Sharp rise in “self-employment”, but earnings fall

19 October 2016

Self-employment has boomed by 45% since 2001-02, but earnings among this section of the workforce are lower than they were 20 years ago.

This is according to a new analysis by the Resolution Foundation, which found that the proportion of self-employed people who have staff of their own has also declined from 23% to 11%, and the share of those working over 40 hours a week is down to 35% from 51%.

Average earnings among the self-employed fell by £100 per week between 2006-07 and 2013-14, and although they began to recover this year, they are still £60 down on 2001-02 and 15% lower than returns seen in 1994-95.

This affects a massive proportion of the overall workforce, as there are now a record 4.8 million people classified as self employed, accounting for one in seven people in work.

Some of the people currently classified as “self-employed” say they are managed – either by a large company or an app – the think tank noted, suggesting the burgeoning “gig economy” and the bogus self-employment that comes with it may be one driver of the earnings fall.

The Manifesto for Labour Law – 25 policy proposals from the Institute of Employment Rights’, which has been adopted by Labour – recommends that the legal definition of “worker” is reviewed to encompass people who are currently being misclassified as self-employed and therefore missing out on fundamental workers rights such as holiday and sick pay.