The Politics of Social Policy for the Self-Employed

Recent accounts of welfare state adaptation to nonstandard employment have predominantly focused on social policies for part-time and temporary workers, leaving those for the new self-employed relatively underexplored. This paper identifies two distinct social policy responses to the rise of the new self-employed: labour law extension, which reclassifies self-employed individuals as employees, and social protection extension, which grants them access to social schemes while maintaining their commercial law status. Focusing on the latter, I argue that social protection extension reforms are shaped by the interplay between the growing prevalence of new self-employment and the strictness of employment protection legislation (EPL) for standard workers. In economies with lenient EPL, the rise of new self-employment generates competitive pressures on standard workers, who increasingly fear the erosion of their employment conditions due to the growing unfair competition from the new self-employed. To address their constituents' concerns, standard workers’ interest organisations advocate for extending social protection to the self-employed. This advocacy provides governments with the broad social support needed to adopt such protective social policies. Conversely, in economies with strict EPL, standard workers are insulated from competitive pressures and do not perceive the new self-employed as a social dumping threat. As a result, the lack of perceived risk to their employment conditions reduces demand for extending social protection, leading eventually to the absence of reform in this direction. To test this argument, I trace the adoption of reforms extending social protection to the self-employed in four European countries with varying levels of EPL strictness and development of new self-employment. In Spain and Finland, lenient EPL combined with significant growth in new self-employment spurred demands by insiders' unions for policies granting the self-employed access to multiple social schemes, ultimately leading to the adoption of reforms in this direction over the past two decades. In contrast, in France and Sweden, proposals for similar reforms by organisations representing the self-employed have not been adopted, lacking the support from insider unions. In these countries, stringent EPL has shielded standard workers from competitive pressures, preventing the emergence of broad social backing for such policies and, subsquently, reforms in this direction—even though France displays a high prevalence of new self-employment and Sweden a relatively low one. By exploring the politics of this underexamined social policy, this paper provides empirical evidence that enhancing social protection for outsiders can stem from insiders’ demands. In doing so, it sheds light on new political processes shaping welfare state adaptations to the dualisation of the labour force amid the digitalisation of the economy.