Collapse in pay lies behind Britain’s return to work: Self-employed are hidden victims of recession, report warns - UK - News - The Independent

 

Collapse in pay lies behind Britain’s return to work: Self-employed are hidden victims of recession, report warns

Self-employed earn fifth less than in 2008, and 40% less than typical employee

More than a quarter of people now classed as self-employed are hidden victims of the recession struggling by on low pay, a new report reveals.

The study by the Resolution Foundation think tank reveals the dark side of the sharp growth in self-employment, which has helped the Government to maintain its boast that unemployment is falling as more and more people find work.

Since the start of the recession five years ago, the number of self-employed has risen by 650,000 to 4.5 million. They now represent 15 per cent of the active workforce.

But the new analysis reveals that the average weekly income of someone in self-employment is 20 per cent lower than in 2008.  As a result, a typical self-employed worker now earns 40 per cent than a typical employee.  An Ipsos-Mori survey commissioned as part of the report also found that 27 per cent of those who became self-employed in the past five year do so because they had no other choice - up from 10 per cent five years ago.

Gavin Kelly, chief executive of the Resolution Foundation, said: “Self-employment is often a highly precarious existence which isn’t that well supported by public policy. High levels of self-employment seem likely to be here to stay and policy-makers have some catching up to do.”

The grim truth about pay and living standards in some the regions of the UK has also been highlighted by official EU figures showing that parts of Britain are effectively poorer that countries from  former communist countries in Eastern Europe.

People in Cornwall and the Welsh Valleys are worse off than residents of Estonia and Lithuania, according to Eurostat figures comparing wealth across the EU using a measure known as “purchasing power standards” - which takes into account GDP per person and cost of living.

In addition, Durham and the Tees Valley, in the north east of England, are poorer than those in the wealthiest regions of Bulgaria and Romania, the two most deprived countries in the EU.

By contrast, the Eurostat figures show that London is the richest place in Europe.

According to the Resolution Foundation report, self-employed people are more likely than people in full time employment to complain of being under employed.

The report’s authors suspect that much of the drop in self-employed average earnings is caused by their working fewer hours, and by the increasing number of women who are self-employed.

London, where the well paid full time jobs are concentrated, has experienced the lowest proportionate growth in self-employed, while the highest increases have been in the north east of England and the West Midlands, where there is high unemployment.

The grim economic background means that many of the people classed as self-employed face an uncertain future, with no growing pension pot, and difficulties in getting mortgages and personal credit.

The Resolution Foundation report warns: “The analysis paints a worrying picture of the security and vulnerability of self-employed people on both a short and long term horizon.”

Mr Kelly, from the foundation, added: “The growth in self-employment over recent years has been astonishing – but the reasons for it are complex. Some of it can be explained by a workforce that is getting older and putting off retirement for longer, some of it may be down to our growing appetite for being our own boss, and clearly much of it is due to weakness in the jobs market meaning there are fewer other options.”

Labour’s shadow Business Secretary Chuka Umunna said: “This report shows that the cost of living crisis facing the self employed is often more acute than for others. 

“That is why, unlike this Tory led Government, we will reduce the cost of doing business for the self employed by reducing the average small business’ energy bill by £5,000 with Labour’s energy price freeze, by improving access to finance with a British Investment Bank and regional banks, and by setting up a UK Small Business Administration to champion their interests at the heart of Government.”

The figures in the Eurostat report date from 2011, before the UK economy began to recover.

In the past quarter the UK has achieved an annual growth rate of 3 per cent, while the economies of the US, EU and Japan floundered.  This inspired David Cameron to talk last week about a “great British revival”.

But the former US Treasury Secretary Larry Summers has dismissed the idea that these figures are a vindication of the Government’s austerity programme.

Writing for the Washington Post, he claimed: “While recent growth has been rapid this is only because of the depth of the hole Britain dug for itself.”

A Department for Work and Pensions spokesman said: "Of the 691,000 extra people who have found work over the last year nearly three fifths are employees of firms. But small businesses and entrepreneurs are the heartbeat of the continuing success of the country and as the economy grows, these self-starters may well become the employers of the future.

“The truth is the number of people in work has increased by 1.35 million since 2010 - over a million of these jobs are full-time. We now have the highest employment rate for five years and record numbers of people are in work.” 

Life and Style
tech
Arts and Entertainment
Robin Thicke's video for 'Blurred Lines' has been criticised for condoning rape
music
News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matt Damon as Jason Bourne in The Bourne Ultimatum (2007)
filmMatt Damon in talks to return
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Life and Style
tech... and together they're worth at least £100 million
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig is believed to be donning skies as 007 for the first time
Arts and Entertainment
Fringe show: 'Cilla', with Sheridan Smith in the title role and Aneurin Barnard as her future husband Bobby Willis
tvEllen E Jones on ITV's 'Cilla'
Life and Style
Bono and Apple CEO Tim Cook announced U2's surprise new album at the iPhone 6 launch
tech(but you can't escape: Bono is always on your iPhone)
Sport
Tim Wiese
sport
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Programme Test Manager

£400 Per Day: Clearwater People Solutions Ltd: Our client are currently seekin...

IT Network Manager - Shepherd's Bush, London

£28000 - £30000 per annum: Ashdown Group: IT Network Manager - Shepherd's Bush...

Secondary supply teachers needed in Peterborough

£21000 - £35000 per annum: Randstad Education Cambridge: Secondary supply teac...

Modern Foreign Languages Teacher

£100 - £110 per day: Randstad Education Group: Full time German Supply Teacher...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week