From the TUC

Can self-employment explain the growthless jobs conundrum?

14 Aug 2012, by in Labour market

The jobs market continues to confound – with employment rising while GDP falls. But does part of the answer lie with rising self-employment rates?

Recently published ONS tables – currently considering the labour market up until March 2012, but due to be updated tomorrow – show that since the recession started in early 2008 the number of employee jobs has fallen by over 500,000, while self-employment has risen by over half this amount (300,000).

The same trend remains on the year, with employee positions falling by 160,000 while self-employment rose by over 200,000. Among managers and senior officials, where there’s been annual employment growth of 80,000, 81% of new positions have been self-employed. And it’s not only those in professional jobs who are finding themselves more likely to face self-employment than ever before – over the year there’s been an increase of 33,000 in the number of workers in elementary positions who are self-employed, compared to a 29,000 fall in the number of employees in these occupations. In adminstrative and secretarial work 46% of annual jobs growth has been in self-employment.

While the inceasing incidence of self-employment may, in part, reflect longer-term occupational change, it is also likely to suggest a lack of labour demand. Put simply, at times of depressed growth such a huge shift from employee positions to self-employment is unlikely to reflect a large number of people choosing to start their own businesses. More probably the statistics reflect a growing cohort of people desperate to find paid work without enough of it.

Norma Cohen, when considering the impacts this may have for our concerning productivity figures, puts it well well she suggests that:

One possibility is that these self-employed individuals are producing less per hour each day than they had been when they were working for someone else.

while also pointing out that much of the self-employment jobs growth has been part-time.

If the reality of our jobs market is that a growing number of under-employed self-employed workers are scraping by with little real work, this analysis is spot on. While some work is no doubt better than no work at all, a key unanswered question about recent jobs growth is how much of it is providing people with a regular income that allows them to come close to meeting their living costs.  If the fast increasing army of self-employed workers are actually seriously under-employed, the discrepancy between the jobs and the growth data may not be so great after all.

8 Responses to Can self-employment explain the growthless jobs conundrum?

  1. JohnM
    Aug 15th 2012, 8:03 am

    And it also begs the question: How many of tbe self employed are actually self employed to the revenues definition.
    Or is it a 21st century “lump labour” scheme/scam. I know two people who have moved to being self employed while not moving, or changing, jobs or employer.

  2. Richard
    Aug 15th 2012, 1:36 pm

    “More probably the statistics reflect a growing cohort of people desperate to find paid work without enough of it.”

    One way to find out would be to request info on number of self-employed claiming working tax credit and housing benefit (which is how the self-employed claim benefit without having to endure the stigma of the jobcentre and signing on) due to work shortage. If that number’s risen considerably, you can be pretty sure what’s going on in the labour market.

  3. Joss
    Aug 15th 2012, 4:01 pm

    I have personally experienced this phenomenon, working a job that is identical to a contracted job, with only one employer, but for their tax reasons and general obligations to provide rights they required you to operate as a self-employed person.

  4. John
    Aug 15th 2012, 6:54 pm

    The increase in “self-employment” is more likely to be a reflection of “The search for more and more sophisticated means by which an employer may have the benefits of a person’s work, without the responsibilities, has taken many forms in recent years: casual worker contracts, contracts placing chains of contractors and sub-contractors between the worker and the employer…” ( http://bit.ly/N0hQ2M ) “Growthless jobs” is not a conundrum. It is the consequences of a 40 year shift to insecure, low-paid, contingent employment. http://theputneydebates.wordpress.com/2012/05/17/full-not-contingent-employment/

  5. Jackie Treehorn
    Aug 16th 2012, 9:49 am

    I’ve experienced this myself, working in academia/think-tank type role, got made redundant in 2011 when my employers lost government funding, managed to pick up odds and ends over the past year on a self-employed, short-term contract basis before (finally) landing a permanent job at a more junior level.

    Obviously it’s good that people have the skills and the initiative to pick up freelance work, but it’s disguising the squeeze on living standards that is happening right now. There’s perhaps work for the TUC on this ‘quiet crisis’ – anecdotally, I also regularly hear friends talking about how they’re stuck in a job that they hate but dare not leave, or have missed out on a long overdue promotion because their employers can’t afford to give them one. This is all contributing to a real sense of struggle that isn’t captured by the statistics.

    Finally, I’d also note the way that unemployment benefits have been stigmatised as a probable cause of the low claimant numbers. The right wing press have made benefit recipients into total pariahs, and I wouldn’t be surprised if some households prefer to tap into their savings out of a (flawed) sense of pride.

    Ironic that while those at the top have no qualms about receiving multi-million pound salaries far out of kilter with their contribution to society, those at the bottom are made to feel bad for accepting a few quid every fortnight in their hour of need.

  6. Why the rise in self-employment is a Bad Thing | Flip Chart Fairy Tales
    Aug 23rd 2012, 8:46 am

    […] here is a sign that the economy is weakening. So, while they might make the employment figures look good, the self-employed will spend less and pay less tax, neither of which will do much to help the […]

  7. Sian Rowland
    Aug 31st 2012, 4:25 pm

    I was made redundant from my local government job last year along with a huge number of colleagues. Out of this group, some have found full time or part time employment but most of us have become self employed. The reason for this is that the services we used to provide have been cut entirely but our client still need our services. The big difference is that now they have to pay for these services, some manage without. I don’t scrape by but I certainly have to be more canny than I used to be.

  8. Back to Work, Mr Cameron | Passing Nightmare
    Sep 2nd 2012, 10:14 am

    […] much of the work being created is temporary, precarious and part-time. There also appears to be a trend to encourage those out of work to declare themselves as self-employed, to help bring the […]