The rise and rise of part time self employment
The labour market figures for the last couple of years have tended to show similar patterns with small rises in employment most months. Today’s were more of the same – a small rise in the number of people in employment leaving the employment rate at record levels.
All types of work have risen – full and part time, employed and self-employed. The biggest proportionate rise has been among the smallest group – those working part-time in self-employment. The size of this group has increased from 1m to 1.35m since the beginning of 2010, a change that accounts for around 15% of the total growth in employment over that period.
What’s behind this growth?
This growth is worth splitting into two parts. Around two fifths is among those aged over 65, continuing to do some work beyond retirement age. This is well worth noting, regardless of whether this change is through choice as people prefer not to retire completely, or through necessity as pension pots are not providing for a comfortable retirement. It also reflects what we found in our ‘Approaching retirement’ research, that many older people consider self-employment as a stepping stone towards retirement.
Around three fifths of the increase is among people aged under 65 – an increase of around 205,000 since 2010. A couple of trends are worth pointing out. Firstly, the rise has been much greater for women than men. Women were already the majority of this group, but three quarters of the rise among working age part time self employed people has been among women, who now make up around two thirds of the group. This contrasts with full time self employment, where women make up only 20%.
The second notable trend is the increase among parents. Two thirds of the increase is in families with a dependent child, meaning that parents now make up just over half of the group. Our previous research on self employment showed that, compared to a decade ago, 200,000 more children were living in families with a self employed adult.
Any changes in the labour market inevitably lead to discussions as to whether they are ‘good’ or ‘bad’ – are people doing this out of choice, or because they have to? Would those people working in part time self employment prefer to have full time employee jobs? It’s hard to answer that question completely but analysis of the Labour Force Survey tells us that over 80% of those in this position do not want full time work. Moreover, it’s easy to see how the flexibility of self employment could be attractive to parents or those looking to move into retirement.
What are the implications?
At the same time, though, the number of people coming to Citizens Advice with problems relating to self employment has been growing in recent years and we know many people face challenges setting out on their own. Now that part time self employment is a significant, if still relatively small, part of our labour market picture, we need to make sure that the kind of security most full time employees can expect from their work is available to everyone.
In February the government-commissioned Deane review of self-employment highlighted the need for more support for self-employed people, for instance recommending enhanced maternity pay and the introduction of an adoption allowance. Our previous work on self employment supported these recommendations, but there is more that could be done. For instance, self-employed fathers currently receive no paternity pay, whereas employees do. The level of pension saving among self employed people is also incredibly low compared to employees. Our research showed that even among self employed people with a relatively high income of £1,000 a week, only 24% are paying into a pension.
Today’s labour market stats show once again that self-employment, and part-time self-employment in particular, is a big part of the growth in employment. This is to be welcomed, as for many people it is a positive choice which enables them to keep a good work life balance. But as this change to the labour market is here to stay the government needs to keep a keen eye on how it can ensure those working for themselves can have the same chance at income security as those working for an employer.