Growth in self-employment outstrips new jobs

Posted: 4th March 2014

An increase in the number of self-employed people is behind recent falls in official unemployment figures as opposed to the creation of new jobs, experts have said.

Quarterly labour market data, published yesterday by the Office for National Statistics (ONS), revealed there were just 0.2 per cent more ‘employed’ people during the last quarter. This compares to a rise of 4.1 per cent in the self-employed sector during the same period.

The rise in the number of people describing themselves as self-employed equates to an extra 172,000 in the last three months alone. It means the total number of self-employed people comes to 4.37 million, or 14.5 per cent of the total workforce according to PCG, the membership group for independent professionals.

Georgios Nikolaidis, economic policy adviser at PCG, said: “The rise in those choosing to go into business on their own is outstripping growth in traditional employment at a rate of almost three-to-one. This sharp increase in self-employment is more proof that the way we’re working is changing.”

Gerwyn Davies, labour market adviser at the CIPD, said the self-employment rise was “striking”, adding, “roughly three-quarters of the quarterly increase in employment is made up of self-employed”. But, he argued the figures are still subject to a margin of error. He also said: “Employment growth is usually a lagging indicator.”

Anna Leach, the CBI’s head of group economic analysis, said growth in new permanent roles was still positive. “Although the pace of employment growth has slowed from last month’s record rates, the fact 193,000 more people found jobs is still good news,” Leach said. She also pointed out that the number of people in part-time roles fell by 29,000 in the last quarter.

A report last December by Tax Research for the Joseph Rowntree Charitable Trust found the self-employed were among the hardest hit during the recession. It found workers here had suffered a fall in income of 31 per cent over the last 12 years. But, possibly out of necessity through redundancy, this had not impacted growth in the numbers of self-employed workers. ONS data found that self-employment grew by 367,000 between 2008-2012, with 60 per cent of this increase in just one of these years, 2011.

According to PCG there has been a 63 per cent rise in the number of people going freelance in the last decade alone. This brings the number to 1.72 million, contributing £95 billion to the UK economy.

Since 2008, 84 per cent of the increase in self-employed workers was for those aged 50 and above. London has the highest proportion of self-employed workers, at 18 per cent.


See the whole report here