Self-employment nation

The number of people working for themselves in the UK has grown at an astronomically fast pace, giving the nation the dubious title of being the self-employment capital of Western Europe.

A report released Tuesday (August 12) by the think tank IPPR reveals that self-employment growth has outpaced all western European nations in the past year, including France, Spain and Italy.

In the UK, 4.5m people have been classified as self-employed, which accounts for more than 15 per cent of the total workforce. This amounts to one out of every seven workers.

High self-employment figures often mask a hidden economy of insecure work. The countries with the highest self-employment figures in Europe include shaky economies such as Greece. Even some members of the Bank of England’s own interest rate-setting committee have seen the growth in self-employment as a worrying sign of a weak labour market.

Entrepreneurial spirit or self-employed poverty?

Establishment politicians may tout these figures as reflective of the nation’s “entrepreneurial spirit”.  But previous figures have shown that those who work for themselves are often part-time and earn a fraction of the wage that full-time workers do.

A majority of those who are self-employed are a far cry from the entrepreneurs the Conservative-led government praises. According to office of national statistics data, the vast majority are not owners or proprietors of their own businesses. They are either sub-contractors, freelancers or are classed as “working for themselves.”

Self-employed incomes have sharply dropped by 14 per cent since 2010, which amounts to a ÂŁ2,000 pay cut on average. Those in regular employment experienced only a 9 per cent drop by comparison.

Even though self-employed workers account for a larger and larger share of the labour force, their earnings are ignored in official earnings figures, which can paint a rosier – and less accurate – picture of how UK workers are faring.

HMRC data shows that the average self-employed worker earns less than ÂŁ10,400 a year. To put this figure into perspective, the annual income for a full-time worker on the minimum wage of ÂŁ6.41 an hour is ÂŁ13,124.

“Most of the self-employed in this country earn a pittance compared to even the lowest paid workers in regular employment,” said Unite assistant general secretary Steve Turner. “That the government refuses to report their earnings in official figures just shows how badly they want to cover their tracks about our weak economy and mislead the public.”

Disguised employment

Designating employees as “self-employed” in order to skirt employment law – and avoid paying taxes – is a common employer practice in some sectors, which could also explain self-employment growth.

In 2012, a UCATT report found that the practice, called “disguised employment,” was rampant in construction and continues to plague the industry. By designating its employees as “self-employed”, unscrupulous employers can rob their workers of basic rights such as holiday pay, overtime pay and pension contributions.

Official employment figures released Wednesday (August 13) confirmed that the sector with the largest growth in self-employment was none other than construction.

“Many of the newly ‘self-employed’ are employees by another name – employees underhandedly stripped of their rights. Disguised employment is a chronic problem, one that this government has done nothing to address,” Turner said.

“Hundreds of thousands of self-employed people also report that they would rather be employees. Self-employment is often not a choice; it’s a last resort that contributes to the growing cancer of casualised, insecure work.”