Still fewer full time workers than before recession as fake self-employment takes over

Thu, 03/04/2014 - 13:06 -- nick

There are still fewer full time workers in the UK than there were before the recession in 2008.

The government has trumpeted its successes in the employment market, boasting of "a million new jobs" in the UK economy, but the reality is hugely different.

The economy runs on full time work, and most people need this level of income to be able to afford to live.

But there are actually 148,000 fewer working full time, while 251,000 more work part time and 510,000 have registered as self-employed.

According to today's Mail, this is evidence that "Britain is in the grip of an entrepreneurial boom", but this does not account for the huge drop in the earnings of business people.

These fell to an average of just £10,400 (adjusted for inflation) between 2000 and 2012, well below the £13,125 someone on the minimum wage can expect for a year's work.

James Plunkett, director of policy at the Resolution Foundation, says "The worry is that these aren't budding entrepreneurs, but people taking on insecure odd jobs to make ends meet."

As we have written before on UnemployedNet, the swathes of public sector redundancies instituted by the coalition are driving more self-employment registrations.

Some of those who have worked for the state struggle to get work in the private sector, and the thousands who have been laid off in each area then find themselves chasing the same jobs.

One refuge in this situation is to set up a small company or register as self-employed, and try to sell your services in the open market, which in practice often means back to your previous employers.

The fly in this ointment is twofold: many others are trying to do the same thing at the same time, and many local authorities and other public bodies have a ban on employing consultants and other external suppliers.

The continuation of redundancies in the public sector over the next few years is likely to entrench this cycle; more self-employed people chasing work which barely exists.

There are other problems with including this status in the official count of jobs.

We covered a story last year which showed advisors on the government's Work Programme were pushing unemployed people into self-employment as a way of claiming payments.

The companies delivering this scheme get paid the same for getting a participant into self-employment as they do for getting them into a paid job, leading some to suggest that this route is being exploited.

In December 2012, Professor Roy Sainsbury of York University identified this as a weakness of the Work Programme:

"You could stay there [in self-employment] for a while - even six months or a year - before anyone really takes much interest in you ... I am beginning to feel that there is an easy route here for work programme providers to channel people into self-employment."

The continuing issues facing self-employed people mean they are likely to see further drops in income.

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