The debate on self-employment has reared its head once more. With the numbers of self-employed workers in the UK rapidly increasing, there has been much speculation over whether this increase should be attributed to a surge in entrepreneurialism or a dissatisfaction with and desperation over the availability of suitable jobs.
The latest research from the think-tank, Resolution Foundation, shows that in the 2008 – 2013 period, nine out of twelve regions in the UK suffered a marked decline in employment – most noticeably in Scotland and the Midlands which were among the worst hit regions. London, however, was the one region that deviated drastically from this pattern, experiencing an increase of 285,000 new jobs during the five year period. Today, London is still the exception, making headlines recently for being a hub for job creation and high employment rates in comparison to the rest of the UK which still has a long way to go in improving its employment levels.
What impact does this have on self-employment? The Resolution Foundation found a correlation between the decline in traditional employment levels and an increase in the number of self-employed workers. In fact, numerous regions saw an increase in tens of thousands in their self-employed ranks.
This has sparked the theory that the rise in self-employment is due to a lack of availability of suitable jobs. Speaking to The Guardian, economist David Blanchflower said: “Particularly after a prolonged downturn, there is a well-documented pattern of people failing as jobseekers and then moving into self-employment status, often out of desperation rather than anything more positive.”
On a related point, the Resolution Foundation’s research found that self-employed people suffered a sharper decline in weekly wages, resulting in them being paid 40% less than employees, on average. Employees’ weekly wages had decreased by 6% since 2007, whereas the self-employed workers’ weekly wages had decreased by 20%.
Additionally, the think-tank reported that roughly two-thirds of self-employed workers had made no provisions for their pensions, compared to only 34% which had. One of the reasons behind this could be the personal financial risks involved for many self-employed workers who start their own ventures, as Blanchflower commented, stating that such individuals often face “financial uncertainty.”
Despite the research findings, when Resolution Foundation asked self-employed workers about their motivations for going it alone, 73% answered that they were motivated by their preference for working for themselves, whilst the remainder said they had no viable employment options.
The government seems to back this feeling regarding the motivations of the self-employed, with a spokesman saying: “Self-employment plays an important role in the UK’s flexible labour market and as this report shows, the vast majority of those self-employed prefer to work for themselves.”
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