Self-employment up despite lower earnings

The average self-employed worker earns 40% less than the average employee, according to a study by independent think tank Resolution Foundation.

The research reveals that the average weekly wage for self-employed people has fallen 20% since 2007, compared with a 6% fall for employees over the same period.

Despite falling wages, self-employment has continued to grow rapidly over the last six years. Between 2008 and 2014, self-employment grew by 666,000 while the number of employees increased by 133,000. Overall, self-employment now accounts for 4.5 million workers, or a seventh of the workforce.

The study, based on a survey of nearly 1,000 self-employed people, found that:

  • 73% of those who became self-employed in the last five years did so for personal preference
  • 83% said they preferred to work for themselves while 17% would prefer to be an employer
  • Between 2005 and 2013, the proportion of women in self-employment rose from 27% to 30%
  • 32% of the part-time self-employed are over 60, while only 13% of part-time employees are over 60
  • 34% describe themselves as entrepreneurs.

Gavin Kelly, chief executive of the Resolution Foundation, said:

“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.”

Ben Page, chief executive of market research company Ipsos MORI (who conducted the survey), said:

“Self-employment has grown across most parts of the workforce and a sizeable number of the self-employed would describe themselves as entrepreneurs. This confidence is at odds with what we know are the associated difficulties – especially financial insecurity and unpredictability – but only a quarter of the self-employed say they would prefer a regular job.”

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