Self-employment falls for 7th month

Friday 16 October 2015

The number of self-employed people in the UK has dropped for the seventh consecutive month, according to figures from the Office for National Statistics (ONS).

Overall, self-employment fell by 26,000 in the three months to August compared to the same quarter in 2014, despite reports of growth in the wider economy. The total now stands at 4.5 million.

Self-employment is now at the low levels seen before the recession. However, the picture isn’t the same for everyone. Many low-skilled workers are believed to have turned to self-employment due to a lack of other job options when companies were not taking on new staff.

These freelancers may have been struggling to make ends meet, and it is likely that some are keen to return to the world of employment now that more opportunities are available. Pay for employees has risen by an average of three per cent, particularly in the retail sector where wages tend to be low.

The situation is rather different for highly skilled professionals such as IT contractors and freelance journalists, who can command much higher wages. For these individuals, being self-employed not only allows them to receive a better hourly rate for their work, but also offers a degree of flexibility and control that many high achievers find appealing.

Interestingly, the country also returned to deflation during the last three months, with total economic growth measured at 0.1 per cent, meaning that many people will have experienced a small rise in their buying power even if they have not received a pay rise.

Responding to the news, the Independent Association of Professionals and the Self-Employed (IPSE) chief executive Chris Bryce said: “Despite the improvement in the labour market more generally, we are concerned that the number of self-employed people in the UK has fallen for the seventh consecutive month compared to last year. We expect the trend is not long term and there has been a modest improvement in the number of self-employed compared to the last quarter.

“The UK's 4.5 million who work for themselves are a huge contributor to our economic growth, so it is essential for the Government to get behind this key part of our flexible labour market.

“We hope the Government reconsiders announcements made in the summer Budget, including proposed changes to travel and subsistence tax relief for freelancers which could drive thousands out of business. The Government should support the self-employed community by implementing tailored policies that help this important sector flourish and reach its full potential.”

While the tail off in the number of people working for themselves may not be permanent, it appears that consistent government support for people looking at becoming self-employed is essential in the long term.

By Victoria McDonnell

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