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Free of charge: A Profile of Australian Micro-Business

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This excellent paper was commissioned by Independent Freelancers Australian supported by the Commonwealth Bank of Australia and undertaken by Monash University. The aim of the research was to develop a better understanding of the independent freelancer/ micro business owner/ self employed sector in Australia. They rightfully argue that a better understanding is crucial for anyone wanting to interact within such a complex sector. They suggest that the responses of this group to current and future economic situations will be a critical litmus test for the whole of society. Moreover the success or otherwise of this group has direct implications for the collection of taxes, for the repayment of loans, and via a traditional 'multiplier effect' there may be implications for many larger businesses. (PDF file, 12 pages, 1,717 KB)

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Unformated preview of the document: 'A Profile of Australian Micro-Business' (Part 1):

A desk audit into the data and research on
micro-business profiling in Australia
Released July 2010
Audit by Monash University
Supported by Commonwealth Bank of Australia
Coordinated by Independent Contractors Australia
With thanks to
Roy Morgan Research
Australian Bureau of Statistics
Australian Taxation Office
Summary Findings
www.contractworld.com.au
1
Background:
An understanding of the independent contractor/ micro business owner/ self
employed sector is crucial for anyone wanting to interact with such complex
individuals and we suggest that the responses of this group to the economic
situation we find ourselves in will be a critical litmus test for the whole of
society. Moreover the success or otherwise of this group has direct
implications for the collection of taxes, for the repayment of loans, and via a
traditional 'multiplier effect' there may be implications for many larger
businesses. This report sets out to present a multi-layered view of the
independent contractor/ micro business owner/ self employed person
important in terms of this group as:
1. Workers - in that they work for a living but they are not employees,
and no amount of reclassification for taxation purposes,
superannuation purposes, labour law purposes can change the fact
that these individuals think and act differently in relation to work and
their business than the average employee.
2. Businesses - in that they engage in business, but they are
qualitatively as well as quantitatively different to a large or even
medium sized business.
3. Consumers - in that they buy, use and consumer products and
services but they are different to other consumers in that they also
produce products/services; their choices reflect trade-offs and multipurpose
considerations (consumer and business person).
The aims of this project are twofold. The first is to clearly identify and
summarise the key features of three of the largest databases and research
resources available within Australia for profiling this complex sector. The
second is to see what synthesis can be achieved between these three
sources as resources and so develop a deeper understanding of this sector.
The three databases and research resources we draw on in this desk audit
align with the multilayered view of the independent contractor/ micro business
owner/ self employed person as:
1. Workers –derived from the Australian Bureau of Statistics (ABS)
2008 Forms of Employment Survey and the 2009 Australian
Labour Market report which specifically identified and reported
for the first time on independent contracting;
2. Businesses –drawn from four reports by the Australian Taxation
Office (ATO) into the micro business sector;
3. Consumers –drawn from both an analysis of the Roy Morgan
Research Asteroid database as well as from a 2009 Roy
Morgan Research report into the self employed in Australia.
2
Who are microbusiness
people?
This reports draws together three perspectives on this question. The first
is the Australian Bureau of Statistics (ABS) report on independent
contracting. In an Australian first, The 2009 Australia Labour Market
survey (ALMs):
a) defines independent contractors as;
"those who operate their own business and who contract to
perform services for others without having the legal status of an
employee, that is, they are engaged by a client under a
commercial contract, rather than as an employee under an
employment contract. Thus, independent contractors have the
same rights as their clients under common law to control the terms
of the contract" (ABS, 2009a p.19).
b) reveals that the Australian workforce is made up of 2.1 million "independent
contractors" and "other business people" and accounts for:
• 19% of total workforce
• 28% of private sector workforce
Figure 1: The ABS Conceptual Framework
The Australian Taxation Office data on micro-business adds further insight
that the Australian workforce is made up of around 2.5 million small
businesses, of which the largest group, 1 million are sole traders, contractors
and consultants
c) Age
ABS data shows a clear domination by the 35+ age group, contradicting the
common view of independent contracting as a young person's option.
3
Figure 2: Independent Contractors by

Unformated preview of the document: 'A Profile of Australian Micro-Business':  Part 2, Part 3, Part 4

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