UK’s self-employment boom continues

Posted on Jul 22nd, 2016 | News and opinion

There has been a surge in the number of self-employed workers in the UK over recent years, new figures from the Office for National Statistics show.

According to the ONS report Trends in Self-Employment in the UK: 2001-15, the number of British people working for themselves rose from 3.8 million in 2008 to 4.6 million last year, an increase of more than 20%. Increases in part-time self-employment were particularly noticeable.

However, the ONS commented that while the growth in self-employment since the financial crisis had been one of the “defining characteristics” of the UK’s economic recovery, the trend in fact began at the start of the last decade.

In 2001, less than 12% of the country’s workforce described themselves as self-employed, but in the first three months of this year the rate was just under 15%.

Chart showing number of self-employed workers
Number of self-employed workers (source: ONS)

High levels of satisfaction

The ONS also found that levels of satisfaction among self-employed workers appeared to be high, commenting:

“The data presented here suggest that in general, self-employed workers are broadly content with their labour market status”

“Relatively few report negative reasons for becoming self-employed, few indicate that they are looking for alternative employment and among the part-timers, many respondents report that they would prefer not to work full-time.”

Earnings data in the report backed up this view. People moving from being employees into self-employment tend to have higher “pre-transition hourly earnings” than those moving into another employee position.

The ONS said this was consistent with workers making a “positive choice” to be self-employed rather than being forced into it.

Self-employment after retirement

So what factors lie behind the rise in self-employment seen since the turn of the century? One of the key drivers has been the number of older people who are “managing their transition” out of the workforce, the ONS said.

For example, many people are deciding to remain economically active after their official retirement dates – for financial or other reasons – and self-employment gives them the opportunity to do so on their own terms.

Part-time self-employment on the up

Increasing rates of part-time self-employment have been driven to a large degree by older workers, reflecting the trend among this demographic group to reduce the amount of work they when they reach retirement age without stopping altogether.

The report found that higher levels of part-time self-employed work contributed significantly to the overall figure. Between 2001 and 2015, part-time self-employment grew by 88% compared with a full-time growth figure of just 25%.

Chart showing share of employment by full- and part-time self-employment
Share of employment by full- and part-time self-employment (source: ONS)

The largest rises in part-time self-employment over the last 15 years have been among older workers as well as young and middle-aged women. They are more likely to work in financial or business services in London and the South-East.

And while the last recession and rising unemployment rates resulted into large inflows into self-employment, the ONS said it did not expect the trend to be reversed to a significant degree as the economic recovery continued.

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Written by Chris Torney

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