Collapse in pay lies behind Britain’s return to work: Self-employed are hidden victims of recession, report warns
Tuesday 06 May 2014
More than a quarter of people now classed as self-employed are hidden victims of the recession struggling by on low pay, a new report reveals.
The study by the Resolution Foundation think tank reveals the dark side of the sharp growth in self-employment, which has helped the Government to maintain its boast that unemployment is falling as more and more people find work.
Since the start of the recession five years ago, the number of self-employed has risen by 650,000 to 4.5 million. They now represent 15 per cent of the active workforce.
But the new analysis reveals that the average weekly income of someone in self-employment is 20 per cent lower than in 2008. As a result, a typical self-employed worker now earns 40 per cent than a typical employee. An Ipsos-Mori survey commissioned as part of the report also found that 27 per cent of those who became self-employed in the past five year do so because they had no other choice – up from 10 per cent five years ago.
Gavin Kelly, chief executive of the Resolution Foundation, said: “Self-employment is often a highly precarious existence which isn’t that well supported by public policy. High levels of self-employment seem likely to be here to stay and policy-makers have some catching up to do.”
The grim truth about pay and living standards in some the regions of the UK has also been highlighted by official EU figures showing that parts of Britain are effectively poorer that countries from former communist countries in Eastern Europe.
People in Cornwall and the Welsh Valleys are worse off than residents of Estonia and Lithuania, according to Eurostat figures comparing wealth across the EU using a measure known as “purchasing power standards” – which takes into account GDP per person and cost of living.
In addition, Durham and the Tees Valley, in the north east of England, are poorer than those in the wealthiest regions of Bulgaria and Romania, the two most deprived countries in the EU.
By contrast, the Eurostat figures show that London is the richest place in Europe.
According to the Resolution Foundation report, self-employed people are more likely than people in full time employment to complain of being under employed.
Pension fears for rising number of self-employed
By Szu Ping Chan
6:00AM BST 06 May 2014
Higher levels of self employment have become a permanent feature of the UK economy as a result of Britain’s ageing workforce and a greater desire for Britons to “work for themselves”.
The number of people who are self employed has grown by 650,000 since the 2008 financial crisis, to 4.5m, meaning one in seven workers is now self employed.
While some of the shift towards self-employment has been caused by cyclical factors, the Resolution Foundation said 73pc of workers had chosen to become self-employed. “The high self-employment numbers are here to stay,” said Laura Gardiner, a senior policy analyst at Resolution Foundation.
The rise in self employment has attracted attention from the Bank of England, where policymakers have argued over whether the increase reflects structural changes in the UK economy or “disguised labour market slack” because many of these workers would prefer to be working full-time.
While the Foundation said there was less slack in the economy caused by self-employment than some policymakers believed, it said underemployment among these workers was “marginally worse than for employees”, representing a reversal of the pre-crisis trend.
- Resolution Foundation reveals that self-employed people are victims of the recession
- Rise of the self-employed to beat fragile jobs market
- Coalition Britain: less Dragon’s Den, more a nation of odd jobbers
- Rise of the self-employed worker (but is it because there aren’t enough jobs?)
- What life is really like for the thousands making the leap to self-employment
- It’s not just inequality that is rising rapidly; insecurity is too
- Working 9-5 is now a vanished way of life in post-recession Wales for thousands of people
- Pension fears for rising number of self-employed