|The Bank of England has welcomed the self-employment rise|
Many have welcomed the trend. Last week the Bank of England suggested benefits cuts were creating a new generation of entrepreneurs by pushing more people into self-employment – a view unsurprisingly shared by Work and Pensions Secretary Iain Duncan Smith, who told the Telegraph the Coalition was reviving Britain’s “entrepreneurial spirit”.
As a freelance journalist it’s tempting to be flattered by such rhetoric. Yet it seems unlikely that Britain has created 600,000 budding Alan Sugars in the space of six years – a somewhat disturbing prospect in any case.
Whilst few serious attempts have been made to properly analyse the statistics and explore what conditions are like for the self-employed, the studies and surveys that do exist paint a rather different (less entrepreneurial) picture of our plight. Some of the most comprehensive research to date comes from the Resolution Foundation which published a report earlier this year showing that the median annual income for self-employed workers fell by £4000 (28%) between 2001 and 2010, dropping to below £12,000 by 2011.
Meanwhile, the number of people out of work has been steadily falling over the past two years. According to the latest ONS statistics unemployment reached a five year low of 2.24 million in the three months to February, prompting George Osborne to commit to targeting “full employment” - an impressive sounding term which, when challenged, the Chancellor conspicuously declined to define. During the same period, the number of people classed as self-employed rose by 146,000. It’s clear a large proportion of people driving the unemployment figures down are newly registered self-employed workers and more than a few are struggling.
Take Andy Britner, a 49-year-old trained electrician who lives alone in a council house in Manchester. After signing on for jobseekers’ allowance, Britner registered as self-employed last year as he couldn’t afford to pay for the latest regulation exam which he was required to pass to remain qualified.
“I was trapped. The job centre was telling me not to apply for that type of work anymore. The only training they could offer me was totally unsuitable,” he says.
Since mid-2013 Britner has been self-employed doing basic domestic jobs such as light fitting for which he doesn’t require qualifications. Soon after registering, his weekly income was hit by the introduction of the ‘bedroom tax’ as he uses a spare bedroom to fit his tools and equipment. “It’s a bit erratic,” he explains, “If I don’t get much work in sometimes I’m £40 worse off than when I was unemployed.”
Though his financial situation has marginally improved in the past few months, he describes it as “like treading water,” adding optimistically, “There’s more work coming my way, I’m just getting by.” Nevertheless, when asked whether he would rather be employed or self-employed, Britner’s answer may surprise some who have never experienced working for themselves.
“I’d prefer to be self-employed because I’ve got more flexibility, I get a lot of satisfaction from my work. When I was employed I’d have no time of my own, I have more freedom now, even though the financial security was better then,” he concludes.
Britner’s optimism is shared by Bristol based audio producer Lyndsey Melling who has been self-employed for a year and a half. After five years working for a leading audiobook production company, Lyndsey decided her career was no longer developing as she wanted it to and became self-employed. “I was very naïve and I wasn’t too worried about it because at the time I knew I would get work from the company that I had been working for. I was very excited about it,” she recalls.
But she soon ran into difficulties. “I had a dispute with the management who were trying to push down freelancer rates…They basically told me ‘stop making a fuss otherwise we won’t employ you.’ They were my only source of income at the time so I learned a few lessons about the customer always being right!” One month later the company folded, owing her £4,500 for three months’ work which she was never able to recover.
Following the incident Melling worked hard to develop relationships with other companies. Thanks to her experience in the sector she had little difficulty securing work and is now busier than ever before. She enjoys her work, though some days she longs for the perks that come with having an employer:“I miss coming home from work and not having to keep doing work. I miss having days off - you don’t even realise that there is such a thing as a bank holiday when you’re self-employed because it’s just another day.”
Her wider concerns include the fact that long term self-employed workers rarely qualify for a decent pension and aren’t entitled to job-seekers’ allowance should they ever need it. “I think if legislation catches up with the change in demographics, things should be fine. If it doesn’t and we’re all being left without these safety nets then when the economy does go down again we’ll all be a lot worse off,” she warns.
Like Britner, Melling has no regrets over her decision to become self-employed and enjoys her professional freedom. Their experiences are consistent with a Mori poll published in April which asked 985 self-employed people whether or not they would rather be an employee. A majority of 79% responded that they would rather be self-employed, with only 16% preferring the employee option. The survey also found that the longer workers had been self-employed, the less likely they were to desire a different employment status. 86% of those who had been in their position for more than five years said they would prefer to be self-employed.
However, the poll also revealed 27% of people who have been self-employed for fewer than five years (an estimated 400,000 workers) say they began working for themselves due to an absence of better alternatives. Furthermore, 12% had struggled to secure a tenancy and one in four responded that their employment status had led to difficulties obtaining personal credit or loans.
Conor Darcy, a researcher at the Resolution Foundation which commissioned the poll, says the results don’t fit neatly with popular media narratives: “The discussion tends to get a bit polarised with some people projecting it as being all people who forced into self-employment who don’t want to be there and then other people say it’s great there’s an upsurge in entrepreneurial spirit. What we’ve found is that the truth is probably somewhere in between.”
‘Somewhere in between’ can be a difficult concept to grasp in a society which is used to clearly defined boundaries between secure employment and the dole. My own experience has taught me that not everyone is able to grasp the conceptual distinction between self-employment and unemployment. No matter how many times I explain my situation to friends, some of them still send me emails suggesting jobs to apply for - often comically unrelated to my skillset and interests. I also receive comments like “…so are you still freelancing?”, and, perhaps even more infuriating, “I truly believe you will get your big break [job] one day.”
All of this would be more understandable if I complained about my employment status or income, but I don’t. These comments are borne of a patronising assumption that anybody who isn’t contracted to a company must be profoundly miserable and helped into a job immediately. This is even stranger when I consider the frequency with which these friends complain about being overworked and depressed in their 'proper' jobs. Yet no matter how I qualify it, the word ‘freelance’ is invariably interpreted by them as code for ‘absolutely desperate for any job going.’
It's doubtless an experience shared by many. A picture is now emerging of a fast growing army of 4.5 million self-employed workers, many of whom enjoy their liberty yet are poorly understood and extremely vulnerable to exploitation. The few unions charged with fighting the battles which will need to be won if the model is to be at all sustainable have too little influence. This poses arguably the biggest problem of all.
“Self employment isn’t a bad thing in itself...” concludes Lyndsey Melling, “...but at the moment you lose an awful lot of rights when you become self employed.”
The battle to secure these rights is a matter which concerns us all, regardless of employment status. Failure to adapt to the interests and demands of the self-employed could have disastrous consequences for a society whose reliance on our labour is accelerating at pace.