Self-Employment the Lack of Stability in the Term Paper

  • Length: 5 pages
  • Subject: Business
  • Type: Term Paper
  • Paper: #33592655

Excerpt from Term Paper :

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.

The revolution or transformation in the institutions of work and economy due to technology came about through a shift in the means of production and of consumption. Means of production refers to the process by which the production of material goods is carried out in a society. In today's world, this process is carried out by people, with the major product being knowledge and/or information, not through factories or machines. Means of consumption is the process by which the consumption of a product by a society is carried out. In modern societies this is done through malls, shopping centers, self-employment and the Internet.

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. 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 (Growth of Self-Employment, 1997). 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.

Knowledge has become the main product produced and consumed in our post-industrial society. As post-industrial implies industry, the manufacturing of goods through factories or with machines, is no longer the driving force of the economy or the major employer of workers. Services and information cannot be produced in factories. As the means of production shifts, the means of consumption does as well. As knowledge and services cannot be transferred through inheritance and can be shared or given without any loss, the means of providing these products is different than the industrial society's means of production. Therefore the means of consumption will be different as well. The means of consumption has replaced the means of production in importance.

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 (Growth of Self-Employment,1997).

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 1990s 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 1990s (Internet 1). But the weak economy since the early 1990s contributed to the slowdown in the growth of employer self-employed (ESE) and to the pickup of own account self-employment (OASE) growth (Gauthier & Roy, 1997).

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 (Leonhardt, 1999).

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 U.S. 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 (Leonhardt, 1999).

Another type of self-employment, which is growing rapidly, is electronic commerce. When you think of companies that are online you usually think of company names that end in dot com. But more and more companies are marketing them selves online and buying and selling online. The Internet and e-commerce are still in their infancy but they are rapidly becoming mainstream business tools.

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" (SES E-Commerce Press Release, 2002). 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 (SES E-Commerce Press Release, 2002). 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 (Following their homing instincts, 1998)

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…

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