When will the Government really figure out the employment figures?

When will the Government really figure out the employment figures?

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Unemployment levels have fallen to the lowest level since 1975 – a year when Bruce Springsteen released Born to Run, Manchester United gained promotion from England’s Second Division and the UK entered the European Economic Community.

But, what is more remarkable is the astonishing correlation between the lowering unemployment figure and the rise in self-employment.

According to the Office for National Statistics (ONS), only 4.3 per cent of 18-64-year-olds are unemployed. In the last year, 400,000 more people have found work. This is despite fears of contraction in economic capacity and shaky investment forecasts.

In recent years, political commentators have disputed the rise of zero-hour contracts and some have speculated that these hold the secret behind the UK’s impressive employment growth. However,there are 20,000 fewer workers employed onsuch a basis, compared with last year.


Self-employment rises as unemployment levels falls

So, what has been the source of the growth?

ONS data indicates a staggering correlation between a decrease in unemployment and a rise in self-employment. The figures show unemployment has fallen by one million people in the last seven years, while self-employment has risen by almost the same number.

If you consider self-employment to be a sector of employment in its own right, it would have ‘employed’ more than twice as many people as any other sector – the equivalent to just over half a million people.

In recent years, the media has focused on the growth of the gig economy – characterised by the likes of Uber – as the source of the rising self-employment. But actually, skilled professionals have been central to the growth. Figures from the ONS show that from 2011 to 2016, one of the fastest-growing occupations was media professionals (109.3%). Other notable increases were IT professionals (67.6%) and science professionals (58.9%).

In contrast, the number of taxi drivers has only grown by 15.4 per cent. While the technology of apps like Uber has certainly injected competition into the industry, private-hire cabs are nothing new. They have been around for decades,and drivers have always been self-employed.

The option of self-employment has seemingly catered for a rising number of skilled professionals in the UK. More generally, it is not a trend unique to the UK. IPSE research shows that from 2008 to 2015, the population of independent professionals in countries such as France and the Netherlands grew by 70 per cent and 52 per cent respectively. A particular stand-out performer was Latvia, which saw a staggering 192 per cent growth.

Across Europe, the number of independent professionals rose by 24 per cent. This suggests there could be a structural shift in the make-up of the modern economy – one that incorporates an increasing ratio of self-employed workers. The growth in self-employment has been quietly propping up the UK labour market. The sector has grown far more quickly than that of any sector of employment, and has catered for a huge rise in skilled workers in the UK. However, Jordan Marshall, IPSE’s policy development manager believesthat the government is yet to recognise this.

“Today, there are almost five million self-employed people in the UK – that’s one in seven workers. But in many ways the government still seems to struggle with this new reality, viewing rising self-employment with suspicion. Many freelancers worry that policy makers do not understand the challenges they face. This leads to ill-judged policies, particularly around taxation – proposals to hike national insurance contributions and damaging changes to IR35 are prime examples,” he said.

Jordan pointed out that, while the review undertaken by Matthew Taylor was certainly a positive step, it did not go far enough in proposing solutions for the self-employed, particularly over issues such as employment status or saving enough for retirement.

He added: “The government must look to really get to grips with these challenges. It must ensure self-employment remains a positive choice for all and these enterprising individuals can deliver their full potentialfor the UK economy.”

By Patrick Grady