The UK is the Self-Employment Capital of Western Europe

A report from the IPPR (The Institute for Public Policy Research – the UK’s leading progressive think-tank) has dubbed the UK as the self-employment capital of Western Europe. The UK’s self-employment increase has been the quickest of all western European countries during the past year and there are now 4.6 million people working for themselves.

Self-Employment Levels Are at an All Time High

People in self-employment now account for more than 15% of the UK’s labour force – this is a record high. According to the IPPR, the UK has had “internationally low levels of self-employment for many years but has caught up with the EU average and, if current growth continues, the UK will look more like southern and eastern European countries, which tend to have much larger shares of self-employed workers.” Indeed, back in 1975 only 8.7% of the UK’s workforce were self-employed.

London is a hub for self-employment with 17.3% of self-employed people working there, followed by the South-West region. However, Scotland and the North-East are regions with the lowest proportion of self-employed workers. The UK’s self-employment level of 15% is on par with the EU average (15.2%), but the UK still has a long way to go if they want to beat the likes of Greece, which currently has 32% self-employment, largely in the agricultural sector.

The ONS (Office for National Statistics) states that the main reason behind the huge increase in self-employment numbers throughout the past few years is that more people are choosing to stay in self-employment than before. This is most likely due to the difficulties of finding alternative employment during the recession. However, the increase in self-employment is also due to the rise of people choosing self-employment over retirement and the desire for a flexible job due to family commitments.

Retire or Work Self-employed?

An increasing number of people over the age of 65 are choosing to stay on the labour market, as self-employed, instead of retiring. In fact, there are now almost half a million people over the age of 65 working for themselves – a number that has doubled over the past five years.

Self-employment has always been more popular amongst people who have already stacked up a few decades of work experience, with the average age of a self-employed worker being 47, in comparison to the average age of 40 for normal employees. Many older people choose self-employment in the run up to retirement, or as an alternative to retirement. Some simply cannot afford to retire, whilst others see it as a golden opportunity, enabling them to keep earning whilst working less.

Pay Squeeze

For many people, the idea of being self-employed is a dream, where you can be your own boss, have a flexible work life and live comfortably. However, the reality can be quite different. Recent figures show that people who work for themselves have had a 22% decrease in real pay since the financial crisis hit in 2008.

The self-employed have in fact experienced a sharper fall in earnings than employees in recent years, with average earnings of £207 per week, which is less than half of the average employee’s wage slip. Additionally, self-employed workers do not receive employer contributions to their pension, holiday leave or sick leave.

Self-employed people are not only paid less, but they also work much longer hours than average employees do. Approx. 13% of self-employed people work 60 hours or more a week – only 4% of employees work so much on a weekly basis.