Employers urged to think more about their relationship with self employment

Employers should pay more attention to the growing number of self employed who now make up around one in seven of workers, according to a report by the Chartered Institute of Personnel and Development.

Self Employed


The report, Megatrends: More selfies? A picture of self-employment in the UK, tracks the increase in self-employment over recent years, particularly the period between March 2008 and March 2017 which accounted for almost a third of total employment growth.

It says the rise in self employment has increased the share of self employed, traditionally men, who are female and who work part time. There is also now a broader range of industries and occupations providing personal services and professional advice.

Earnings gap widens

The report states that self-employed people have seen the gap in earnings with employees widen (to their disadvantage) rather than narrow over this period. It states: “Self-employment comes with potential costs – not least the possibility of lower lifetime income – as well as potential benefits.” On the plus side, a higher proportion of the self-employed report the very highest levels of job satisfaction due in part to having greater control over when they work.

It puts the increase in self employment down mainly to technology making it easier and cheaper to set up on your own, regulation favouring self employment and changing demographics including more older people in the labour market rather than employers forcing people into ‘bogus’ self employment.

It states: “There is no convincing evidence of the increase being driven by employers exploiting their position, forcing ‘bogus’ self-employment on the people working for them. Indeed, if there has been any change in the numbers of ‘bogus’ self-employed, this could just as easily have been the result of changes in tax law or its enforcement and of individual preference.”

Paying attention to self employed hires

The report calls on employers to pay more attention to the self employed and the relationship they have with them. Challenges highlighted include protection of intellectual property, client contacts and the use of corporate resources (such as IT or stationery), the risk of direct competition,  levels of commitment, HR issues around managing more on-demand workers, some of whom employers do not directly control and clarity over how the employment relationship benefits both sides.

It suggests it would be a good idea for employers to focus on the positive benefits for both employers and the self employed. “Self-employment is an alternative development route for talented people alongside internal progression. Employees are more motivated and productive if they think they have opportunities to learn and grow – these need not be just for a better job within their own organisation. Employees will develop skills from their own business that they bring to the workplace,” it states.

It notes growing political interest in the self employed. It says that “arguably” the balance has shifted in favour of rights and responsibilities where the self employed are concerned, but notes that since the government was forced to shelve plans to increase tax on the self employed mean a trade-off between rights and responsibilities has yet to be achieved.

It adds that the introduction of Universal Credit may have “profound implications” for the low-earning self-employed, particularly the requirement to report income monthly and the Minimum Income Floor which it says “may dissuade some self-employed with low and variable incomes from receiving income support from the state” and could lead to more people giving up on self employment.

It adds that sectors with high levels of sole traders may be vulnerable to new ways of working, such as automation.

The latest ONS figures show little movement in unemployment from last month. It currently stands at 4.3% with just over 70% of women aged 16 to 64 in work. The number of self employed people has changed little in the last year and is currently around 14.8% of all people in work. The number of employees increased by 426,000 compared to last year.

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