Can self-employment explain the growthless jobs conundrum?
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.