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Self-employed earnings at all ages

by on October 19, 2016

Management Today were amongst those who covered the announcement about self-employed earnings in the UK. Readers of this blog will know that both younger and older workers have typically been exhorted to set up their own businesses as a way of avoiding unemployment (or discrimination). The headline, based on a report published by the Resolution Foundation, is that whilst there are increasing numbers of self-employed, they are earning less than they did 20 years ago. The fall of 15% in self-employed income compares to a rise of 14% in typical employee earnings.

Of course the 15% fall hides some complexity but the highest and lowest 1% self-employed earners were excluded and the figures are based on median calculations, i.e. a measure of central tendency less affected by outliers than when using the mean. The Foundation’s Quarterly Briefing provides some further detail, including some analysis by age and gender.

The self-employed now make up 1 in 7 workers. Typical earnings for the self-employed were lower in 2014-15 than in 1994-95, twenty years earlier. Whilst earnings have fallen across the board, men have incurred larger falls than women, and those over 54 have incurred smaller falls than younger workers. There has been some ‘compositional change’ in that a smaller percentage of the self-employed working more than 40 hours per week and a sunstantial reduction in the percentage of self-employed who have employees. So, the shape of self-employment has shifted towards a single person enterprise working fewer hours each week. But there has been speculation as to other reasons such as the rise in the gig economy, the precarious nature of work and some renewed calls for the introduction of a Basic Income.

The Resolution Foundation also calls for the self-employed to be included in any labour market statistics.

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