Spoiler: not necessarily. They tend to be under-insured, but they don’t seem to mind.
Christoph Fahle and I conducted a short study on social and financial security among the coworkers at Betahaus Berlin. Betahaus is one of the largest coworking spaces worldwide, and certainly one of the coolest, too.
We did the study simply because so many people are interested in coworking (some recent media coverage: “the future of work“, “digital nomads“). Journalists often try to frame coworkers and other Macbook-hugging knowledge workers like some kind of digital peons. Since both Christoph (as co-founder of Betahaus) and I have a slightly different take on coworking – we both love it and chose to pursue this style of working very much voluntarily – we thought we should go on a fact-finding mission.
So we asked the residents of Betahaus about their financial situation (income, insurances etc), threw in a few demographic questions (age, gender etc), stirred for a while and out came this brief report. For good measure we also tacked on some ideas for improvements of the overall situation of freelancers at the end of the document.
The whole report is available here (in German): Betahaus Kurzstudie “Soziale_Absicherung” (PDF)
Here’s a translation of the executive summary:
Betahaus is a central work space for freelancers in Berlin, from so-called Digital Bohemia to laptop knowedge workers. The large majority of Betahaus users is freelancing or just founding a company. (A few full-time employed are the exception that proves the rule.) Beyond that, the residents of Betahaus can hardly be pigeon-holed as the Betahaus workforce is a very diverse, heterogeneous group regarding income (below €1.800 to over €5.000), age (22-47 years) or profession (design, media, mechatronics…).
If you were to depict a typical Betahaus resident based on the average of all data we found, he would be male, 25-35 years old, freelancing and working full-time. He has health insurance, but no pension plan and hardly has any insurance besides that, but feels sufficiently socially and financially secure. From the government he wishes less bureaucracy, more flexible support and less disadvantages compared to full-time employees. But not just the average, but particularly the statistical outliers find a home at Betahaus, from precarious post-grad to well-earning startup founder or regular employee who is looking for an office away from his office.
In the study we paid particular attention to social and financial security. We came to some remarkable and partly alarming results: Just about 40 per cent of respondents have an all-round insurance package, i.e. health insurance, pension plan and at least one more relevant insurance (occupational disablement insurance, additional private pension plan or life insurance). Still, more than half feels sufficiently financially and socially secure.
Asked for their vision of a perfect social security system, the respondents criticized Germany’s social security system and expressed wishes aimed at politicians: Freelancers are structurally disadvantaged compared to regularly employed, and Betahaus residents wish equal treatment. This includes less bureaucracy as well as more flexibility in the social security system: flexible rates of contributions, the option to exit or change membership in the social insurances, unbureaucratic support in bridging temporary crises or phases of client acquisition. The wish for the option to easier switch between regular employment and freelancing was expressed, particularly in regards to pension plans and health insurance. Particularly young freelancing parents have a hard time as the system for financial support for parents is aimed primarily at regular employees.
We, the authors, are part of the demographic we studied here. In addition to the mere interpretation of the data we would like to offer some perspectives and food for thought in the last chapter. These inputs are aimed as much at politicians as they are at the freelancing community:
- Equal treatment of freelancers and regular employees
- Make the first steps easier
- Allow flexible switching between employment and freelancing (and back)
- Flexible micro credits
- Support young freelancing parents
- Support coworking spaces
- Collaboration instead of competition
Christoph has more details in German at the Betahaus blog.
The study is licensed under Creative Commons (by-nc-sa), so share as you wish.
Thanks everyone at Betahaus for your contributions!
I read the executive summary of your study with quite a bit of interest (haven’t had tme to go into it in depth yet I’m afraid) but I’ve a couple of brief comments/questions.
Firstly, I must admit that the pricing structure of Betahaus doesn’t seem cheap at all to me – unless you only really want to use it a few days a month. Compared to some of the prices you can get in a bürogemeinschaft, 229€ a month is a pretty hefty fee. So I’m curious about how anyone considered it a forced option for poor freelancers (compared to a voluntary one for decently earning freelancers). When I was looking at getting office space last year I wanted to take part in a coworking space, but the price knocked it out (as did the fact that my work doesn’t all take place inside a laptop and I need a lot of my gear with me).
Also, I’m curious about how only 40% have pension plans, but that more than half feel financially secure. Does everyone feel that they’ll be working for the rest of their lives, with no retirement? It’s been a serious topic in my home for quite a while and even we are pretty worried that our later life financial security may be pretty shaky (and I’ll be the first to admit we’re insured to the eyeballs – a trait I’d previously assigned to being married to a German, but which your study seems to disprove ;) ).
So with a market that’s heading more and more to freelancers (even with the scheinselbständig rules in place), is there any idea about how to move forward? Any plans on pushing a political agenda to improve the lot of the freelancer?
Thanks for bringing this up – really important points, the whole lot.
The pricing is indeed a touchy subject. Particularly in Berlin, where office space is generally a lot cheaper than in most other cities. Here, it seems to me, you don’t necessarily use a coworking space to save money, but rather to join the community there. (Although depending on what you need for your work, you can use a lot of infrastructure besides a desk, at least in some spaces.) So there’s certainly a point that’s worth discussing.
But it’s the facts-versus-feeling on social security that really surprised me at all. The little data we gathered doesn’t give us a lot to interpret, so I can just make a few guesses. The pessimistic take would be to assume a lot of folks are just naive and don’t realize they’re in trouble. A more positive viewer would assume that they are simple optimistic or in early stages or their career and would start their serious financial planning at a later point. Or that they have a kind of backup plan that we just didn’t factor in in our survey. (Cash under the mattress, etc.)
Either way, there’s a gap that definitely could use some further research. If the data is valid, as it seems to me, then we’ll see a big problem down the road. Although to be fair, the German social security systems seems to be headed for some major problems due to the demographic change in general, so maybe a major overhaul can’t be avoided anyway?
What we did here is nothing more than showing a tiny data set that I hope can help shape this discussion. The Statistisches Bundesamt (www.destatis.de) has plenty of data on income etc to dig into.