Policy Research in Macroeconomics

The Great Leap Forward of the self-employed

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Something odd happened in the UK labour market in recent months.  The total workforce grew over the last year by 459,000, and over the last quarter by 105,000.

But over the last year, the number of employees has risen by 198,000, while the number of self-employed has leapt by 285,000 – a huge 6.8%.

And most of this huge increase in the self-employed has come in the last Quarter, according to the ONS statistics – the quarter on quarter increase was 211,000, or a stunning 5%.  It applies to men and women, though the growth in women self-employed is slightly higher.

Even more remarkable, this last-quarter leap in the self-employed took place while the number of employees actually fell by 60,000.

Looking at it from the perspective of full-time and part-time work, we find the following:

  • The number of full-time employees has risen year on year by 218,000, or 1.2%. But the number of part-time employees has fallen 19,000 over the year, and in the last quarter by 74,000. So more people are finding full-time employment.

  • As regards the self-employed, the number of full-timers has increased year on year by 230,000, or 7.7%, and by 158,000 over the last quarter.

  • The number of part-time self-employed has risen year on year by 55,000, or 4.6%. This is entirely due to the last quarter, when the number grew by 53,000.

There are therefore two or more somewhat contradictory  trends at work – as the economy has recovered somewhat, the number of full-time employee positions has increased, and part-time ones diminished.

Yet the casualization and fragmentation of the national labour force also continues apace – with the growing army of self-employed.  No doubt this too reflects two tendencies – the increasing number of professionals choosing or obliged to become self-employed but making a good living from it, and myriad others living and working on the margins of the workforce.  At least part of the solution to the “productivity puzzle” lies in this latter trend.  But why this sudden huge surge in self-employment? Another month, another “puzzle”!

Here are charts showing the trends in employment and self-employment over the last 10 or 5 years.  We got a bit confused with our reds and blues, in showing the Labour and Conservative–LibDem Coalition periods!

all self employed 10 yrs

all self employed 10 yrs

all employees 5 yrs

all employees 5 yrs

full time self employed 10 yrs

full time self employed 10 yrs

part-time self-employed 10 yrs

part-time self-employed 10 yrs

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3 Responses

  1. Jeremy Smith needs to get out more. There’s no real leap in the numbers of self-employed, there’s just lots of people bullied/coerced into it by job centres and work programme providers. People are hassled endlessly when they sign on or by their WPPs and are told they’ll get the same money with no hassle in working tax credits if they go self-employed so they do. The JC+ workers get their bonuses for getting people off the dole and so the the WPPs, they get rewarded with great slabs of taxpayers money. It’s a scam. This is no doubt why productivity has gone down while employment figures have gone up. These people are counted as working even though they’re clearly not.

  2. “the increasing number of professionals choosing or obliged to become self-employed”
    Those people tend to work via their own companies, and would therefore often see themselves as employed as directors. The Labour force survey is self-reported so it depends on their own point of view.

    However it is much more tax efficient to work via your own company from very low levels of income. You’d need to see an increase in the registration of single member companies to ascribe the increase in self-employment to ‘professionals’.

    If you don’t see that, then this is low level casual stuff.

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