Millions of UK unemployed forced 2 register as self-employed

[TonyGosling]

Average wages for self-employed still lower than two decades ago
The Resolution Foundation estimates that average earnings for people in the group in 2014/15 are only around £240 a week, 15 per cent down on 1994/95 levels in real terms

Ben Chu Economics Editor @Benchu_ Tuesday 18 October 2016 06:21 BST8 comments
http://www.independent.co.uk/news/business/news/self-employed-wages-st ill-lower-than-two-decades-ago-a7366116.html

The Independent Online
Self-employed Deliveroo riders went on strike over pay this summer Getty
The average earnings of Britain’s still growing army of self-employed workers are still lower than they were two decades ago, new research from the Resolution Foundation suggests.

The think tank estimates that average earnings for people in the group in 2014/15 are only around £240 a week, 15 per cent down on 1994/95 levels in real terms.

Over that time the earnings of employees are up 14 per cent at around £400 a week.

No growth in two decades

selfemployed1.jpg
According to the latest labour market report from the Office for National Statistics there are 4.76 million self-employed people, accounting for around 15 per cent of all those in work.

Since the 2008-09 recession their ranks have swelled by almost one million. And since 2000 the numbers are up by 1.5 million.

Yet the average wages of the group are £60 a week lower than at the turn of the Millennium, according to Resolution’s calculations.

Official data on the earnings of the self-employed is patchy and only produced with a considerable time lag, so Resolution has to use statistical interpolation techniques to estimate the latest average earnings for the group.

Rising numbers

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There is a vigorous debate among economists and analysts over whether the sharp rise in the numbers of self-employed in recent years reflects the preferences of workers for greater autonomy and fewer hours, or whether it is a symptom of a labour market that is still under capacity.

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Some suggest the rise in self-employment reflects the enforced casualization of the work force by companies that want to reduce their labour costs.

The bulk of the decline in average real wages since 2000 is accounted for by self-employed workers doing fewer hours in a week.

But since the financial crisis this has changed and such “compositional effects” have not explained the earnings shortfall.

Theresa May has appointed Matthew Taylor, the former head of Tony Blair’s policy unit, to head a review of workers’ rights and firms’ employment practices, which will cover the issue of self-employment.

The proportion of self-employed business owners with staff of their own has fallen from 23 per cent in 2000 to 15 per cent today.

This has been interpreted as suggesting that the surge of self-employment is not evidence of a major flowering of entrepreneurial activity.

This year has seen strikes by technically self-employed workers in the so-called “gig economy” against the pay and conditions imposed by the smartphone apps UberEats and Deliveroo.

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“With so many self-employed workers earning so little, it is right that the government investigate how public policy should catch up to meet the needs of these workers,” said Adam Corlett of Resolution.

“For many people, self-employment brings a freedom that no employer can provide. But the growth of low pay and short hours, along with a summer of protest about conditions, means that it’s no surprise some workers in the gig economy feel that self-employment is just a positive spin on precarious work.”

[TonyGosling]

The fast disappearing income of the UK’s self-employed
Posted on December 3 2013
http://www.taxresearch.org.uk/Blog/2013/12/03/the-fast-disappearing-in come-of-the-uks-self-employed/

A couple of weeks ago I started to prepare what I thought would be a quick blog on the differences between HMRC and ONS data on the number of self employed people. However, the more I looked at the data I more I realised that the figures on the self employed had a story to tell, and so I investigated further with the outcome that I have published a report on the subject of the declining income of the UK’s growing army of self-employed people this morning.

One of the big surprises in the UK economy over the last few years has been that unemployment has not risen to 4 million, which many, me included, were expecting. What’s often said is that this is because many people are working part time, for low pay, and so are being kept off the unemployment statistics. What this research shows that this is, at least in part, because of the growing number of self employed people who make very little from that activity. The research covers the number of self employed people and their earnings from 1999 to 2011, the last year for which HM Revenue & Customs data is available and the picture is harsh. Excluding the less than 2% of self employed people who earned more than £100,000 a year throughout this period the picture is summarised in one graph

Screen shot 2013-12-02 at 15.22.08Using HMRC data on the number of self employed people the average, inflation adjusted, earnings of those who are self employed fell from just under £15,000 a year at the turn of the century to £10,400 in 2011, a real decline of just over 31%.

The picture is different using Office for National Statistics data on the number of self employed – which eliminates those who might have a part time self-employment as a well as a job, but comparing that data both unadjusted and allowing for inflation with the data on those who have income from employment makes very clear just how stark the change in fortunes has been for the full time self-employed since 2008 (and this data includes those earning more than £100,000 a year):

Screen shot 2013-12-02 at 15.23.27

Right across all income scales the full time self employed saw their fortunes rise until 2008 – although the vast majority of that increase went to the top 1% or more who had average earnings of £303,000 in that year – after which the income of the self-employed crashed. Allowing for inflation average earnings of those who declare that they have self-employment as their main economic activity fell from £25,400 in 2008 to £18,500 in 2011, a decline of 27%.

Despite this the number of self-employed people is rising. According to HMRC the number has increased from 4.17 million in 1999 to 5.11 million in 2011 – an increase of 22.5%. The ONS, which only records those who have self employment as their main economic activity, think the increase more modest, from 3.21 to 3.92 million over this period, but the percentage rise is almost identical. Despite that national statistics show that the share of national income they have been enjoying has been falling.

As I said in a press release issued yesterday:

These figures are quite shocking. For some time economists have been looking for the missing explanation of what is happening in the UK economy. This data helps explain how we’ve reached a point where incomes are falling, the economy is sluggish and yet unemployment is apparently not rising. The fact is we now have maybe millions of people working in very marginal self-employments for what are poverty wages because they have no other choice available to them. This is not entrepreneurial Britain and the march of the makers as some would like to represent, this is desperation Britain where people left with no choice scratch any living they can out of the limelight and, until now, out of the sight of economic statistics.

In a culture where only the best are rewarded, where cut-price is everything, and where low pay is officially applauded as a sign of productivity life for many self-employed people is very tough. These people are the hidden unemployed and the hidden low paid. They’re self-employed because the safety net has been pulled from underneath them. These are the statistics of desperation UK – the part of the economy that the top 1% or so of self employed people will never know exists.
George Osborne should take note.

[TonyGosling]

Lack of savings puts two million self-employed at risk
By Simon Allin
Lack of savings puts two million self-employed at risk

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Lack of savings puts two million self-employed at risk
By Simon Allin
Almost two million self-employed people in the UK are vulnerable to financial shocks because they are unable to save any money, research has shown.
A rerport titled Income Roulette, a study of debt, savings and protection among 9,000 people by insurer LV, revealed four in 10 (41 per cent) self-employed people can’t afford to save any money each month and a further one in 10 (11 per cent) save less than £50.

Furthermore, a third (33 per cent) couldn’t survive for more than three months if they lost their income.

The biggest barrier to saving among the self-employed was found to be fuel bills (62 per cent), followed by debt (38 per cent).

Government and industry have a duty to improve the financial resilience of the self-employed.
Justin Harper
Self-employed people are particularly vulnerable to financial shocks because they do not have access to employers’ benefits such as sick pay, but income protection can help if they are unable to work due to accident, illness or disability.

Yet just 4 per cent of self-employed people in LV's research said they had income protection, compared to a national average of 11 per cent, with four in 10 (42 per cent) mistakenly believing that they were not eligible for it.

Almost four in 10 (37 per cent) said they thought income protection would be too expensive, even though cover of £1,000 a month could cost less than £10 a month.

Although state benefits are available, claiming can often be a difficult process, with the employment and support allowance claim form running to 60 pages and the weekly payout amounting to just £80.

Justin Harper, head of protection policy at LV, said: “Government and industry have a duty to improve the financial resilience of the self-employed.

"We believe that an income protection policy can play an important part in increasing resilience and is one of the best ways for the self-employed to protect themselves against a financial crisis.

“By having a conversation about protection with clients, advisers can ensure more people in the UK are equipped to tackle financial blows.”

Barry Pappin, director of protection brokerage Vita, said: “A myriad of reasons stifle the uptake of income protection, including a lack of awareness, misconceptions and virtually no self-initiation from customers to protect what is arguably their biggest asset – their income.

“However, as advisers, we can make a real difference in ensuring that as many of our customers as possible have this valuable cover in place. The opportunity is huge and there’s no shortage of relevant product solutions from providers.

“But rather than trying to solve the income protection gap overnight, I believe as advisers we can all start by taking responsibility for making sure that our advice and sales processes are optimised to help increase the number of income protection policies being recommended and put in place.”

simon.allin@ft.com

Almost two million self-employed people in the UK are vulnerable to financial shocks because they are unable to save any money, research has shown.
A rerport titled Income Roulette, a study of debt, savings and protection among 9,000 people by insurer LV, revealed four in 10 (41 per cent) self-employed people can’t afford to save any money each month and a further one in 10 (11 per cent) save less than £50.

Furthermore, a third (33 per cent) couldn’t survive for more than three months if they lost their income.

The biggest barrier to saving among the self-employed was found to be fuel bills (62 per cent), followed by debt (38 per cent).

Government and industry have a duty to improve the financial resilience of the self-employed.
Justin Harper
Self-employed people are particularly vulnerable to financial shocks because they do not have access to employers’ benefits such as sick pay, but income protection can help if they are unable to work due to accident, illness or disability.

Yet just 4 per cent of self-employed people in LV's research said they had income protection, compared to a national average of 11 per cent, with four in 10 (42 per cent) mistakenly believing that they were not eligible for it.

Almost four in 10 (37 per cent) said they thought income protection would be too expensive, even though cover of £1,000 a month could cost less than £10 a month.

Although state benefits are available, claiming can often be a difficult process, with the employment and support allowance claim form running to 60 pages and the weekly payout amounting to just £80.

Justin Harper, head of protection policy at LV, said: “Government and industry have a duty to improve the financial resilience of the self-employed.

"We believe that an income protection policy can play an important part in increasing resilience and is one of the best ways for the self-employed to protect themselves against a financial crisis.

“By having a conversation about protection with clients, advisers can ensure more people in the UK are equipped to tackle financial blows.”

Barry Pappin, director of protection brokerage Vita, said: “A myriad of reasons stifle the uptake of income protection, including a lack of awareness, misconceptions and virtually no self-initiation from customers to protect what is arguably their biggest asset – their income.

“However, as advisers, we can make a real difference in ensuring that as many of our customers as possible have this valuable cover in place. The opportunity is huge and there’s no shortage of relevant product solutions from providers.

“But rather than trying to solve the income protection gap overnight, I believe as advisers we can all start by taking responsibility for making sure that our advice and sales processes are optimised to help increase the number of income protection policies being recommended and put in place.”

simon.allin@ft.com