PhD students or employees?

An article in the Guardian Higher Education section grabbed my attention in the last few days: a debate about whether PhD students in the UK should be classified as employees. I've worked in countries that take different approaches: I myself was a PhD student here in the UK, with student status, whilst in the Netherlands, where I did my first postdoc, our PhD students were classed as employees. The major advantage to PhD students being employees is that they pay into the social security system of their country - pension, healthcare and such - and are protected by employment legislation. This can have a big knock-on effect later in life. As the proponent of employment status in the article also points out, not having a taxable income can present problems when e.g. buying a house.

More subtly, it might change the status of PhD students in a department or research group: rather than work towards writing a thesis mostly for their own benefit, they'd be seen as a more integral part of the research workforce. To me this makes sense, as the day-to-day business of research resembles "a job" more than "an educational course", and students' contributions are often invaluable to the outcomes of a research project. If a PhD were seen as a transition in employment, rather than a drastic move back into education, it might also make it easier and more attractive for older, more experienced professionals to re-enter universities and get PhDs.

Classing PhD students as employees would make them more expensive of course, possibly reducing the overall number that can be taken on. I'd be interested in seeing the calculations for that. As the opponent in the Guardian piece points out, foreign PhD students might then also count towards any immigration quotas, though I don't see why there couldn't be an exemption for them. And students themselves would have to come to terms with losing "student benefits" like council tax exemptions, cheap overdrafts and other financial perks. The question of self-funded students could pose some problems too, though I expect that the number of students funding their own way through a PhD without needing any kind of employment is very small.

I'd be interested in learning more about how different countries arrived at the systems they use, and what is says about how they perceive the role of PhD students in education and research, and their value to the country's economy as a whole.