Nearly a quarter of a million Brits exit self-employment
Last week, survey data published by ONS showed that the number of self-employed workers in the UK fell by almost a quarter of a million (238,000) in the second quarter of 2020 (April to June).
In response, IPSE (The Association of Independent Professionals and the Self-Employed) warned that the UK workforce could now become “rigid”, having lost the flexible expertise of a larger self-employed group.
The UK is suffering financially right now with its largest recession on record following the coronavirus pandemic and lockdown. Therefore, this fall in self-employed workers has come at a time when businesses most the need the adaptable skillsets of freelancers.
“Going into a recession, we would normally expect a jump not a slump in the number of self-employed, as businesses look to the flexible expertise they offer,” said Derek Cribb, CEO of IPSE. “However, with government policy driving down the number of self-employed, there is a real fear the UK workforce will become brittle and rigid just when it needs to be at its most agile.”
A lack of government support
The government’s Self-Employment Income Support Scheme, announced in March, is intended to help self-employed workers who found themselves without income in lockdown.
However, the scheme leaves out many groups including the newly self-employed, freelancers who work for limited companies, and those who were over the income threshold before the pandemic. To check if you’re eligible for the scheme, click here.
According to IPSE, the fall in self-employed numbers can be blamed on these gaps in income support.
Cribb says: “In the second quarter of 2020, there was a disproportionate and disturbing slump in the number of self-employed in the UK – far more than among employees. This is almost certainly because of the serious gaps in the government support for the self-employed, including directors of limited companies and also the newly self-employed, who are at the most fragile stage of their careers.”
The data also showed a decrease of 197,000 in the number of self-employed workers between the second quarter of 2019 and the same period in 2020. This fall further highlights the impact of lacking government support on the self-employed population.
IPSE’s Freelancer Confidence Index hints at the financial difficulties faced by the self-employed in the aftermath of the pandemic: the average income of freelancers dropped by 25 per cent.
More men than women are leaving self-employment
The survey data also revealed a much greater decrease in self-employed men (7.2%) than women (0.1%). This is probably explained by the fact that the construction sector had the largest fall in numbers of self-employed workers compared with last quarter (57,000) and is 96% male.
Other sectors that faced large decreases in self-employed workers included professional, scientific and technical activities (down 55,000) and administrative and support services (also down 55,000).
Having moved headfirst into a recession, UK businesses desperately need the flexible skills that the self-employed can offer. The need for more support of the group is clear: to avoid further falls in the self-employed population, full government backing is crucial.
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