Rise of the self-employed to beat fragile jobs market

Since the recession began in 2008, thousands of people have become self-employed, according to the study.

The Resolution Foundation think-tank found self-employment outstripped the number of people taken on by companies or public sector bodies in 10 of 12 parts of the UK.

It said the figures suggested the UK workforce had been “dramatically reshaped” over the course of the downturn.

The research shows that while the number of employee jobs in Yorkshire fell by 64,000 the number of self-employed jobs rose by 37,000.

The figures may help to explain why despite thousands of jobs being lost during the recession unemployment did not hit the levels forecast by many economic experts.

In other parts of the country the change is even more stark. In Scotland, for example, there was a 28,000 increase in self-employed jobs and a loss of 156,000 employee jobs.

In one of its starkest findings, the report suggests that across the whole of the UK “the net creation of employee jobs in this period was effectively zero.”

Laura Gardiner, report co-author and senior research and policy analyst at the Resolution Foundation, said: “It’s remarkable to see how the growth in self-employment has generally outstripped the creation of employee jobs since the start of the recession. Although, the experiences from region to region have varied significantly.

“London and The East of England are the only regions where employee jobs have outstripped self-employed jobs, and until this year, the number of employees across the UK since the recession has barely risen.”

Ms Gardiner warned the figures did not include jobs data from 2014 when there have been significant increases in the number of people in work.

The research may point to a significant shift towards self-employment but those working for themselves have also had a tougher time in making ends meet.

Wages of the self-employed have fallen by an average of 20 per cent since 2007 compared to six per cent for employed people.

A typical self-employed person now earns 40 per cent less than a typical employed person and only a third of self-employed people are contributing to a pension.

Councillor Susan Hinchcliffe, cabinet member for employment at Bradford Council, said: “I applaud anyone who sets up their own business because I’ve done it myself and it takes some doing to make it work.

“Some people are finding it hard to get work at the moment so perhaps more are setting up on their own because they have got skills they see are needed for, and there will be cases of redundancy money being used in this way.”

Chris and Rose Bax left retail jobs at outdoor equipment store Cotswold Outdoor to set up Taste the Wild in 2008. They offer wild food foraging and cooking courses from a smallholding based at Helperby, North Yorkshire.

Mr Bax said: “It wasn’t the easiest time to try and grow a business. The banks had stopped lending so we set the business up small and didn’t draw a wage. Luckily we have grown organically.”

Leeds-based Rhian Kempadoo-Millar has no regrets about going self-employed but warns it is no sure-fire route to success.

The fashion designer and mother of two set up her Kempadoo-Millar label specialising in locally manufactured flat caps in 2010. She started by trading on market stalls but is now attracting interest from international retailers.

“Being self-employed brings with it a different set of challenges. In the current climate and you have to be incredibly motivated to be successful. It means I’m working into the hours when my friends are at the pub. ”

A sound understanding of the relevant market for a product is vital from the outset, she said.

The Resolution Foundation’s figures are likely to trigger a debate over the shape of business support as the economy recovers.

Significant effort is going into encouraging companies to invest in the region and to support existing firms to grow.

Campaigns such as StartUp Britain were launched in the depths of the downturn but questions will now be raised over whether attention is in danger of drifting away from helping people who start their own business.

The Resolution Foundation report also suggests that if high levels of self employment continue, changes will be needed to make it easier for the self-employed to access mortgages and credit.

‘Going alone offers no certainty of success’

Leeds-based Rhian Kempadoo-Millar says she has no regrets about going self-employed, but warns it is no sure-fire route to success.

The fashion designer and mother-of-two set up her Kempadoo-Millar label specialising in locally manufactured flat caps in 2010. She started by trading on market stalls but is now attracting interest from international retailers.

“Being self-employed brings with it a different set of challenges. In the current climate and you have to be incredibly motivated to be successful. It means I’m working into the hours when my friends are at the pub.”

A sound understanding of the relevant market for a product is vital from the outset, she added.