Member Article

Warning over rise in self-employment as average income falls 22%

Concerns have been raised particularly amongst the unions following the release of ONS figures on the rise of self employment with average income falling 22% since 2008/09.

UCATT, the construction body, has called the self employment situation a ‘ticking time bomb’ and the TUC have argued that the self employed, particularly those in ‘blue collar’ positions, will not have sufficient access to sick pay, redundancy, holiday pay and pension entitlements, leaving them vulnerable.

The ONS found that the most common roles are working in construction and taxi driving, although in recent years there have been increases in management consultants.

As construction in particular is vulnerable to adverse weather conditions, UCATT general secretary Steve Murphy said: “Because of the heavy nature of the industry a lot will have to carry on working into later life, often in foul weather, without any pension provisions - it is a ticking time bomb.”

The body also said that in the three months to the end of June, 4.6 million people were self-employed, higher than at any point over past 40 years with the rise in total employment since 2008 predominantly among the self-employed.

Self-employed workers tend to be older than employees and are more likely to work higher (over 45) or lower (8 or less) hours and the number of women in self-employment is increasing at a faster rate than the number of men (although men still dominate self employment).

Commenting on a new analysis, TUC General Secretary Frances O’Grady 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.

“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.

“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.”

A Department of Works and Pension spokesman said: “Employees have driven the majority of the rise in employment since 2010 and today’s figures show that the rise in self-employment is mainly due to fewer people leaving self-employment than in the past.”

British Chambers of Commerce chief economist David Kern added: “It is wrong to take a dismissive attitude towards self-employment and regard it as hidden unemployment.

“Many people choose to be self-employed and make a considerable contribution to the economy.”

This was posted in Bdaily's Members' News section by Clare Burnett .