We need to support economic growth and the living standards of the self-employed. Photo: Flickr/milk_p
Show Hide image

Is being self-employed becoming the new normal?

In the last four years, 40 per cent of new jobs have been in self-employment. This is more likely to be a permanent shift than a temporary phenomenon.

Much has been made of the rise of the UK self-employed, and indeed it looks like they’re here to stay. Over one in seven of the workforce is self-employed; from rent-a-chair hairdressers to the owners of tech start-ups, the self-employed are everywhere. This level of self-employment puts us above the European average, an unusual position for a western European economy.

The surge in self-employed workers has driven our jobs recovery, 40 per cent of new jobs in the last four years have been in self-employment, and many commentators are delighted with the figures. But, as IPPR’s new report shows, no other country in Europe has relied on growth in self-employment to the same extent. Admittedly many countries are yet to see jobs growth of any kind, but Germany, amongst others, has seen jobs growth composed entirely of new employee jobs, along side a fall in the number of self-employed.

Self-employment is often used as a synonym for entrepreneurship; and of course we want innovation and creativity in the UK economy – these inputs, which are sometimes found in self-employment, can fuel growth. But if high self-employment rates are the new normal, then there’s a lot more than entrepreneurship for policymakers to consider.

There are many differences between Germany and the UK’s self-employed: German self-employed workers are more likely to have their own employees (44 per cent of them do, compared to the UK’s 17 per cent) and in Germany they are more likely to be highly-qualified where as in the UK self-employed workers tend to be lower levels of qualification than the average worker.

One of the most troubling findings about self-employed workers in the last couple of years has been the fall in their average earnings. IPPR research shows that a typical self-employed worker in the UK earns just over half the amount a typical employee earns. This has slid from around three quarters in 2007. Earnings growth has been poor for employees throughout this period – so this relative fall for the self-employed could represent an even greater decline in their living standards. Similar trends have been seen in other European countries, although Germany has seen a much lesser fall.

Only 9 per cent of self-employed workers were receiving training in 2012 compared to 17 per cent of employees. This figure has fallen by six percentage points since 2007. Difficulty accessing training may have knock on effects on the ability of new business owners to grow and develop their company – critical to the contribution of entrepreneurship to economic growth. For sole traders, a lack of training may mean limited progression opportunities and a more difficult route out of low pay. Government policies must adjust to the new labour market reality by boosting the support available to self-employed workers to access training and develop their skills.

Between 2007 and 2012 the number of self-employed workers looking for another job doubled, with the main reason for this cited as needing a job with more hours of work. This combined with relatively low earnings suggests that our new self-employed jobs may not be the entrepreneurial success stories we need. Instead the rise in self-employment partly represents a growth in hidden underemployment. It might, like the proliferation of zero hours contracts, be more evidence that being in work is no longer a sure fire way to escape poverty. After all, those living below the poverty line are now just as likely to be in work as out.

Nonetheless, IPPR research suggests that for some disadvantaged groups, self-employment can represent a valuable route into work. For mothers looking for flexible work; for older workers looking to top up their pension; and for migrants struggling with few contacts, starting a small business or working independently can provide a route into the labour market not available in the employee market. Being your own boss has great advantages, and in 2009 nearly half of Europeans expressed a preference for this way of working.

Policymakers need to consider self-employment carefully in order to support those who choose self-employment, most critically for those that haven’t really chosen self-employment at all but have turned to it as a last resort. High self-employment levels are the new normal and this means we need to support economic growth and the living standards of the self-employed.

Izzy Hatfield is a researcher at IPPR

Show Hide image

On civil liberties, David Davis has become a complete hypocrite – and I'm not sure he even knows it

The Brexit minster's stance shows a man not overly burdened with self-awareness.

In 2005, David Davis ran for the Tory leadership. He was widely assumed to be the front-runner and, as frontrunners in Tory leadership campaigns have done so enthusiastically throughout modern history, he lost.

The reason I bring up this ancient history is because it gives me an excuse to remind you of this spectacularly ill-judged photoshoot:

“And you're sure this doesn't make me look a bit sexist?”
Image: Getty

Obviously it’s distressing to learn that, as recently as October 2005, an ostensibly serious politician could have thought that drawing attention to someone else’s boobs was a viable electoral strategy. (Going, one assumes, for that all important teenage boy vote.)

But what really strikes me about that photo is quite how pleased with himself Davis looks. Not only is he not thinking to himself, “Is it possible that this whole thing was a bad idea?” You get the distinct impression that he’s never had that thought in his life.

This impression is not dispelled by the interview he gave to the Telegraph‘s Alice Thompson and Rachel Sylvester three months earlier. (Hat tip to Tom Hamilton for bringing it to my attention.) It’s an amazing piece of work – I’ve read it twice, and I’m still not sure if the interviewers are in on the joke – so worth reading in its entirety. But to give you a flavour, here are some highlights:

He has a climbing wall in his barn and an ice-axe leaning against his desk. Next to a drinks tray in his office there is a picture of him jumping out of a helicopter. Although his nose has been broken five times, he still somehow manages to look debonair. (...)

To an aide, he shouts: “Call X - he’ll be at MI5,” then tells us: “You didn’t hear that. I know lots of spooks.” (...)

At 56, he comes – as he puts it – from “an older generation”. He did not change nappies, opting instead to teach his children to ski and scuba-dive to make them brave. (...)

“I make all the important decisions about World War Three, she makes the unimportant ones about where we’re going to live.”

And my personal favourite:

When he was demoted by IDS, he hit back, saying darkly: “If you’re hunting big game, you must make sure you kill with the first shot.”

All this, I think, tells us two things. One is that David Davis is not a man who is overly burdened with self-doubt. The other is that he probably should be once in a while, because bloody hell, he looks ridiculous, and it’s clear no one around him has the heart to tell him.

Which brings us to this week’s mess. On Monday, we learned that those EU citizens who choose to remain in Britain will need to apply for a listing on a new – this is in no way creepy – “settled status” register. The proposals, as reported the Guardian, “could entail an identity card backed up by entry on a Home Office central database or register”. As Brexit secretary, David Davis is the man tasked with negotiating and delivering this exciting new list of the foreign.

This is odd, because Davis has historically been a resolute opponent of this sort of nonsense. Back in June 2008, he resigned from the Tory front bench and forced a by-election in his Haltemprice & Howden constituency, in protest against the Labour government’s creeping authoritarianism.

Three months later, when Labour was pushing ID cards of its own, he warned that the party was creating a database state. Here’s the killer quote:

“It is typical of this government to kickstart their misguided and intrusive ID scheme with students and foreigners – those who have no choice but to accept the cards – and it marks the start of the introduction of compulsory ID cards for all by stealth.”

The David Davis of 2017 better hope that the David Davis of 2008 doesn’t find out what he’s up to, otherwise he’s really for it.

The Brexit secretary has denied, of course, that the government’s plan this week has anything in common with the Labour version he so despised. “It’s not an ID card,” he told the Commons. “What we are talking about here is documentation to prove you have got a right to a job, a right to residence, the rest of it.” To put it another way, this new scheme involves neither an ID card nor the rise of a database state. It’s simply a card, which proves your identity, as registered on a database. Maintained by the state.

Does he realise what he’s doing? Does the man who once quit the front bench to defend the principle of civil liberties not see that he’s now become what he hates the most? That if he continues with this policy – a seemingly inevitable result of the Brexit for which he so enthusiastically campaigned – then he’ll go down in history not as a campaigner for civil liberties, but as a bloody hypocrite?

I doubt he does, somehow. Remember that photoshoot; remember the interview. With any other politician, I’d assume a certain degree of inner turmoil must be underway. But Davis does not strike me as one who is overly prone to that, either.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

0800 7318496