Two million self-employed adults aged 25 and over are earning less than minimum wage, according to TUC analysis.
The TUC says that self-employment accounts for 15% of the workforce, but that the self-employed earn considerably less than those in employment. In 2016/17 it says they earned on average £12,300, compared with £21,600 for those in employment. This was also a fall from £13,200 in 2015/16.
The TUC is concerned that the growth in self-employment is driven in part by employers looking to reduce tax liability, duck the minimum wage and deny workers their rights.
It says sham self-employment includes some gig economy workers and people who are contracted to a single employer through a personal service company, rather than being contracted as an employee.
TUC General Secretary Frances O’Grady said: “Self-employment can be a great option. But it’s clear that it’s not working for everyone, with millions of self-employed workers stuck on poverty pay.
“Too many workers have been forced into sham self-employment – like at Uber and Hermes. It’s not about helping workers, it’s all about companies dodging tax, ducking the minimum wage and denying workers their full rights.
“Theresa May promised to change things for ‘just about managing’ families, but she’s done nothing. She should be cracking down on businesses that use sham self-employment. She should ban zero-hours contracts. And she should give agency workers the right to equal pay to stop undercutting and encourage employers to create more permanent jobs.”
The TUC wants the government to follow up the Taylor Review with:
IPSE (the Association of Independent Professionals and the Self-Employed), which represents self employed people, agreed more needed to be done to protect vulnerable self employed people, calling for more training for the lowest paid and a statutory definition of self employment, but it criticised the TUC’s negative view of self employment.
Andy Chamberlain, IPSE’s Deputy Director of Policy, said: “The TUC’s limited analysis does not chime with what the self-employed themselves say about their experiences. Survey after survey tells us loud and clear that on average the self-employed are happier than employees, valuing autonomy and flexibility.
“Rather than misleading characterisations of self-employment, we need a strong focus on the real challenges the self-employed face, whether that’s being paid on time, receiving a fair deal on maternity pay and Universal Credit, or negotiating a complex tax system.
“Research by BEIS also confirms that most people in the gig economy are satisfied with this way of working, and do not rely on it for their main source of income.
“There are 1.5 million part-time self-employed people in the UK, and it is likely these account for many of the people the TUC analysis suggested were earning less than the minimum wage. For most, gig economy work provides a source of additional, flexible income that the majority are very happy to have.
“A report out today by a research unit at Oxford also reveals that Uber drivers in London earn about £11 an hour after costs – marginally above the £10.20 recommended living wage.
“While we must protect vulnerable workers, it would be a mistake to conflate ‘bogus self-employment’ with the ‘gig economy’ or wider self-employment – and then try to regulate these ways of working into oblivion. That just hurts the overwhelming majority of people who actively chose to work in this way.”