'Remarkable rise' in number of self-employed as earnings fall


The number of self-employed workers has shown a "remarkable" increase over the past decade, but their earnings have fallen by £60 a week, a new study shows.

Typical weekly pay grew steadily in the late 1990s and early 2000s - but fell in the wake of the financial crash, said the Resolution Foundation.

Earnings have recovered to around £240 a week, but the figure is 15% lower than in 1994 and £60 a week lower than in 2001/2, said the think tank.

The number of self-employed workers is at a record 4.8 million, or one in seven of the workforce - but the research found a fall in the number of self-employed business owners with staff.

The increase in numbers shows the Government is right to review employment practices in modern workplaces, said the foundation.

Adam Corlett, economic analyst at the Resolution Foundation, said: "While the self-employed workforce is getting bigger, typical earnings are actually lower than they were 20 years ago.

"Prior to the financial crisis, this stagnation was as much about the changing nature of self-employed work, rather than individual rewards.

"But since the crisis, the returns to self-employment have fallen sharply even when measured on a like-for-like basis.

"Modern self-employment is less likely to involve very long working weeks, and today's workers are far less likely to be business owners with staff of their own.

"While returns may have increased recently, many workers are still feeling the painful effects of the financial crisis.

"For many people, self-employment brings a freedom that no employer can provide. But the growth of low pay and short hours, along with a summer of protest about conditions, means that its no surprise some workers in the 'gig economy' feel that self-employment is just a positive spin on precarious work."

TUC general secretary Frances O'Grady said: "Britain's new generation of self-employed workers are not all the budding entrepreneurs ministers like to talk about. While some choose self-employment, many are forced into it because there is no alternative work.

"Self-employment today too often means low pay and fewer rights at work. We need more decent jobs that people can live on, not a return to the sort of working practices we saw in Victorian times."

A Business Department spokesman said: "The Government is committed to building an economy that works for everyone and while the national living wage has given one million workers a pay rise, the Prime Minister has made clear the labour market must support and protect all workers.

"That is why she has asked Matthew Taylor to lead a review of how changing employment practices affect job security, workplace rights and opportunities for progression."