Self-employed to outnumber public sector staff says RSA

Researchers for the RSA expect that 5m will be self-employed by 2018, overtaking the 4.9m state workers.

The registered charity said demographic shifts such as an ageing population and high levels of immigration have bumped up numbers as has the shift from materialist to post-materialist values.

New technologies have also sent the cost of doing business into freefall, said the RSA.

Yorkshire has seen a 25 per cent increase in self-employment since 2000, it added.

Researchers took an in-depth look at the self-employed workforce and found that the full-time employed earn 20 per cent less than their employed counterparts, their weekly earnings have fallen by 10 per cent in real terms since 2000 and they tend to work longer hours, have less holiday leave and can be at risk of social isolation.

But the research also found that the self-employed are happier than typical employees.

The RSA argued that forgoing material benefits for more meaningful returns is a sign of a new “creative compromise” at work.

Researchers identified six tribes of the self-employed:

* Visionaries (22 per cent of the self-employed): Optimistic, growth-orientated business owners who are usually driven by a mission and a sense of purpose. They are more likely to be younger and male, and to employ many employees.

* Locals (13 per cent): Relaxed and generally free from stress, these operate low-tech businesses which serve only their local community. They earn a modest income and many are close to retirement.

* Classicals (11 per cent): Generally older, these embody the popular image of the entrepreneur. They are largely driven by the pursuit of profit.

* Survivors (24 per cent): Reluctant but hard-working individuals who are struggling to make ends meet, in part due to the competitive markets they operate in. They earn less from their business, and are more likely to be younger.

* Independents (19 per cent): Freedom-loving, internet-dependent business owners who are driven by the opportunity to vent their creative talents. They are usually younger and left-leaning.

* Dabblers (11 per cent): Usually part-timers, their business is more of a hobby than a necessity. A large number are retirees seeking to do something interesting in their spare time.

Benedict Dellot, of the RSA, said: “The fundamental lesson from our research is that we need to learn to live with the self-employed.

“Yes, there are a substantial number who are forced into the position, but there is little doubt that the vast majority enjoy being their own boss – and understandably so.

“At present, however, many commentators have failed to recognise this, and seem to want to hark back to a golden age when being an employee in a large organisation was the norm.

“Not only is this futile, it also distracts us from the task of improving the living standards of the self-employed and ensuring their needs are no longer overlooked in government policy.”