THE BLOG

Fake Recovery Continues - Two-Thirds of Jobs Created Since 2008 Are Self-Employed, and Earnings Fall Sharply

22/08/2014 12:32 BST | Updated 21/10/2014 10:59 BST

The UK's fake recovery continues.

Even as the coalition crows about 'long term economic plans' and 'turning the corner', the truth of the matter is revealed - by the government's own information service.

The Office for National Statistics (ONS) has released information on changes in self-employment, and confirms what we have said for years: the increase is an issue more of desperation than any 'entrepreneurial spirit'.

Start with the raw figures, which show that the earnings of self-employed people fell by nearly a third between 2006 and 2014, a huge blow to those involved.

It gets worse than that though, with longer hours but lower average pay, nearly £100 per week less than in 2006 and less now than a full-time minimum wage employee by around £2,500.

It needs to be understood that when David Cameron announces apparently rosy employment figures each month, he is really telling us of many people who cannot find other work being forced into either a fake status that disguises their joblessness or poverty level hours.

There is another element of disguise, in that the pay of self-employed people is not included when official figures are released; how much worse would the recent 0.2% annual fall in wages have been if the 12% fall for those working for themselves was included?

The new figures bear out our analysis that public sector redundancies also contribute.

Some of those who have worked for the state struggle to get work in the private sector, and the thousands who have been laid off in each area then find themselves chasing the same jobs.

One refuge in this situation is to set up a small company or register as self-employed, and try to sell your services in the open market, which in practice often means back to your previous employers and contacts.

The fly in this ointment is twofold: many others are trying to do the same thing at the same time, and many local authorities and other public bodies have a ban on employing consultants and other external suppliers while they lay people off.

The continuation of redundancies in the public sector over the next few years is likely to entrench this cycle; more self-employed people chasing work which barely exists.

The ONS shows that big increases in the numbers of managers, consultants and professional people registering are behind much of the change, suggesting a public sector root with many having been made redundant as local authorities strip out those not focused on direct service delivery.

There are other problems facing workless people here.

We covered a story last year which showed advisors on the government's Work Programme were pushing unemployed people into self-employment as a way of claiming payments.

The companies delivering this scheme get paid the same for this outcome as they do for finding real jobs, leading some to suggest that this route is being exploited.

The coalition can crow, but the reality is that the ONS has exposed some gaping holes in the UK 'recovery'.