People are being their own bosses at highest rate for 40 years
Self-employment accounts for largest proportion of post-2008 UK jobs rise – but is it a sound alternative to working for an organisation?
People who have chosen to be self-employed have become the biggest force behind the UK’s total rise in employment, according to figures published this week by the Office for National Statistics (ONS). The findings demonstrate that workers are increasingly turning their backs on squeezes and freezes in company pay policies and taking chances on their own – leading to the UK’s highest level of self-employment for 40 years.
In its Self-Employed Workers in the UK – 2014 report, the ONS wrote: “Total employment in the second quarter of 2014 was 1.1 million higher than in the first quarter of 2008 – just before the economic downturn that hit the UK. Of that increase, 732,000 [jobs were] among people who are self-employed, so the rise in total employment since 2008 was predominantly [in that category]. The total number of employees [hired by organisations] rose by 339,000 over the same period.”
One key factor behind the rise, the ONS added, is that fewer people are exiting self-employment than have done so in the past, creating a hard core of people who are working for themselves.
Looking at specific trends and demographics, the ONS discovered:
1. The number of women in self-employment is increasing at a faster rate than the number of men (although men still dominate overall)
2. Self-employed workers are generally older than hired employees
3. Their hours are also somewhat polarised – in other words, more likely to be on the higher end of the scale (eg, 45 hours per week or over) or the lower (eight or fewer)
4. The number of over 65s who are self-employed have more than doubled in the past five years to almost half a million
In terms of job types that new entrants to the category are choosing, construction and taxi driving are leading the field – but in recent years, there has also been an interesting growth in self-run management consultancies.
On the basis of the findings, TUC general secretary Frances O’Grady accused the government of painting a rose-tinted picture of startup Britain. “These figures nail the myth perpetuated by ministers that the UK’s new self-employed workers are all young entrepreneurs,” she said. “In fact, almost half are over the age of 50.”
She added: “It’s great that older people are using self-employment to stay working and earning as they approach and even pass their state pension age, even if many are doing this because they can’t afford to retire. But it’s worrying that much of the recent increase is due, as the ONS says, to the limited opportunities for people to move out of self-employment.”
Despite the hard core of those remaining in self-employment for longer, O’Grady questioned whether it was ultimately a sustainable lifestyle. “It’s not hard to see why some people would want to stop being self-employed, as their average income has collapsed in recent years. The latest assessment of earnings from self-employment is £207 a week – less than half that of employees. They also don’t receive any sick or holiday pay, nor do they have an employer contribute towards their pension.”
O’Grady concluded: “Self-employment appears to be a key factor in the UK economy’s shift towards low-paid work. Many people want to work for themselves. But the growth in self-employment is reducing people’s pay, job security and retirement income – and is likely to be reducing the government’s tax take too.”
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