Rise of the self-employed worker (but is it because there aren't enough jobs?)

Increasing numbers of North East workers are opting to become self-employed, a new study shows

A survey found those working for themselves suggest enjoy the freedom, but it isn't the catch-all solution to problems
A survey found those working for themselves suggest enjoy the freedom, but it isn't the catch-all solution to problems

Thousands of North East workers are escaping unemployment by becoming their own bosses, new research has found - but many will not be better off by doing so.

The number of self-employed people in the region has shot up since the economic crash.

But the rise in the numbers working for themselves also raised doubts about the economic recovery, according to researchers.

They warned:

  • More than a quarter of newly self-employed people said they would rather have a standard job working for an employer.

  • The typical self-employed worker earns 40% less than the typical employee.

  • Only 30% of self-employed people are contributing to a pension, compared to 51% of employees.

The findings were published by think tank The Resolution Foundation, which warned: “The analysis paints a worrying picture of the security and vulnerability of self-employed people on both a short and long term horizon.”

However, researchers also found that many people liked being self employed, and the upward trend had begun before the banking crisis.

The increase also appeared to be linked to increasing life expectancy and a desire to continue working longer, with people choosing self-employment rather than retirement.


 

Researchers used official statistics and surveys to produce their findings.

They found that the number of jobs in the North East has actually fallen by 91,000 since 2008, while the number who are self-employed rose by 23,000.

Since late 2009, when the recovery began to recover, the number of employee jobs has risen by 9,000, while the number of self-employed rose by 19,000.

The figures cast doubt on Chancellor George Osborne’s claim that Britain has “a record number of jobs”, as he stated when the latest employment figures were published in April.

Researchers found that 83% of self-employed people said they preferred to work for themselves while 17% would prefer to be an employee.

But this changed among those who have become self-employed in the last five years, with 72% saying they prefer self-employment while 28% would rather be someone’s employee.

Self-employed people can find it hard to obtain mortgages, tenancies and accessing personal credit and loans, the study found.

The number of people in employment in the North East stands at 1,206,000, a rise of 31,000 over the quarter and 40,000 over the year, according to the most recent jobs figures.

Unemployment stands at 124,000 or 9.3%.

Catherine McKinnell, Labour MP for Newcastle North and a Shadow Treasury spokesman, said: “An increase in the number of people choosing to work for themselves is positive, and it’s clear that those in self-employment play an increasingly prominent and important part in creating economic growth and prosperity.”

But she added: “Despite the Coalition’s claims of private sector job creation, I am very concerned that many people in the North East feel forced to go down this route because they are simply unable to find directly employed work elsewhere.

“We need sustainable economic growth that benefits all working people, rather than a recovery which is seeing far too many people pushed into low paid, insecure work.”

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