The latest Labour Market Statistics show a large rise in self employment. This is an intensification of a long term, worrying trend.
Today’s labour market statistics
contained a lot of bad news. Unemployment is up, to 2.64m. Youth unemployment remains above 1 million. 67,000 jobs have been lost in the public sector in the last three months.
This all fits with the gloomy economic picture of the last few years. One figure, though, shows remarkable growth – the number of people in self employment. The most recent figures show there are 4.14 million self employed people in the UK, a rise of 166,000 in the last quarter.
As a rule, quarter on quarter changes should be treated with caution. The statistical confidence intervals on these estimates are quite wide. But, notwithstanding today’s news, the number of people in self employment has been rising for a long time.
Since 2001, the number of people in self employment has risen by over 700,000. The number of employees also rose over this period – there are now 300,000 more full time employees and 500,000 part time employees compared to a decade ago. There are, of course, 1.2m more people unemployed as well. (The working age population as a whole has grown significantly in the last decade).
But when we focus on the last five years – taking us back to before the recession began – a different picture emerges. The graph below shows the changes in employment since 2006 for full and part time workers, both employed and self employed.
Changes in part time, full time employment and self employment between 2006 (4 quarter average) and 2011 (three quarter average)
What has happened since 2006 is a huge decline in full time employment. There are around 350,000 fewer people in full time employment than there were five years ago. This fall is not entirely set off by a rise of 240,000 people in part time work. There has been a net loss of over 100,000 employee jobs since 2006.
It is self employment that is bridging the gap. There are 260,000 more people in self employment now than in 2006, a rise of 7% over that period. If we unpick these numbers further, we see that most of this growth is among people who describe themselves as self employed, working part time.
For many, employment has turned into self employment and full time work has become part time, with all the insecurity and lack of benefits and support this implies. So unemployment would be much higher were it not for the fact that people are willing to take work on whatever terms are offered.
There are different types of self employment and for many it is the best option. But on average, incomes are lower for self employed people than for people in full time work. The risk of poverty (See Chapter 5 of Households Below Average Income
, DWP) for adults in a household where one or both are self employed is 23%. In a household where all the adults are working full time it is 6%.
This rise in part time self employment can be considered alongside the 1.2m people working part time because they cannot find full time work as additional evidence, beyond the official unemploymnet figures, of a shortage of jobs. We estimated in our Monitoring Poverty and Social Exclusion
report that “underemployment” in the UK – people not able to find the amount of work they want to do - was around 6m people. These self employment statistics suggest it may be even higher.