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18 Oct 2016 12:06pm

Self-employed earning less now than in 1995

The self-employed workforce has grown by nearly 50% since the start of the century but its earnings have fallen by around £60 a week over the same period and are now 15% lower than they were in 1995

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Caption: Self-employed not all budding entrepreneurs and gig economy workers

According to the Resolution Foundation’s latest Earnings Outlook, one in seven workers – or 4.8m people – now describe themselves as self-employed, which represents a growth in numbers of 45% since 2001/02.

But an analysis of their typical earnings shows that although these increased steadily in the late 1990s and the early 2000s, they flat-lined in the run-up to the financial crisis and then slumped by 25% in the aftermath.

They have recovered slightly but really only in the last year and are now around the £240 a week mark.

Over the last 20 years, the Foundation says, the profile of the self-employed has changed dramatically, something that goes some way to explaining why earnings have fallen.

Only 11% of self-employed people now employ staff compared to 23% in 2001/02, while the number of those working more than 40 hours a week has decreased from 51% to 35%.

There is also a question about the definition of self-employed – as the Foundation points out, some self-employed are still “managed” by large employers or a smartphone app if they work in the gig economy.

An example are Uber drivers, whose status as self-employed is currently being investigated in two Employment Tribunal cases backed by the GMB union.

Two drivers are arguing that they are effectively employed by Uber and so should be entitled to holiday and sickness pay.

The cases were heard in July and the tribunal decision is expected shortly.

“For many people, self-employment brings a freedom that no employer can provide,” the Foundation’s economic analyst, Adam Corlett, said.

“But the growth of low pay and short hours, along with a summer of protest about conditions, means that it’s no surprise some workers in the gig economy feel that self-employment is just a positive spin on precarious work.”

The Foundation, he added, welcomed government moves to review employment practices in modern workplaces and ensure that public policy matched self-employed workers’ needs.

Julia Irvine

 

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