This Resolution Foundation analysis looks at the recent growth in self-employment. It focuses on: the sectoral make-up of the UK’s 5 million self-employed workers; the drivers of this growth since the recession; how the self-employed are treated differently in terms of tax and employment rights; and what policy challenges this raises.
- Nearly 60 per cent of the growth in self-employment since 2009 has been in high-skilled, higher-paying ‘privileged’ sectors, despite them making up just 40 per cent of the self-employed. The fastest growing sectors have been advertising (100 per cent growth), public administration (90 per cent), and banking (60 per cent).
- The remaining 40 per cent of the growth has taken place in relatively precarious sectors, such as construction and cleaning.
- One of the key drivers of this growth has been the tax advantages enjoyed by the self-employed. For a worker costing a firm £100,000, a self-employed worker enjoys a tax advantage of around £7,000 over a similarly expensive employee.
- The growth of self-employment raises important policy questions regarding the tax treatment of labour; employment rights and protection; and access of social security provision and private pension savings.