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An in-depth look at self-employment figures in the UK

Since the financial crisis began in 2008, employment, unemployment and self-employment figures have been up and down like a metaphorical Yo-Yo. Last week the UK’s economy breathed a sign of relief after figure showed unemployment had dropped by 46,000 in the three month to July (although this growth was attributed to temporary employment due to the Olympic Games, so we’re not out of the woods yet).


Despite the turbulence, the underlying trend has been increases in both unemployment and self-employment, the logic being that as the private and public sectors shed employees to cut costs (particularly the latter) many were choosing to go it alone as a freelancer or contractor rather than seeking another full-time job. The PCG announced a few months ago that, according to their research, the total number of freelancers in the UK had risen from 1.4 million to 1.6 million in just two years.


Given the good people at the Office for National Statistics publish employment figures every month, we thought we’d take a closer look at the available data to see exactly how fast self-employment and freelancing is growing.


General picture of employment


The vast majority of workers in the UK remain in full-time employment – 31.8 million of the 39 million working age population, to be precise. The self-employed number is somewhat more modest – 4.5 million according to the latest figures. Here’s how those figures (including unemployment) have changed since 2006:


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The trends observable in this chart are:



  • An overall increase in the working population of the UK

  • A noticeable dip in full-time employment between 2008 and 2010

  • A slow growth in unemployment


Changes to the employed workforce


At this macro level, fluctuations are quite hard to observe. To get a clearer picture of what is happening, we can take a close look at how the makeup of the UK’s employed workforce is changing. Using figures from the beginning of 2006 as a benchmark, one trend is clear if we look at the percentage change in employment status:


 


self-employment-jump


While the number of people in full-time employment has remained roughly the same and the number of unemployed individuals has grown steadily, the number of people classing themselves as self-employed has jumped dramatically, peaking in Q1 2012, when more people were classed as self-employed than at any time since records began.


There are a number of issues with the data provided by the ONS. Primarily, many freelancers form a limited company and choose to no longer class themselves as self-employed. Secondly, only a portion of those who class themselves as self-employed would call themselves a “freelancer”.


Interestingly, a large portion of the growth in self-employed individuals can be attributed to over-50s who have been made redundant, see little chance of finding new employment and so start their own business.


These unknowns aside, it is clear from the available data that the number of freelancers in the UK is growing, and that growth is accelerating.


Photo by Paul L

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