Newsflash: the economy is recovering. One of the key indicators of this is the fact that unemployment is falling. It is down to 6.9% in the three months before February 2014. However, whilst the Government and media are quick to push this statistic, there’s more to it. Since the economic crash, there has been a significant increase in the number of self-employed workers. The number of people who work for themselves is up by more than 600,000 since 2010. Industry experts are wondering if the increase is due to more ambition and drive, or something else?
According to PCG, the freelance union, a significant factor in the increase in the number of people who are self-employed is the reduction in start-up costs. A spokesperson for the Union said that people are now able to start with less capital, or sometimes no capital at all. Previously, potential business owners were turning to banks for a £100,000 start up loan, now they can start with just £500. This is partly due to the technological changes in society. Starting a business used to mean you had to find a premises to base it in, materials, stock and employees whereas now, often a laptop, phone and internet connection can get your business off the ground. Industry insiders are saying that this notion makes self-employment a much more secure career path or a route out of unemployment when the job market is sparse.
However, it is important to note that the four most common self employment occupations: taxi drivers, joiners, farmers and other construction trades have not changed a lot, so it would be unrealistic to credit digital technology completely with the growth in self employment.
A large part of the rise could be down to part time self employment used by employers. Critics say that this is a way for companies to dodge expensive employee benefits by creating part time jobs. Another sector is those stuck between working and not working, such as new mothers who create a business from home in order to try and strike a balance by generating some income.
The main concern for self employed people is that they do not have access to pension schemes. 2013 figures show that self-employed workers have smaller pensions. Economically speaking, self employment creates lower earnings as people tend to work less. It also creates financial insecurity which impacts the level of disposable income being put back into the economy.
So perhaps beneath the surface, self-employed people are struggling more than we think.