The number of self-employed people has reached the highest level in 40 years, according to the latest report from the Office for National Statistics (ONS).

The ONS data showed there were 1.1 million more self-employed workers in April-June 2014 compared with January-March 2008.

The 4.6 million full-time self-employed account for 15% of the total number of workers in the UK. There are a further 356,000 employees who have a second job in which they are self-employed.

In 1975, 8.7% of workers (1.9 million) were self-employed; in 2008 it was 13%.

This rise is attributed to various factors, including:

  • Government backed Enterprise Allowance Schemes
  • The effect of the early 1990’s recession and the 2008 recession – people going towards self-employment due to a lack of other options
  • Less people are leaving self-employment than in the past – the inflow rate has been fairly constant over the last 20 years but the out-flow rate has dropped dramatically from 35-37% 20 years ago to 23% now. This could be because more people are continuing to work beyond the default state pension age (and the statutory default retirement age of 65 was removed in 2011) and because the number of jobs available to employees fell at the onset of the latest recession).

The ONS define the self-employed as workers who directly provide services and do not have a contract of employment. However, we know there are many individuals required by their employer to be self-employed when they genuinely should not be and are consequently losing out on employment rights.

It can be very complicated to work out someone’s employment status but it is crucial to know what status you have as it affects the employment rights and benefits you are entitled to.

This latest survey found that:

  • The number of self-employed workers over 65 has more than doubled in the past 5 years, and self-employed workers tend to be older. The average age of self-employed workers is 47 years (7 years older than the average age of an employee) and there are more self-employed workers than employees in the 50 – 64 age bracket.
  • Men still dominate the self-employed (68%) but the number of women in self-employment has increased by 34% since 2009. The top three occupations for self-employed women are cleaners and domestics, childminders and related occupations, hairdressers and barbers.
  • The occupations with the highest number of self-employed workers are in the so-called skilled trades – construction and building roles, taxi drivers and chauffeurs, carpenters and joiners – but this was one of the hardest hit sectors in the recession so there has only been a small increase in their numbers.
  • There has been an increase in the number of white-collar workers becoming freelance, working in roles such as management consultancy, book keeping, photography and chartered accountancy.
  • Generally, self-employed workers tend to work longer hours than employees, with 35% of self-employed people working more than 45 hours per week compared to 23% of employees and with 13% of self-employed working 60 hours or more per week compared to just 4% of employees.
  • London has the highest concentration of self-employment, with 17.3% of Londoners – the largest increase in the self-employment sector. The North East had the lowest self-employment rate at 10.8%
  • However, average income from self-employment fell by 22% since 2008/9. In 2012/13 the average median income from self-employment was £207 per week. The ONS note that self-employment income is generally underestimated in surveys as income can come from a wide variety of different sources. Average weekly earnings (excluding bonuses) for employees were £450 a week in June 2014

Commentators of the statistics have said:

  • Frances O’Grady, the TUC general secretary, said:

“Today’s figures nail the myth perpetuated by ministers that the UK’s new self-employed workers are all young entrepreneurs. In fact, almost half are over the age of 50. 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”.

  • And went onto say “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. “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.
  • And “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.”
  • Laura Gardiner, a senior analyst at the Resolution Foundation, said:

“Figures from the ONS today confirm many of the findings from our own study of the growth in self-employment, including the fact the self-employed have seen a sharper fall in earnings than employees in recent years.”

  • Chuka Umunna, Labour’s shadow business secretary, said more support for the self-employed and a better understanding of their contribution was needed. Releasing a separate analysis by Labour, a week earlier, Umunna said self-employed incomes had fallen by £2,000 on average since May 2010 – a 14% drop – which compares with a 9% fall for those in regular employment. Umunna said he and the shadow welfare secretary, Rachel Reeves, had called on Sir Andrew Dilnot, chairman of the UK Statistics Authority, to consider taking into account the earnings of self-employed people when the Office for National Statistics publishes earnings figures following a sustained rise, since the financial crash, in the number of people working for themselves.

 

If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk  – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative  or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

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