Huge rise in workers choosing to run own businesses

For the wage slaves up and down the country who dream of setting up their own business, here's the good news - almost 300,000 did exactly that this year.

For the wage slaves up and down the country who dream of setting up their own business, here's the good news - almost 300,000 did exactly that this year.

The massive increase in self-employment was one of the largest in modern history and was only surpassed in recent times by a surge at the peak of the last boom in 1989.

Significantly the increase of 282,000 people working for themselves over the 12 months to September - the latest figure available - entirely accounts for the growth in employment over that period.

Over the last year companies took on a net total of just 9,000 new employees, according to the Government's Office for National Statistics (ONS).

The growth in self-employment was across the board, with all regions of the country, both sexes and most categories of industry and occupation showing expansion.

So why do we all want to work for ourselves? John Philpott, chief economist at the Chartered Institute for Personnel and Development, said the state of the economy was partly responsible.

He said that beneath rosy headlines about record numbers in work, a lot of people had lost their jobs and many companies had seen profits plunge since the US recession kicked in 2001.

"My hunch is that quite a lot of this must be people losing their jobs and not being able to find an alternative to setting themselves up in business," he said.

"From the point of view of companies a lot of organisations are strapped for cash and might prefer self-employed people rather than taking on new [staff]." Nick Robeson, director of executive recruitment company Boyden, agreed businesses were still too nervous to hire managers.

"If you look at the state of the economy nobody has been confident about the recovery so often the only way many people can come into employment is by going freelance," he said.

Ian Luder, a partner at accountants Grant Thornton, said that it was part of the wider trend of cost-cutting that had seen thousands of jobs moved to countries such as India. "A company can just decide that it no longer needs to have a particular function carried out by its own people but it can contract it out," he explained.

He said it was quite common for a company to make people redundant and buy back their services on a freelance basis.

Mr Robeson said that of nine mid-level executives he had found fixed-term jobs for recently, a third had recently been made redundant.

However, he said that for the rest the decision (to become self-employed) was motivated by a desire for a change in the way they worked. "If you take someone in their late 40s or early 50s with some money in the bank who wants a bit of freedom, why would they want to be an employee if instead they can work for three or four different companies over a period of two years?" he said.

The ONS figures appeared to back this up, revealing large increases in self-employment among men in professions such as IT, strategy and planning, law and accountancy.

Of the 120,000 increase in the banking, finance and insurance industry, the majority (114,000) were in real estate, renting and business activities, which includes tax, business and management consultancies, accountancy and auditing.

The largest increase in male self-employment was among the 35 to 49 age group, where 86,000 set up their own business, and in the 50 to 65 age bracket where 30,000 struck out on their own. The increases in this industry were greatest in London and the South East.

Rebecca Harding, chief economist at the Work Foundation think tank, said that on a positive note the increase could be put down to a long-term culture change in the UK.

But Ms Harding warned there was still a long-way to go to emulate the entrepreneurial culture of self-employment in the US.

She said potential entrepreneurs might be discouraged by the image of a typical business owner as being a white, middle-aged, middle-class, wealthy graduate. "Levels of entrepreneurship [are] much higher in ethnic communities but there are still barriers to them getting money and growing their business," she said.

The ONS figures showed that away from the middle class professions there were large increases in self-employment among carpenter, bricklayers, childminders, personal trainers, chauffeurs and taxi drivers. "People are beginning to realise that entrepreneurship is not something that someone else does," Ms Harding said.

HAPPY FAMILIES: PARENTS WHO LEFT THE RAT RACE

'My son used to be wary of me'

STEVE MARTELL knew he had to leave his high-pressure job as a sales manager at Abbey National when he was failing to see his children on week days.

He remembers with incredulity the frantic lifestyle he led during what he described as his "corporate nightmare". He said: "I would leave home on a Monday when the children were still asleep and return after 8pm every night. Friday night would often be the first time I saw the children in the week. I came home like a zombie each night."

In September, Mr Martell, 39, left his six-figure salary job and became self-employed as an independent financial adviser. "I get to see the children in the mornings and evenings. I can now actually take time off, so when my older children, Daniel and Adam, come to visit, I actually get to see them.

"I have spent more time with my youngest child, Ben, in the last three months than I had in the previous three years. He is getting to know his father for the first time. He used to be slightly wary of me ... Now I'm hoping that I'll be able to exert some influence over his life."

Mr Martell's relationship with his wife, Suzanne, has also improved.

"It feels much more like when we first met 12 years ago. I really feel like I'm getting to know my wife again."

Despite his initial insecurities, he has no regrets about his decision. "It's only when you step off the treadmill that you realise what a poor quality of life you have," he said.

'I wanted something satisfying'

Sally Cook found her career as a conference organiser challenging and satisfying, yet when she was pregnant with her second child in 1999 she realised she wanted greater balance in her life.

"I felt unhappy I didn't have more time with my son when he was born. I have always been very career-orientated, and built up my portfolio within conference organising, but I wanted something satisfying and more flexible," she said. Two years ago she qualified as a fitness instructor and now spends one-fifth of her work time personal training, and the rest teaching exercise classes.

Although her income is lower now, Mrs Cook, 37, prefers being in charge. "There is a bit of insecurity, but because the health industry is developing so quickly, I have not found it too bad. As a manager you would do the best for your team but still had no real control, whereas working for yourself you can create your own environment," she said.

She is glad to be rid of the office politics and the hour-long Underground journey to work in central London. Despite working mainly in the evening, she feels that her relationship with her husband, Henry, an internet consultant, has improved.

"We spend much better quality time together," she said. "I'm not so exhausted because I don't work so hard. I now have time to do the shopping and chores such as sorting out the car insurance during the day. That means that our time together is used well."

Reports by Genevieve Roberts