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PurposeThe aim of this paper is to assess whether employment insecurity/instability is a necessary consequence of operating as a self‐employed worker in the external labour market (ELM) and to examine the role for social capital to influence any such potential insecurity/instability.Design/methodology/approachA total of 124 workers in the UK construction industry – 78 self‐employed and 46 directly employed – and 12 employers were interviewed in a period spanning the New Construction Industry Scheme in 1999 to provide the empirical evidence for this research.FindingsBelying the common assumptions of atomistic dependence in the face of employers hiring from a competitive and undifferentiated labour pool in an ELM, the results of this research clearly demonstrate a key role for social capital to influence the allocation of work in the ELM and thus minimise the importance of job tenure in determining perceptions of employment security/stability.Practical implicationsThe role for social capital to influence the allocation of work has attracted increasing attention in recent years. This paper provides further evidence that job tenure by itself, cannot be used as a definitive measure of employment security/insecurity in both internal and ELMs.Originality/valueThere is relatively little empirical research on the role of social capital to influence the distribution of work; particularly in the ELM. This paper responds to the increasing call for research in this area to focus on micro/social action rather than on macro/structural variables and mechanisms.

The rise in the number of self-employed workers in the UK has been paralleled by increasing concern that the use of such `peripheral' labour may result in the operation of a dual-labour market acting to reinforce segregation between `good' core employment, characterised by higher pay, fringe benefits and job security, and `bad' peripheral employment with adverse characteristics. In contrast, using evidence gained from a survey of workers in the UK construction industry, this paper shows that, for any occupation/level of skill, there are discrete advantages and disadvantages in both direct and self-employment. It is, therefore, argued that worker preference for a particular mode of employment is the key criterion which determines the case for either relative advantage or disadvantage. In particular, the evidence shows that the large majorities of both direct and self-employed workers who prefer their existing mode of employment undermines dualist conclusions of relative disadvantage arising from self-employment per se.

Does flexibility in employment relations necessarily mean a polarisation into desirable and undesirable jobs? The Core/Periphery labour force structure was developed as the model which would facilitate the attainment of numerical, financial and functional flexibility. In particular, numerical flexibility is achieved via the expansion of the peripheral workforce as variations in the supply of non‐firm specific activities occur in response to the demands of the firm.