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Harsh Realities of Growth in Self-Employment for Britain's Older Workers

28/08/2014 12:59 BST | Updated 28/10/2014 09:59 GMT

Britain, it sometimes seems, has become the self-employment capital of Europe (though in reality it is not clear that we are any more likely to be self-employed than in other European countries). Somehow, we have accepted such "facts" from the Office of National Statistics a little too easily as being incontrovertibly a sign of good times on their way.

The statistics are indeed impressive. There are now 4.6 million people working for themselves, with the proportion of the total workforce self-employed at 15 per cent compared with 13 per cent in 2008, and 8.7 per cent in 1975.

Two thirds of the 1.1 million increase in all employment since 2008 is made up of people working for themselves. Without self-employment, our economy would not look half as buoyant.

One could see the growth of self-employment as a tribute to the resilience and creativity of hundreds of thousands people, which in part it certainly is. If the jobs aren't there to be got by conventional means, with characteristic British inventiveness, we are taking matters into our own hands and setting ourselves up as self-employed.

It is part of a, "The world doesn't owe me a living" culture, you could say.

Doubtless the increase in the length of time we are living is a background factor in the growth of self-employment, allowing people to trade in their crystalised life-time's knowledge for the greater freedom to decide which comes from being one's own boss. This however hardly explains the phenomenal rate of increase in self-employment seen in recent years. There have to be other explanations.

The realisation that there are smarter ways to work than attending an office nine to five and a sense that "everything is possible" in the new age of global communications, could be other factors.

But part of the reason is surely found in the age profile of the new self-employed.

Self-employed people tend to be older anyway (with an average age of 47, compared with an average of 40 among employees) but the number of self-employed people over 65 has more than doubled in the past five years to reach almost half a million. So to that extent it is clear, that the drive (or need) to work longer is in some way mixed up with the increase in self-employment.

In sheer numbers, the increase is explained by the fact that fewer people in self-employment appear to be retiring than in the past. (About 886,000 of the people who were self-employed in 2009 had left by 2014, compared with 1.3 million who were self-employed in 2004 leaving by 2009.)

In other words, those becoming self-employed are digging in for longer as active workers and remaining in the job. Hence, the massive increase. All these self-employed people just aren't retiring. They are more likely to be following the maxim, "Live longer, work longer," but how much work do they actually do? Being "self-employed" may seem preferable to being "retired" and definitely better than "unemployed," even if many of the self-employed are in tiny jobs, working only a few hours a week. In truth, some may be happy with that, but not all are.

Many more explanations for the increase in self employment are possible. On one level it could simply be that being one's own boss offers more opportunities to extend working life with the kind of flexible slow down we have always asked for, as an alternative to destructive and sudden "cliff edge retirement."

There is of course, a pensions back story - who wants to retire just when one's annuity pot will buy the smallest pension in living memory? So assuming one has the luxury of being able to regulate one's own working pattern to suit - as the self-employed are more likely to do - retirement decisions can be put back.

There is another side to the coin however. While self-employment is often offered as a panacea, it is frequently the only kind of work on offer. For those employers who are reluctant to engage older workers now that they can't be forced to retire (and many seem to be in this mind set) offering someone a "self-employed" role is an ideal solution. A legal evasion tactic, in other words.

There are many older workers who go along with the notion of being "self-employed," in this way. Through some devious sleight of hand they are being deprived of employment protection and getting nothing very much in return. They find it preferable to festering on the dole.

So while self-employment can offer positive advantages - and will no doubt continue to be a source of dynamic growth of employment opportunities, especially for older people - it is important to remember that not everyone wants to be self-employed. The fact that they are thus classified, is in some measure a product of their very vulnerability to discrimination and unfavourable treatment.

It is worth remembering that the change towards self-employment has not come out of the blue but has been growing for most of the last 30 years. That said, the recent increase in self-employment among older people, has been nothing less than phenomenal! Logic says it will continue, but not everyone who is able and in need of work should be forced to take this route.

Self-employment on good, fair and decent conditions is a fair enough solution and an option that many people may very well find attractive, but don't lets kid ourselves - not all in the gardens of the self-employed is a bed of roses.

Self-employment as a repository for older workers to be parked (now that they can't be forcibly retired) is a worrying development. We should ask how many of the growing self-employed are actually part of such a duplicitous agenda, before we crow too loudly about them being a feature of Britain's dynamic and growing economy.

Chris Ball is Chief Executive of TAEN - The Age and Employment Network Follow TAEN on twitter @taen_uk Follow Chris Ball @crystal_balls