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.
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).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
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.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
-
Four AI ETFs to buy
Is now a good time to buy AI ETFs? We examine four AI ETFs that investors might want to add to their portfolio
By Dan McEvoy Published
-
Chase boosts easy-access interest rate - savers could earn 4.75%
Chase is offering a boosted interest rate which is fixed for six months, on top of the standard variable rate
By Jessica Sheldon Published
-
Beating inflation takes more luck than skill – but are we about to get lucky?
Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
By Merryn Somerset Webb Published
-
Rishi Sunak can’t fix all our problems – so why try?
Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
By Merryn Somerset Webb Published
-
Young people are becoming a scarce resource – we should value them more highly
Opinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
By Merryn Somerset Webb Published
-
Ask for a pay rise – everyone else is
Opinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
By Merryn Somerset Webb Published
-
Why central banks should stick to controlling inflation
Opinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
By Merryn Somerset Webb Published
-
How St Ives became St Tropez as the recovery drives prices sky high
Opinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
By Merryn Somerset Webb Published
-
The real problem of Universal Basic Income (UBI)
Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
By Merryn Somerset Webb Published
-
Why an ageing population is not necessarily the disaster many people think it is
Opinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
By Merryn Somerset Webb Published