One in 20 employed New Zealanders are contractors

Nearly 144,000 New Zealanders work as self-employed contractors, which is just over 5 percent of all employed people, Stats NZ said today.

The Survey of working life conducted between October and December 2018 asked employed people about their work arrangements, employment conditions, and satisfaction with their job and work-life balance during the previous 12 months. This is the first time Stats NZ has sought to identify contractors and ask about the nature of that work.

“There is considerable interest in contracting, given the perceived trend towards a ‘gig economy’ where people increasingly work on short-term contracts or freelance jobs,” labour market statistics manager Scott Ussher said.

“However, the challenge in identifying how many people work as contractors is that the distinctions between employees, self-employed contractors, and other types of self-employed people are not always clear-cut.”

To make these distinctions, we relied on people’s own view of their employment status instead of applying any legal criteria. The survey asked self-employed people with no employees whether they worked as contractors in their main job.

Men were nearly twice as likely as women to be in contract employment, with 7 percent of employed men and 4 percent of employed women working as contractors.

While those identifying as contractors made up a relatively small proportion of the total New Zealand workforce, they were more common in some industries. The industries where they made up the highest proportions of the workforce were:
• professional, scientific, technical, administrative, and support services (14 percent)
• rental, hiring, and real estate services (13 percent)
• information media and telecommunications (13 percent)
• construction (12 percent).

While self-employment has traditionally been regarded as giving people more independence than waged or salaried employment, this is not always the case with contracting.

“Some contractors depend on a single business or organisation for their work. Anecdotally, we know that some are treated much like employees, but without the benefits and protections of an employment contract,” Mr Ussher said.

While the survey did not classify contractors as independent or dependent, it did ask several questions about how much independence and autonomy contractors had in their work.

Half of those who identified as contractors said they relied on one client or business for most or all of their work. However, a larger proportion (73 percent) said they were usually able to work on contracts with more than one client or business at a time. Over two-thirds (67 percent) said they were able to sub-contract or employ others to assist with their work.

Most contractors reported a relatively high level of autonomy in their work:
• 77 percent said they had a lot of control over how their daily work was organised.
• 79 percent had a lot of control over how their tasks were done.
• 66 percent had a lot of influence on decisions that affected their own work.

On each of these aspects, contractors reported less control or influence than other self-employed people, but more than employees.

Contractors tended to earn a similar amount to employees but more than other self-employed people. Both contractors and employees had median hourly earnings of $25, with contractors tending to work slightly fewer hours than employees (with averages of 34 and 37 hours, respectively). By comparison, self-employed non-contractors tended to work fewer hours (an average of 31) and had lower hourly earnings (a median of $16 an hour).

Although some contractors may experience issues such as poor conditions of employment and lack of rights and benefits that employees enjoy – particularly those in highly dependent relationships with a single client or business – we found that the vast majority of contractors were satisfied with their jobs and wanted to remain in self-employment. Nine out of 10 contractors said they were satisfied or very satisfied with their jobs, similar to the figures for other self-employed people and employees. Additionally, 9 out of 10 contractors said they would prefer to continue being self-employed rather than have a paid job working for someone else.

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