The collective risk management of zzp’ers: How do the social protection system, networks and households effectively restrain their precariousness?

Abstract

Self-employed without personnel (zzp’ers) have been growing in both number and heterogeneity. Despite the significant share of economically dependent and bogus self-employed, zzp’ers are still viewed as entrepreneurs embodying an individualized type of risk management. However, relying on market-based instruments may be ineffective, as market failures and irrational risk perceptions can hinder them from adopting arrangements to restrain their precariousness. This paper investigates how Dutch institutions empower zzp’ers with various forms of collective instruments to voluntarily manage their risk of precariousness. Precariousness is defined comprehensively as unmet basic needs. Four instruments involve a risk sharing among zzp’ers, their families, and the welfare state: statutory protection system, network, hybrid work, and household. Two main research questions are answered using a mixed-method research design: what are the basic needs covered by the collective risk management instruments available for zzp’ers? To what extent are those instruments effective in restraining their precariousness? The larger their risk sharing, the more instruments correct market failures and irrational risk perception on the one hand and provide standardized risk management on the other hand. The overall effect of collective instruments is expected to be mixed: to empower zzp’ers and to conflict with their preference for autonomy. Results show that the statutory protection system preserve a balance between business freedom and protection of zzp’ers in most vulnerable circumstances. Other instruments, especially networks, are shown to be effective in restraining the precariousness of zzp’ers. However, as for hybrid work, more standardized risk management strategies are shown to hinder their autonomy.