Theoretical overview of self-employed persons

Employment is a crucial indicator of economic development and growth, making employment policy a key component of national and regional socio-economic strategies. Self-employment is a significant form of employment widely practiced in Latvia and other EU Member States as a means to initiate businesses and integrate into the labour market. As of 2022, about 27.66 million self-employed individuals, constituting roughly 14% of the EU workforce, contribute to the European economy. Modern work dynamics allow individuals to earn income as employees or self-employed, with flexible employment forms, including self-employment, gaining popularity due to several advantages. These advantages include increased flexibility, personal independence, opportunities to join or stay in the labour market, and the potential to earn additional income alongside a primary job. However, self-employment also has its drawbacks. It can be exploited to evade taxes and bypass labour laws, leading to ʻfalse self-employmentʼ. While this may appear advantageous for the self-employed, it primarily benefits employers by reducing their costs. This practice can severely limit the self-employedʼs access to social protection and adversely impact their quality of life and financial stability in situations of social risk, such as illness, disability, or retirement. Self-employment involves various economic, psychological, sociological, and managerial dimensions and entails considerable risk. Global trends indicate that individuals in lower-income countries are more likely to be self-employed, whereas those in higher-income countries tend to have paid employment.