TUC: Self-Employed Figures Are Skewing Our Understanding Of Unemployment Figures

Are Jobs Stats Masking The Poorly Treated Self-Employed?

The government's employment figures, due to be published on Wednesday, have been skewed by a surge in self employment, according to Trade Unions Congress (TUC) analysis.

More concerning is the TUC's suggestion that many of these self employed people are working for someone who previously would have employed them under a full time contract, meaning they were now working the same hours for potentially less money and less security.

From early 2010, 40% of the new jobs created in the UK have been through self-employed roles, even though just 14% of all British workers are self-employed.

The TUC claimed the small rise in overall employment levels since the start of the recession has been driven by a 9% increase in the number of self-employed workers (up 330,000). However, the number of employees has actually fallen by 1% (down 284,000).

This sharp rise in self-employment could be masking the true extent of unemployment, claimed the TUC. General secretary Frances O'Grady said in a statement: "We know the harsh economic climate is having a huge effect on the amount of work that those fortunate enough to have a job are able to get, with over three million people saying they would like more hours than they currently have.

"Ministers brush away these concerning by saying that there are more people in work than ever before. What's not clear though is how many of these new jobs actually offer secure and regular paid work, let alone enough hours to make ends meet."

The largest increases in self employment have been in administrative and secretarial work, which saw a 52% rise. Sales and customer service roles saw a 32% increase, while personal service occupations, such as hairdressing, cleaning and care work went up 31%.

Given the sectors involved, the TUC is concerned that rather than running their own businesses, many people could be undertaking "false self-employment", ie doing the same work as contracted employees but on poorer terms and with poorer conditions.

Employers can save 13.8% on national insurance contributions by forcing staff to be self employed, as well as waiving certain employment rights such as sick and holiday pay.

"More than in one in three new jobs created since 2010 have been self-employed roles. It would be naïve to think that these are all budding entrepreneurs," explained O'Grady.

"Small falls in unemployment levels in recent months have been welcome, but our better than expected employment figures are masking high levels of under-employment and falsely self-employed workers, who may have hardly any paid work at all."

This isn't the first time this concern has been raised - in October 2012, Tony Dolphin, senior economist and associate director for economic policy at the IPPR, spotted that more than half the increase in employment over 2012 was accounted for by the self-employed, unpaid family members and people on government work schemes.

Blogging for the Huffington Post UK last year, Dolphin said: "Many of the newly self-employed may be earning very little: perhaps they have despaired of finding employment as an employee and so are trying self-employment as a last resort. Part-time workers obviously earn less than full-time workers.

"And for those in full-time employment, average earnings increased by just 1.7% over the last year - below the rate of inflation. The buoyant employment numbers may mask a much gloomier picture for household incomes; and it is incomes not employment that drive demand and growth in the economy."

The Labour party has also said it will investigate the issue as part of its party policy review.

Baby Boomer Entrepreneur Boost

By contrast, figures released by online freelancer marketplace PeoplePerHour, painted a very different view, suggesting that the self-employed boom was in fact driven by baby-boomers who wanted to work for themselves.

Its survey of 5,000 businesses found the 55-year-old plus demographic was the fastest growing age group on its website, with an 88% rise in new micro and small business owners registering on PeoplePerHour in the past year. The top three sectors were internet-based businesses, retail and property.

Xenios Thrasyvoulou, founder and chief executive of PeoplePerHour, told the Huffington Post UK he refuted the TUC's claim that self employed figures are being skewed by businesses hiring ex-employees on freelance contracts.

"We have seen more than 150,000 new freelancers and micro business owners registering on the website in the past 12 months for a number of reasons," he said.

"Some people are freelancing to earn a little extra money to supplement their incomes, but most of the people we speak to on the site are freelancing or starting small businesses because of the greater independence and financial freedom that working for themselves offers.

"What is clear from the survey we carried out is more people are making a career and life choice to go self employed. It's never been easier to work for yourself."

Small business owners across all age demographics were also asked how they felt about running a business in the current difficult economic climate. More than a third said it was challenging and that the next six months would be 'make or break'.

And a third said they started working for themselves for a better work life balance. Another 26% wanted to pursue a hobby or passion, which led to them working for themselves, while 12% said it was for financial freedom.


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