editors:

1. For further information contact RSA Head of Media & Communications, Luke Robinson on 020 7451 6893 or luke.robinson@rsa.org.uk
2. The number of people in self-employment has grown by 40 per cent since 2000, compared with a 10 percent rice in conventional employment. Close to half of all jobs growth since 2008 is owed to these self-starters, with a record 1 in 7 working people now saying they answer to themselves. Should this trend continue, the self-employed will be on course to outnumber the public sector workforce by the end of the decade.