Covid drives up number of self-employed for first time since 2015

BarcelonaFor the first time since 2015, the number of self-employed in Catalonia grew last year. The reason: the covid crisis. The report Situation of self-employment in Catalonia 2020 presented this Thursday by the Labour, Economic and Social Council (CTESC) highlights that after four years of continuous fall, the year 2020 closed with 522,630 self-employed workers in Catalonia, which represents a slight increase over the previous year (1,127 people more), according to data from the Active Population Survey (EPA).

This rise has also meant a slight increase in the weight of the self-employed in the total number of the employed, up half a point from 2019 to 15.7%. But the figure is below the Spanish average (16.1%). In fact, the weight of the self-employed in Catalonia is the fourth smallest in Spain, only above Madrid, the Basque Country and Murcia. All are far from Extremadura, which leads the ranking (21.3%), followed by Galicia and the Balearic Islands.

However, the upturn last year is mainly due to the increase in self-employed who do not have any employees (3.7%), which represent almost three out of four of the total. In contrast, small entrepreneurs (self-employed with employees) have been punished by the covid crisis and have suffered a decline of 7.2%.

According to the rapporteur of the study, Víctor Climent, professor of sociology at the University of Barcelona, both the increase in self-employed without employees and the decline of those who do employ workers are the usual behaviours that occur when there are cycles of economic crisis. "When you enter a period of recession, the number of self-employed workers grows, except for small entrepreneurs, who are the first to take the hit," he explains. The figures prove him right: from 2012 to 2015, when the economic downturn was in full swing, the number of self-employed soared from about 490,500 to over 530,500 people [see graph].

Self-employed people aged 55 and over, the drivers of growth

Despite the fact that more than half of the self-employed are between 35 and 54, the group that has made the overall number of self-employed rise again in 2020 after four years has been the over-55s, who last year grew by 12.6%. The reasons, according to CTESC, are diverse: false self-employed (employees who were previously salaried and now, despite working for the same company, become self-employed) or people who were on a salary, have become unemployed and are now looking for new ways of income to survive, among others. This last factor fits in with the fact that 2020 closed with a fall in the number salaried workers by 2.6%. The sectors that grew the most were construction and scientific and technical activities.

As for the extraordinary measures put in place to address the pandemic, the report notes that they have reached almost half of the self-employed (43%) and the sectors that received the most aid are trade, crafts and fashion, followed by tourism. "That about half of the self-employed have needed financial assistance to stay afloat indicates that the crisis has brought down their income, although we have not quantified this," says Climent. He highlights the low number of benefits for cessation of activities granted to those who applied between January and June, the period in which the restrictions were most severe. Of the 863 applications, only 250 were given. Most of those that were rejected were for "not properly accrediting the cessation".

The profile of the self-employed in Catalonia is currently male (seven out of ten are), who works in the service sector (77.2%) – a fact that is not surprising, as it is one of the economic engines of Catalonia – and who pays the minimum contribution base.

Given this situation and the impact of covid, the CTESC makes a long list of recommendations and requests, such as extending active retirement to all self-employed, allowing the self-employed who run a company to deduct their income tax or corporate tax, and ensuring Social Security tols and information are updated, especially the tool to calculate your own pension.

The Generalitat's Secretary General of Labour, Enric Vinaixa, has recognised that the report "sets the Government homework" and has claimed that they will be done in 2022. "One of the Government's goals is to incentivise and consolidate self-employment in the Generalitat's areas of competence, and in those that are not, the objective of the Catalan executive is to demand them". He also celebrated that the pension reform being negotiated with unions and businesses foresees a contribution in function of the real income of the self-employed. On the other hand, he has criticised increasing contributions linneally.