Self employed could outstrip public sector jobs by 2018

The number of self-employed people could outstrip those working in public sector jobs by 2018, according to a report from the RSA.

The number of self-employed people could outstrip those working in public sector jobs by 2018, according to a report from the RSA.

Its project The Power of Small, carried out in partnership with Etsy.com, found that the UK’s microbusiness community is booming, with numbers increasing by around 13 per cent, or 620,000 since 2008.

Their upcoming report, to be published in May, is expected to conclude that on current rates of growth, the number of self-employed people will outstrip those working in public sector jobs by 2018.

RSA researchers found that currently over half of microbusinesses (defined as firms with 1-9 employees) fold within their first three years of trading. 

Their report is likely to argue that the Government should re-examine whether its support for small businesses goes far enough, and whether its tax and welfare policies encourage microbusinesses to grow into small and medium enterprises.

Emerging data from an RSA/Populus poll of 1,006 microbusinesses, commissioned to coincide with the report, revealed that currently nearly half of microbusiness owners (43%) think that the government is not doing enough to support them. Carried out between Feb 24th – March 12th 2014, the survey showed that:

– 22% strongly agree and 41% slightly agree that the economy is getting better and the country is heading in the right direction.

– 77% do not trust politicians to put the interests of the country above the interests of their party and themselves, and 61% disagree that the welfare system is fair to them.

– Only 10% of microbusiness owners think Labour has the best pro-business policies (Conservatives 46%, UKIP 7%, Lib Dems 5%).

– 63% support a significant cap on immigration (19% against).

– They are split when it comes to voting YES in a referendum to leave the European Union (37% in favour, 41% against).

RSA Senior Researcher Benedict Dellot, said: "Microbusinesses are the new political force to be reckoned with, but the government has yet to win their favour. Business support remains confusing and superficial, and we have an archaic welfare system that does little to recognise or reward those who want to work for themselves. This is despite small business owners being the country’s biggest job creators. The key lesson from our survey is that parties of all sides need to get beyond the rhetoric and start delivering policies that actually help the go-getters and the risk-takers to achieve their potential – not just for their benefit but for that of wider society.”

The Power of Small found long-term drivers of the microbusiness boom to include:

– New culture – More people now value autonomy and meaning at work, particularly young people who dislike hierarchy more than their forebears. The report says: "We are witnessing a shift in values where people want to be masters of their own fates."

– New organisations – Typical wage work in organisations is becoming more precarious as benefits are squeezed (e.g. pensions) and real wages stagnate. The result is that self-employment has become a more attractive alternative, say the researchers.

– New demographics – An ageing society has increased the supply of healthy retirees looking for work, while at the same time a baby boom is creating a new breed of families searching for more flexible forms of working

– New markets – The UK’s industrial base continues to shift from manufacturing to the service sector (e.g. healthcare), where small businesses thrive, says the report. It also highlights the growth of the ‘artisanal economy’, with consumers looking for more personalised, tailored, niche products – things, it says, small businesses are more able to deliver.

– New technology - Ebay and Etsy have enabled people to turn their hobbies into fully fledged businesses, while freelancing websites like Odesk and Elance have allowed more people to earn money from their talents.

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