Chris Dillow’s ‘day job’ piece in the Investors’ Chronicle explains the ‘hidden unemployment’ in Britain. Productivity has dropped, he says, because a lot of people simply don’t have enough to do. Part of this is due to firms hoarding labour and putting people on short hours but another factor, he says, is the increase in the numbers of under-employed and self-employed.
Professional workers have become consultants or freelancers, whilst manual workers have become men with vans or odd-job men. Many of these, though, don’t work much. Of the 4.1 million self-employed, 1.37 million work fewer than 30 hours per week.
And, as a survey by the Guardian found:
Out of 112,179 vacancies advertised on 22 February – the full Jobcentre Plus database at the time the Guardian’s freedom of information request was granted – only 58,534, or 52%, could be verified as long-term vacancies offering enough hours to meet the new government definition of “work” for a typical family.
A further quarter of vacancies offered applicants no guaranteed income, were for short periods of time, or were classed as self-employed, meaning benefit claimants could face serious delays to receiving benefits, or they may simply not have worked long enough to qualify at all.
The Guardian’s James Ball summed it up:
Job hunting in Britain: zero-hours contracts, phantom vacancies, “self-employed” roles and the hunt for enough hours.
Because that’s what a lot of people are doing. Hunting for hours, whether they be enough hours to make applying for a job worthwhile, enough hours from an agency or enough work for the ever-expanding army of the self-employed. As John Philpott said, it is these odd jobbers that are keeping the lid on unemployment.
So it shouldn’t really come as any surprise that research for The Independent by the Consumer Credit Counselling Service found that the self-employed have, on average, higher personal debts and higher arrears on household bills. A lot of them are simply not generating enough income to make ends meet.
Though politicians like to lionise small businesses, self-employment has rarely been a route to riches. Even before the recession, overall earnings among self-employed people tended to be lower than for those in employment. With the rapid rise in the number of self-employed people competing for a reduced pool of work, that is only going to get worse.
Last Autumn, The Atlantic hailed the “Gig Economy” as “the Industrial Revolution of Our Time“. But, to stretch the analogy a little, if the gigs are poorly attended and you can’t charge much on the door, you often find yourselves playing just for the hell of it.
High levels of self-employment are characteristic of poorer and less developed economies. Our economy has more self-employment because it’s poorer, not because of some bright new revolution. The Gig Economy might sound exciting and make great headlines but for most people, the gigs won’t be that much fun.