Often encouraged to demonstrate they are part of a new entrepreneurial culture, students and school-leavers invariably see self-employment as a route to both a high income and greater personal freedom. ONS analysis shows one in five (21%) 16- to 21-year-olds say it is likely they will be self-employed at some point in the future. In 1975, just 8% of workers were self-employed; but by 2019, this had increased to more than 14%. This rise has been entirely driven by ‘solo self-employment’, i.e., without employees. Solo self-employment accounts for over a third of all employment growth since the onset of the financial crisis. The level and growth of solo self-employment in the UK is amongst the highest in OECD countries.
But the solo self-employed are an extremely diverse group, ranging from ‘London professionals’ in the finance sector, to young men, who are more likely to belong to ethnic minorities, without much in way of formal educational qualifications and working as delivery drivers – it’s estimated there are nearly 300,000 in this category. Though with nearly a million second hand vans are sold each year, it’s clear large numbers also depend on income from self-employment while having other jobs.
Though young people might continue to be optimistic about self-employment, according to an Institute of Fiscal Studies study, a lack of job opportunities is just as likely to drive people into this sector. Many enter solo self-employment from unemployment or inactivity. Nearly a quarter (23%) of new solo self-employed workers were unemployed in the previous quarter, and a further 31% were ‘inactive’. Increased self-employment is just part of what’s now referred to as ‘non-standard’ employment which includes over a million on ‘zero-hours’ contracts and thousands that work through third party organisations – various types of employment agencies.
It also includes many who might not consider they are self- employed, but under employment law, as ‘private contractors’ occupy this status – for example young riders who think they ‘work for Deliveroo only to find that they are on shaky ground if they are knocked off their bike or don’t qualify for statutory sick pay and holidays. For many young people, this sort of self-employment is integral to the ‘gig-economy’.
While an army of consultants and ‘IT professionals’ are able to rake in fees of around £700 a day, according to the IFS, median pre-tax earnings among the solo self-employed in 2018–19 were 30% lower than those among employees. Over half of the solo self-employed earned less than £300 a week, compared with just a third of employees. The IFS also reports that many solo self-employed workers are often ‘underemployed’ with more than I in 10 wanting to work longer hours.
The ONS has estimated that about 9% of 22 to 30-year-olds in England and Wales are self-employed. This compares with about 16% of 25–34-year-olds (almost one in six) and 36% of those aged 35–49 and 35% of those aged 50–64. However, some other sources suggest that there may be larger numbers of young workers who derive at least part of their income from self-employment. Men are more likely than women to be self-employed, with males between the ages of 22 to 30 twice as likely as women to work for themselves.
While the tabloid press loves to provide examples of the entrepreneurial ability of teens who find they can make more money buying and selling on line, rather than through occasional babysitting, most self-employed young people have not come straight from school. Degree or higher education is the most common qualification level for young people working for themselves. This is certainly the case in the growing digital sector where a new highly educated precariat hone their skills freelancing on ‘start-ups’ or seek work through platforms. The drift to more home working as a result of the pandemic can only accentuate this trend.