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Why would you be self-employed?

By JAMES COAKES Published 19th Jan 2016
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15% of the UK workforce is now self-employed, and critics say that this has a negative impact on the economy; driving lower pay, adversely affecting retirement income and eroding job security and tax revenue. In the last few years the increase in self-employment has been linked to the recession, with the suggestion being that self-employment is the last resort for those who are unable to find permanent positions of employment.

Research by the Office of National Statistics found that more than half of self-employed people had been working for themselves for more than 10 years and half of those people had been self-employed for 20 years or more.

Other significant groups within the self-employed economy included people in the service industry who provide services which are typically not provided by a larger employer, for example fitness instructors and hairdressers.

The survey found that only about 5 per cent of self-employed people are actively looking for a paid job to replace their trade. Another survey, this time carried out by Ipsos Mori for the Resolution Foundation (author of an annual report called Low Pay Britain) found that of those who became self-employed as a result of losing their jobs only 25% were unhappy with their lot and wished that they were still in paid employment.

Since 2010 the rise in self-employment has accounted for a third of the growth in employment. It is clear that many people choose this way of working as a long term strategy rather than just because they cannot find a paid job.

However, it is not all good news. The self-employed have seen a 22% drop in their income since the recession of 2008, with average earnings of £207 a week, which is less than half of that of the average employee, and with no sick or holiday pay. If self-employment is a lifestyle choice then it is hard to see where the rewards are, other than simply ‘being your own boss’. Anecdotally many self-employed people do say that this is why they choose that lifestyle.

One group in which self-employment has increased significantly is in the over 65s, where it has more than doubled in the last five years. In this sector it may be that people are selling their time out of necessity, needing to supplement their pension income and perhaps not being able to find an employed position.

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