August 20, 2014 4:41 pm

Self employment climbs to 4.6m Britons

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A rise in white collar freelancers has driven self employment to its highest level for at least 40 years with 4.6m people in the UK now working for themselves.

Growth is being driven by a rise in professional, scientific and technical activities, such as management consultants, photographers and accountants, which have added 237,000 people to the total number of self employed in the past five years.

However, builders and taxi drivers, who have long been the most popular roles for people working for themselves, still dominate the numbers, amounting to more than a quarter of the total.

The figures, compiled by the Office for National Statistics, in part reflect the rise of the “fired on Friday, hired on Monday” approach by some large companies, where former salaried staff are taken on as freelancers.

Such practices have been criticised for being little more than cost saving measures, since companies do not have to pay pensions and other employment benefits to these workers.

The ONS found that average income from self employment has fallen by 22 per cent since 2008/09.

Emma Jones, founder of Enterprise Nation, the home business website, admitted that this was a concern but insisted that self employment was a “positive decision” for many people and not a temporary blip caused by the recession.

“I have to say you don’t need as much income when you’re self-employed, compared with being employed,” she added. “What these stats don’t measure is the increase in job satisfaction and general satisfaction levels of the self-employed.”

Separate data from HM Revenue & Customs shows that the self-employed make higher personal pension contributions than employed workers – an average of £4,230 a year in 2012 compared with £3,600 a year for employees.

Tom McPhail, head of pensions research at Hargreaves Lansdown, an asset management firm, said: “Given that taxi driving and chauffeuring is one of the most popular forms of self-employment, it may be that people are pursuing this option because they cannot afford to retire yet.”

We need a maturer debate now about how we can actually help business owners to achieve decent living standards

- Benedict Dellot, researcher, RSA

The rise in self employment has been the biggest factor behind the increase in the number of people in work since 2008, according to the ONS, and is mainly due to fewer people returning to salaried roles after a period of working for themselves.

Demographic changes are also driving the trend with the number of over 65s in self employment more than doubling during the past five years to almost half a million people.

Data from the Department for Work and Pensions show that in Watford, almost 90 per cent of people aged 50 to 64 are in work, the highest employment rate for that age group in Britain.

The number of women in self employment is increasing at a faster rate than the number of men, although the latter still greatly outweigh the former when it comes to working for themselves.

Benedict Dellot, senior researcher at the Royal Society for the encouragement of Arts, Manufactures and Commerce, said: “It’s good that we’re doing more to promote self-employment in the UK, but I think we need a maturer debate now about how we can actually help business owners to achieve decent living standards rather than drown in the hyperbole of entrepreneurship.”

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