The Odd Job Society

The witch-hunt against freelancers goes on. (See here, here and here.) If the Daily Mail is to be believed, (I know, I know) George Osborne is about to ban the use of interim managers in the public sector.

But, while even the so-called quality newspapers have been blathering on about Moira Stuart’s private company, a far more significant story about the self-employed received much less coverage. The CIPD’s John Phillpot has been doing some research into the self-employed population, which is now at record levels. He found that the 8 percent net rise in self employment since 2008 “has offset around 40% of the loss of employee jobs, helping to dampen the rise in unemployment during and since the recession”. So opting for self employment is keeping people off the unemployment register and off benefits. He also found that 89 percent of these newly self-employed people work less than 30 hours per week.

So who are the new self-employed?

Almost a quarter of the UK’s self-employed people work in construction, but the number of self-employed construction workers is currently lower than in 2008 (Table 5). By contrast, sectors with relatively small shares of self-employment – notably education, information and communications, financial and insurance services and public administration, defence and social security – are among those which have seen the biggest proportional increases in self-employment in recent years.

Self-employed public administration professionals up by 29 percent. That will be where some of these public sector freelancers are coming from then.

It’s not difficult to see what is going on here. Rather than sign on as unemployed, a lot of people made redundant from professional, managerial and technical roles have decided to try their hands at going freelance. Many of them are not getting a lot of work but seem to have decided, for the time being at least, that underemployment is preferable to unemployment. As Dr Philpott said:

It’s good that these self-employed ‘odd jobbers’ are helping to keep the lid on unemployment in a very weak labour market but their emergence hardly suggests a surge in genuine entrepreneurial zeal.

This is not a story of tax-dodging fat-cats but a story of casualisation in sectors where self-employment was once relatively uncommon, and of under-employed people with one-man companies scratching around for work.

As I said when I wrote about this last month, the rise in self-employment is no cause for celebration. For many of the new freelancers, life will be much less secure and nowhere near as well paid as their corporate or public sector roles were. David Blanchflower said, “For most people, becoming self-employed is a bad idea.” Sadly, that may turn out to be true for many of the new freelancers.

An OECD paper published at the end of last year noted that high levels of self-employment are a feature of less affluent economies:

In general, self-employment rates are highest in countries with low per capita income although Italy, with a self-employment rate of around 25.5%, is an exception.

Self-employment rates: total

As a percentage of total employment

So Luxembourg, Norway and the USA have low levels of self-employment while those of Mexico, Greece and Turkey are much higher. Outside the OECD the levels are higher still with over 30 percent on average in Latin America. It comes as a surprise, especially to Americans, to learn that America is not a small business country, but it shouldn’t. Most rich countries aren’t.

That’s not to say that self-employed people make a country poor. It’s the other way round. Poor countries have a lot of self-employed people because their economies can’t create enough full-time jobs. While self-employment may be a lifestyle choice for some, it is all too often Hobson’s choice for many more.

The OECD cites the rise in self-employment as a significant factor contributing to the UK’s increased level of inequality over the past three decades:

About one-half of the increase in individual earnings inequality is explained by changes in self-employment income as on the whole the self-employed earn less than full-time workers. Their share in total earnings increased by one fifth since the mid-1980s and among the self- employed, the gap between high and low earners has risen. 

The findings from John Philpott’s report give a similar picture. Many of those who have become self-employed since the recession are under employed and almost certainly earning less, and therefore paying less tax, than they did when they had permanent jobs.

The post-recession increase in self-employment is a symptom of a weak economy and the creeping casualisation of work in sectors, like government, which were once seen as stable and secure. That tells us far more about our economy and our society than the hysterical stories about tax-dodging freelancers.

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8 Responses to The Odd Job Society

  1. Pingback: The Odd Job Society - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. Kevin says:

    Yup. Just like, um, HR.

    A profession of once capable business mangers now filled with interims, consultants and part time carers who can’t manage anything other than basic administration in their temporary employment because they don’t know the organisations that pay thier fees nearly well enough to do so.

  3. 89% of self employed people work less than 30 hours a week?

    Does that include or exclude the amount of time they spend commenting on blogs? The internet would collapse without us : we under employed/self employed are the backbone of the wired world I reckon. Or at least it’s mouthiest denizens……..

  4. workessence says:

    This certainly contradicts the utopian and over-idyllic future view of organisations reduced to their “brand” core and essentially populated by flexible, iPad and latte-wielding freelancers, as depicted by the Hybrid Organisation “think tank”. The portfolio career is a lot harder than it looks in the brochures.

  5. rogerh says:

    Being freelance is no joke when times are hard. You can scrape what appears to be a decent living in the good times but there is usually not much left over to replace sick benefit, pension or training. In short you are living off your personal capital and it is a declining asset. This is building up a big problem down the road. I have travelled this road but was lucky enough to get back into a big corporate before retiring. I fear this lifeboat has now gone away. Heaven help the freelancers.

  6. My company is trying to bridge the gap and help the self employed and help people into employment. You can have pay as you go staff or permanent-it’s that simple, and I am going to push it out across UK and overseas markets.
    My agenda isn’t about mega profits, tax avoidance it is about making a difference. I at the end of the day am self employed, and have been employed by good and bad companies.
    What drives me is, I wanted to see change, but being an employee, I could not bring about change to working conditions, fairness and customer excellence. So here I am, I have been self employed since 2004, I started this in 2011, and launched in 2012.
    A business that makes nothing, but money is a poor business.
    Henry Ford

  7. Pingback: 80% of Temporary Workers want a Permanent Job! « T Recs

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