Self-employment in the UK: Pushed or pulled?

The proportion of self-employed workers in the UK has rapidly increased since the Coalition government took office in 2010.

The number of self-employed in the UK hasincreased by 14.2%in the last four years, bringing the total to 4.5 million. The self-employment rate is higher for men than for women: 19% compared to 7.9%.

According to the UKOffice for National Statistics(ONS), self-employed people have also experienced a22% fall in real paysince 2008-9.

It is estimated that, of those who have become self-employed since the recession, 88.8% work fewer than 30 hours a week, probably because theycannot secure more hours.

Arecent reportfrom theInstitute for Public Policy Research(IPPR) has concluded that the UK is becoming the "self-employment capitalof western Europe."

According to theIZA’s Program DirectorDavid Blanchflower, there aretwo types of self-employed: those who are pushed, and those who are pulled. The former are typically low-earners who are self-employed as analternative to unemployment, and the latter are individuals who leave their jobs to pursueentrepreneurial activities.

Blanchflower commented: "Recently,push seems to have dominated pull."

Spencer Thomson of the IPPRechoed this analysisof the jobs market: "The UK is as much anation of shopkeepersas a vanguard ofcutting-edge capitalism."

Trade Union Congress(TUC) General Secretary Frances O’Gradysaid that: "Self-employment isreducing people’s pay,job securityandretirement income– and is likely to be reducing the government’s tax take, too."

Roy Thurikwrites thatopportunity entrepreneurshipcan havepredictive power over the business cycle, whereas necessity entrepreneurship does not.

Meanwhile,Alexander S. Kritikoshas urged governments tocut red tape, streamline regulations and prepare for layoffs in incumbent firms, toencourage entrepreneurswho create jobs, innovation and economic growth.

Read morehere.

Related articles:
Entrepreneurship and the business cycle, byRoy Thurik
Entrepreneurs and their impact on jobs and economic growth, byAlexander S. Kritikos