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Explosion in self employment is masking the decline of traditional jobs

New analysis by the independent thinktank The Resolution Foundation, reported by the Times, claims that traditional employee jobs are declining or flatlining across the country, and the true effect is being masked by the rise in self-employment.

The research shows that the total number of employed jobs fell in nine of 12 British regions between 2015 and 2022, ranging from a drop of 144,000 posts in Scotland, to a fall of 26,000 in the east Midlands. The numbers of employee jobs in the south-east (-1,000) and eastern region (+4,000) remained virtually static, while in London, uniquely, 246,000 were created.

The number of self-employed people rose by 112,000 in the south-east, by 76,000 in London, by 63,000 in the east and by 66,000 in the west Midlands. There were 54,000 additional self-employed posts in the south-west and 46,000 in the east Midlands.

These newly created self-employed jobs were sufficient to offset the loss of employed jobs, and this has contributed to an increase in the numbers in work in other regions over the 2010 baseline.

Additional research has also shown that self employment weekly wages have decreased at a much bigger percentage than employed jobs. While weekly wages for employees have fallen 6% since 2007, typical self-employed pay has decreased by 20% in the same time period. The typical self-employed person is now being paid 40% less than the average employee.

This move into self-employment can be for personal reasons, but some state a lack of other options for the move. There is also worrying analysis that this move can be putting even more financial pressure on homes across the UK. 

The Times quotes labour market economist and former Bank of England rate-setter, David Blanchflower “Self-employment is often the last resort of the desperate… Such workers operate under considerable strain, worried about where their income is coming from. They are sometimes forced to finance themselves by borrowing against their home, exposing their families to the same financial uncertainty that attaches to their job.”