Press release
Minister McGrath welcomes Department of Finance’s publication of research on self-employment
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Published on
Last updated on
The Department of Finance today (Friday, 2 February) published analysis conducted jointly with the Economic and Social Research Institute, which examines the determinants of self-employment across the economic cycle. The findings demonstrate a strong impact of the economic cycle on the decision to enter into self-employment and present a key resource for future policy measures aimed at growing the economy.
The self-employed make up a substantial and important proportion of the workforce, and are one of the driving forces behind economic growth over time. In that respect, understanding self-employment and its drivers is key to contextualising policy interventions aimed at supporting innovation and growing employment through this channel.
The findings identify distinct drivers motivating self-employment entry and exit at different points of the economic cycle. The research shows that the composition of entry into self-employment shifts substantially toward individuals entering from unemployment during recessions and that this type of entrant is characteristically less likely to innovate. That said, there is an important role for this type of activity in avoiding ‘scarring’ effects on the labour force during downturns.
The results will support the government in framing interventions in terms of self-employment for a given policy objective.
Commenting on the department’s analysis, Minister for Finance Michael McGrath said:
“I welcome the publication of this analysis which adds significant context to policy levers in terms of entrepreneurship and self-employment. The finding that the composition of self-employment varies considerably with the economic cycle is economically significant, and provides robust context for policies aimed at improving the entrepreneurial environment in order to boost long--term economic growth.
"The Irish economy has undergone significant changes in recent decades and this is a pattern which will undoubtedly continue. Supporting innovation and entrepreneurship to grow our economy and create new employment through structural changes such as climate and digital transitions is a key priority for Government. Technology advancements should facilitate greater flexibility and innovation in the labour market, including in the area of self-employment. The insights gleamed from this report will provide a valuable input for development of public policy in this area.”