The economy is on the up, unemployment is on the down but is the decrease in unemployment all that it seems to be? With the news that the number of unemployed people is falling and the government hailing the success of its tax reductions as one of the reasons could the real reason be because of an increase in people registering as self-employed?
New research according to the Office for National Statistics (ONS) nearly 4.2 million people listed themselves as self-employed over the last quarter of a year, this number has increased by 84, 000 from the previous quarter and is the highest figure since records began back in 1992. Is this a positive trend with more workers becoming entrepreneurial? Has the recession inspired a greater generation of business minded workers, keen to set up for themselves?
Unfortunately not, economists say that this rise masks the fact that people cannot find permanent work and means that the drops in levels of unemployment are not a true reflection on the state of the economy. Recent research has said that there is a noticeable increase in the number of ‘odd jobs’ being taken up such as cleaners, handymen, nannies and taxi drivers.
Who is Becoming Self Employed?
Gerwyn Davies, policy adviser at from the Chartered Institute of Personnel and Development (CIPD), was quoted as saying: “A rise in self-employment may, in itself, be a good thing, however previous analysis from the CIPD found that the recent rise was less a sign of a resurgent enterprise culture, and more evidence of a growing army of part-time ‘odd jobbers’ desperate to avoid unemployment.”
However this hasn’t been the entire story with an increase in professional workers occurring as well. Many accountants and office administrators also became self-employed working on contracts rather than employees of companies. In fact administrative and secretarial self-employed people rose by 52% this is in contrast to service occupations (such as cleaning etc.) which only rose by 31%.
Chris Grayling, the employment minister, welcomed the rise in self-employed people but did warn that the economy was still facing challenges.
TUC General Secretary Frances O’Grady said in a statement: "We know the harsh economic climate is having a huge effect on the amount of work that those fortunate enough to have a job are able to get, with over three million people saying they would like more hours than they currently have. Ministers brush away these concerning by saying that there are more people in work than ever before. What’s not clear though is how many of these new jobs actually offer secure and regular paid work, let alone enough hours to make ends meet."
Not everyone thinks that these numbers are a negative thing. Much of the increases in freelance workers and self-employed people have been credited to the baby boomer generation and the desire to fit work around having children.
Xenios Thrasyvoulou, founder and chief executive of PeoplePerHour, said, "We have seen more than 150,000 new freelancers and micro business owners registering on the website in the past 12 months for a number of reasons….Some people are freelancing to earn a little extra money to supplement their incomes, but most of the people we speak to on the site are freelancing or starting small businesses because of the greater independence and financial freedom that working for themselves offers…What is clear from the survey we carried out is more people are making a career and life choice to go self employed. It’s never been easier to work for yourself."
The news isn’t therefore all negative. The figures show a generation who want to work for themselves and are not just forced to work for themselves. Although the figures do impact the unemployment numbers and could mask those that are struggling, many are enjoying the freedom that being self-employed gives them.