Self employment – desperation or entrepreneurship?

In the UK 40% of the new jobs created in the last four years have been in self employment, an average of one in seven workers, putting the country well above the European average.

According to a report by the Institute of Public Policy Research (IPPR), quoted in an article in the New Statesman in January this year, only 17% of the UK’s self employed are likely to have employees, compared to 44% of them in Germany, statistics that we find frankly lacking in credibility.

The same article quotes IPPR research as having found that a typical self-employed worker in the UK earns just over half the amount a typical employee earns, compared with 2007 when the figure for self employed earnings was two thirds of typical employee earnings.

This has led some “experts” to argue that the new self employment is in fact disguised unemployment and the result of a weak jobs market.

Others, however, including the Bank of England (BoE) argue it is a sign of healthy entrepreneurship and a more flexible economy.

According to the BoE the self employment rate in the over-65s is at 39% while it is just 10.5% for those aged 25-34.

It is likely that at least some of these people have registered themselves as self employed as a result of the economic downturn with its resultant culling of jobs, particularly in the white collar professions.

It is also likely that a proportion of the older cohort, particularly, have either realised there is little hope as mature workers of finding another position or have had to turn to supplementing their income in what would have been retirement because early redundancy has prevented the maturity of occupational pensions, leaving them with insufficient pension income to live on.

But is that the whole story? As people are living longer and healthier lives is it possible that what was once a dream – of setting up one’s own business – is now a more realistic option? What do you think?

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