Regulation Inhibits Potential for Freelance Knowledge Work

Freelance knowledge work is more heavily regulated in Germany than in other countries as well as being comparatively less appreciated in society. These are the findings of a new ifo study on knowledge workers such as IT and communication professionals as well as engineers and accountants. “Rather than harness the potential of freelance knowledge work as a driver of growth, Germany puts many obstacles in the way of freelancers,” says Oliver Falck, one of the study’s coauthors. These obstacles include bureaucracy, barriers to start-ups, hurdles in acquiring external funding, as well as legal gray areas when it comes to solo self-employment.

According to a regulation index, Germany is more heavily regulated (0.42 index points) than the average of all countries surveyed, which is 0.37 index points. “There are ways to pare back regulation in Germany,” Falck says. Freelance knowledge work is least regulated in Australia, the UK, and Finland (each 0.03 index points), according to the 2018 figures. By contrast, Turkey (0.90), Luxembourg (0.84), and Greece (0.73) regulate self-employment the most.

If Germany’s regulations were as lean as Finland’s, the number of freelance knowledge workers could rise by 1.3 people per 100 people in employment. This would equal an increase of about one-third compared to 2018 (4.1 freelance knowledge workers).