My TUC colleague Nicola Smith published a blog on the conundrum inherent in the UK's employment statistics yesterday. As she put it:
The jobs market continues to confound — with employment rising while GDP falls.
But she offers and explanation:
But does part of the answer lie with rising self-employment rates?
Recently published ONS tables — currently considering the labour market up until March 2012, but due to be updated tomorrow — show that since the recession started in early 2008 the number of employee jobs has fallen by over 500,000, while self-employment has risen by over half this amount (300,000).
The same trend remains on the year, with employee positions falling by 160,000 while self-employment rose by over 200,000. Among managers and senior officials, where there's been annual employment growth of 80,000, 81% of new positions have been self-employed. And it's not only those in professional jobs who are finding themselves more likely to face self-employment than ever before — over the year there's been an increase of 33,000 in the number of workers in elementary positions who are self-employed, compared to a 29,000 fall in the number of employees in these occupations. In administrative and secretarial work 46% of annual jobs growth has been in self-employment.
I've been around for long enough to know this happened in the early 1990s. During the downturn then (mild in comparison with today's mess) many people reluctantly turned to self-employment when jobs had simply disappeared. The same is, I am sure, true now.
But as Nicola notes when relating this paradox of rising apparent entrepreneurial growth with falling GDP:
If the reality of our jobs market is that a growing number of under-employed self-employed workers are scraping by with little real work, this analysis is spot on. While some work is no doubt better than no work at all, a key unanswered question about recent jobs growth is how much of it is providing people with a regular income that allows them to come close to meeting their living costs. If the fast increasing army of self-employed workers are actually seriously under-employed, the discrepancy between the jobs and the growth data may not be so great after all.
I suspect that's true. And sometime soon the poverty that is resulting from this will become all too apparent as ends do not meet.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Good point.
Coming back to your material on offshore tax-dodging, it may interest you to know that “James Herriot” aka Alf Wight (author of the hugely successful vet books) was encouraged by his accountant to move his cash into avoidance schemes, but refused because he thought this was his country and he should support it. It’s in the biography written by his son, but unfortunately I couldn’t find the reference in the index.
He goes up in my estimation!
This seems a logical argument to me, Richard, for two reasons. First, didn’t we see a similar development with previous recessions? In the 1980s I certainly remember large numbers of my former workmates in the mining industry using their redundancy money to set up mobile enterprises of all sorts and ‘investing’ in small local businesses (usually run by relatives), such a barbers and hairdressers.
But speaking of now, I can tell you from many conversations with colleagues and friends over recent months that many people leaving public service are setting up as self employed ‘consultants’ and then trying to sell their services back to the LA or other organisations. As an example, I met someone only two weeks ago who had been a special needs advisor for a local education authority, but had been ‘let go’ as a result of cuts and the changes to the status of LEAs. She is now trying to sell her services to the rapidly growing regiments of academies. Unfortunately for her, so are many in similar positions, so my impression was she’s not that hopeful of success but will carry on until her redundancy money runs out anyway (rather than sign on).
I also know of another case where a policeman whose just been ‘retired’ has set up as a security consultant. He’s hoping that he can sell his services to G4S or Serco as they take over more policing roles in the near future. And in HE, I know of numerous cases of people who are taking early retirement (generally because they’ve been lent on to do so) who are now self employed ‘consultants’ or ‘advisors’. In fact I’ve been workign with two on a research project that ended recently. Scale this up across the UK and you have your answer.
This isn’t just happening with former public sector workers; I know from experience that lots of agency staff are encouraged to give their status as ‘self-employed’ and I expect that this accounts for a large proportion of this statistic. This not only has ramifications for their tax status but also for their working conditions, job security and general health (Unfortunately the governing elite still retain the out-dated orthodoxy that “stress” attributable to work is higher for those individuals working in the perceived high-pressure, high-responsibility, high-salary jobs; however contemporary research shows that working stress is a factor of control not responsibility. Therefore those with little control over their working lives will have worse physical and mental health).
Last point 100% right
I wonder if there are other factors involved here too: How many people are off the unemployment register, yet under-employed through being only able to find part time work? There won’t be much consumption in those households to help drive any positive GDP figures. Likewise, the rise of zero hour contracts will have a negative effect here. Yes, these people are ‘lucky’ enough to be in work, but without stability and the ability to plan and spend. Last week, I overhead a supermarket assistant remark to his colleague that he had been turned down for a small loan to take a holiday purely because he was on a zero hours contract. This form of employment is a massive step backwards for working people and can’t help any recovery one bit. It comes down to your level of cynicism as to whether the Government realise this or even care.
Agree
Hmmm. Not too sure how many opportunities there would be for self-employment, for a librarian such as myself. Not too many I suspect. 🙁