A good piece from the Guardian’s Phillip Inman, earlier this week, on the shift from paid jobs to self-employment. I’m not so sure that it’s an ‘untold story’ though, given that some of us have been banging on about it for a while.
This bit was interesting:
Since 2000 there are 1.2 million more self-employed businesses, making a total of 3.7 million. Not many of them register mega-incomes. One characteristic of self-employed businesses is that most report incomes small enough to fall under the VAT radar (currently £79,000). Only 100,000 of the businesses that have sprung up in the last 14 years are VAT registered.
I dug around a bit more in the BIS business population data.
According to BIS, in January 2013, there were 632,865 more businesses than there were in January 2008. However, over the same period the number of firms employing people fell by 20,995. Of the new firms employing just the owners, there were only 17,495 more businesses registered for VAT. Most of these new businesses were therefore firms which employed only the owners and had annual turnover of less than £79,000. There have been great fanfares about the number of business start-ups but, of over half-a-million created since the start of the recession, the vast majority are very small operations keeping one or maybe two people off the unemployment register.
There are a record number of people in work (up 651,000 since the start of 2008). Of course we also have a growing population, so whilst number of people in work is up the employment rate (the percentage of the working age population in work) is still below it’s pre-crisis peak.
[T]here has been a very large rise in self-employment (+486,000) against a much smaller increase in the number of employees (+135,000).
I couldn’t resist sticking this on a chart.
Ministers like to brag about the ‘record number of people in work‘ but 75 percent of the increase since the start of the recession has been due to the rise in the number of self-employed people. As the ONS pointed out last year, the sharpest increase in the number of self employed workers came after 2011.
But surely, at least all these new entrepreneurs must be creating wealth to boost the economy.
Alas, it would appear not.
According to the IFS Green Budget, over the same period, income generated from self-employment fell.
So, even with 486,000 extra people, the income from self-employment fell by nearly 2 percent.
As I’ve said before, too much self-employment really isn’t a good thing. It is a symptom of economic basket-caseness. The IFS reckons that the recovery is now “underway in earnest” and that growth will “remain firm over the coming five years”. Let’s hope they are right. We’ll know things are getting better when the number of self-employed workers starts to fall. By a lot.