Is the boss a thing of the past?
Click to read our on The Benefits of being Self-Employed
The Office for National Statistics (ONS) has released figures that show that the steady rise in the ranks of the self-employed over the last decade has accelerated recently.
The ONS latest job figures show that there are now 4.54 million self-employed people, which is about 8% higher than a year ago. In fact, overall there are now 780,000 more people in employment than there were this time last year and almost half of them are self-employed.
Self-employment is one of the big stories of the recovery. One in seven workers in the UK are now working for themselves and self-employment is credited with having a significant effect on keeping unemployment down.
Over the longer term, the biggest rise in self-employment has been seen in the number of older workers. According to the ONS, self-employment among the over-50s is up 36% on 10 years ago.
The independent think tank the Resolution Foundation believes the main reason for this is the fact that working for yourself appears to be growing as an alternative to retirement, especially with many individuals having pensions that are barely adequate to have a comfortable retirement.
The Foundation says that more than a quarter (28%) of the rise in the number of people working for themselves is due to a decline in the rate at which people leave self-employment. They also found that more than half of self-employed people aged 60 or over now work part-time, that is up from 46% in 2005.
In other words, self-employment is increasingly seen as an option that allows older people to keep earning but by working less. This trend helps explain the big growth in overall part-time self-employment seen in recent years. The proportion of women joining these ranks is also growing.
- 36% rise among over-50s
- 7% rise among 35 to 49-year-olds
- 18% rise among 25 to 34-year-olds
- 23% rise among 18 to 24-year-olds
Source: Labour Force Survey, ONS
Is self-employment a choice or a necessity?
Unfortunately for many people, self-employment has often been a last resort, especially as the recession took hold. Many of the clients that have appointed me in recent years were effectively forced into working for themselves because of the steady squeeze on unemployment benefits and usually many months of unemployment with little sign of a job, despite numerous job applications.
However the majority of these clients, whilst finding it hard initially have found that being unemployed has been a blessing in disguise; with the majority not seeing themselves working for anyone else in the future.
The feedback I’ve received often centres on the flexibility and freedom that self-employment gives you, with many of my newer clients stating that finally they being rewarded for the time and effort they are putting in to their business.
Economist John Philpott
However, self-employment should come with a health warning as the Resolution Foundation calculates that average earnings for the self-employed have dropped by 20% since 2007, compared with a fall of just 6% for employees over the same period. But they also say that recent evidence shows that with the economy improving the rise in earnings for employees is being outstripped by the self-employed.
Economist, John Philpott, says,
“I think self-employment has been a safety valve against unemployment, it’s meant that people who in the past would have no work at all are able to do something. However, if it means that people are underemployed for a prolonged period of time, that’s a sign the economy is still weak and we need to do more to boost demand, so that we create jobs for everyone who wants them,”.
To put it another way, self-employment can be seen as a sign of economic weakness or strength. The hope is that as the economy recovers, more of the self-employed will become genuine entrepreneurs who will expand their businesses and hire other people.
I was effectively forced into self-employment in 1986 and whilst it was hard to begin with, my efforts were eventually rewarded and I now have a successful business employing 8 people. If I can do it why not you?
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David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.