Merryn's Blog

The depressing truth about Britain's labour market

The number of people in self-employment has rocketed since 2008. But it's not evidence of a thriving entrepreneurial economy. It’s a sign of desperation.

There was something rather sad about some of the numbers out today from the Office for National Statistics (ONS).

They showed that the number of self-employed people is up by 367,000 since 2008, with the majority of the rise being between 2011 and 2012. Well over 80% of the rise was in the over 50s. There are now 4.2 million self-employed people in the UK.

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The ONS aren't the only people to have noticed this, of course. A report out in 2012 from economist Stephane Rapelli found that the number of "independent professionals" (a classification that doesn't include the cab drivers, builders, joiners and farmers in the ONS numbers) rose by 82% between2000 and 2011. And a study by Kingston University found that these professionals added around £202bn in sales to UK GDP in 2011 (that's something like 8% of private sector turnover).

The same report found that working mothers make up 13% of independent professionals. This sounds nice doesn't it? How great to be your own boss, to have no one to answer to etc, etc.

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But it isn't quite like that of course. I asked Louis Clark of PCG (an association for freelancers, contractors and consultants) what has actually driven the rise. All their research points to much the same thing. Sure, it makes more sense in some professions to be self-employed than it used to (see the row under the last post about the way in which work has changed) but the majority go freelance "because they are forced into it by redundancy or other issues regarding permanent work."

Once in, people also tend not to get out. You could take that positively (once they are freelance people rarely want to go back to having a boss) or it could be the case, particularly among the over 50s, that once you are out of employed work it is hard to get back in.

Note that the self-employed, says the ONS, tend to work longer hours than the employed (38 hours a week for freelancers vs 36 for employees), they tend to be older, and they tend to be male.

The good news here is that technology has made it a lot easier to be self-employed than it used to be, and the rise in self-employment has offset something in the region of 40% of the loss of employed jobs.

The bad news, as this report from last year notes, is that "it's far from clear that the recent rise in self-employment marks a resurgence in British enterprise culture many of those taking the self-employed route back to work looking more like an army of part-time odd jobbers' desperate to avoid unemployment."

PS the ONS is very modern. You can see a graphic of the stats on YouTube here.

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