450,000 newly self-employed would rather be employees

Reluctant recruits make up a quarter of those becoming self-employed since the recession but clear majority still prefer being their own boss 

A quarter of those who started out as self-employed in the last five years would prefer to be employees, suggests new research from independent think tank the Resolution Foundation, conducted by Ipsos MORI. The number of self-employed people has risen steadily over the past five years but a significant minority of those who started out during this period would, given the choice, rather work for someone else.

The new survey challenges common assumptions about Britain’s growing army of self-employed workers. On the one hand it shows that, contrary to suggestions that the new self-employed are in this position unwillingly, 72 per cent say they prefer their current situation to being an employee.

However, the Resolution Foundation research also shows that those who became self-employed in the past five years are much more likely to say they’d prefer to work for someone else (28 per cent compared to 11 per cent of those who have been self-employed for five years or more).

ONS data shows that of the 4.5 million self-employed people in the UK today, nearly 1.7 million became self-employed since 2009. The survey suggests that, of that newer group, approximately 450,000 people would prefer to be an employee.

It also shows that this new group is much more likely to cite a lack of work alternatives as the driving factor behind their decision to become self-employed compared to those who took this decision more than five years ago. Of those who became self-employed in the last five years, more than one in four (27 per cent) gave lack of work alternatives as the reason, compared to only one in 10 (10 per cent) of those who took the decision longer ago. This suggests that for a growing minority self-employment is increasingly less of a choice and more of a fall-back.

Among the newly self-employed, those working in semi-skilled and unskilled occupations are particularly likely to want to be an employee. The survey reveals that 44 per cent of the new self-employed in lower-skilled occupations would rather be an employee, more than double the proportion (21 per cent) of more highly-skilled people.

The research also raises concerns about the challenges facing the newly self-employed in accessing credit and housing. One in four (24 per cent) of those who have been self-employed for less than five years say they have been prevented from obtaining personal credit or loans due to being self-employed, in contrast to 11 per cent of those who have been self-employed for five years or more. When asked whether being self-employed has ever prevented them from securing a tenancy, 12 per cent of the newly self-employed said yes, while only 3 per cent of those self-employed for five years or more experienced similar difficulties.

Compared with the longer established self-employed, those who have moved into this position over the past five years are also much more likely to be women. 37 per cent of the new self-employed are female versus 27 per cent of those self-employed for five years or longer.

New figures to be released today (Wednesday 16 April) by the Office for National Statistics will give an update on the UK’s labour market and are likely to underline the growing role played by self-employment. There are currently 4.5 million self-employed workers and 25.5 million employees in the UK.

The survey is part of a major investigation into the changing face of self-employment in Britain being carried out by the Resolution Foundation which will be published next month.

Conor D’Arcy, Researcher at the Resolution Foundation, said:

“The UK has had impressive employment growth over recent months, a sizable proportion of which has been driven by an explosion in self-employment.  That’s why it’s vital we know more about these new self-employed workers. Some will see themselves as entrepreneurs and revel in setting up their own business – the clear majority still prefer to be their own boss – but a considerable minority appear to be there unwillingly or at least would prefer the security of being an employee given the choice. The new face of self-employment is more likely to be female and looking for an alternative compared with their more established counterparts.”

ENDS

Notes

1.All figures, unless otherwise stated, are from the Resolution Foundation’s analysis of survey data provided by Ipsos MORI. Total sample size was 985 GB adults. Fieldwork was undertaken between 28th March and 7th April. The survey was carried out online. The figures have been weighted and are representative of all self-employed adults in Great Britain aged 16-65.

2.All percentages from the Ipsos MORI survey exclude those who responded ‘don’t know’, ‘can’t remember’, ‘not applicable’, or who refused to answer the question, from the base.

3.ONS data on the number of self-employed people are taken from the Labour Force Survey, which shows that there were 4.5 million self-employed people in the latest headline statistics (November 2013–January 2014). More detailed Labour Force Survey data from the last quarter of 2013 shows that 37% of self-employed people had become self-employed in the last five years. Applying this 37% to the latest data gives an estimate of 1.7 million of the self-employed having started out since 2009.

4.The Ipsos MORI survey was conducted with GB residents, while the headline ONS self-employment numbers refer to the UK as a whole. We have estimated the number of newly self-employed people in the UK who would prefer to be employees using the GB figure.