Self-employed

1. Self-employed Evidence base 2014

2. Purpose This slide-pack aims to provide a broad evidence-base on self-employment in the UK. Drawn predominantly from the Labour Force Survey, the pack ties together characteristics of the self-employed, their working patterns, earnings and geographical information.

3. Summary Composition • Self-employment has been a growing part of the labour market for the past 30 years, and as of Q2 2014 makes up 15% of total UK employment • However, the UK is still below the European averages for both male and female self employment rates • Women are a growing part of the self-employed population, now making up nearly a third of self-employed • Part-time self-employment is also growing, driven largely by more self-employed women • Females account for just under one-third of self-employment • Rise in the proportion of females is due to stable inflows and a reduction in outflows • Female self-employed tend to work less hours than male self-employed • Self-employment is more prevalent among older people; around 40% of 65+ year olds who work are self-employed Business composition • In 2014 there was a record level of private sector businesses; increases since 2001 track self-employment growth • The composition of the UK private sector business population has seen big increases in the proportion of businesses with no employees since 2000

4. Summary Involuntary self-employment • The self-employed are less likely to look for additional work than employees • Self-employed are also involuntarily part-time at lower rates than employees • Self-employed are more likely to have multiple paid jobs than employees • The self-employed are less likely to look for additional work than employees Mechanism behind rising stocks • Rises in self-employment appear due to people staying self-employed for longer, rather than more people becoming self-employed • The length of service of both employees and self-employed has increased since 2008 Type of work • Around one-fifth of self-employed work in construction, however self-employment saw the biggest reduction in this sector post-recession • Self-employed tend to work in higher-skilled occupations • Self-employed do less shift-work than employees, and are more likely to work from home than employees

5. Summary Geography • Self-employment is spread across the UK countries in similar proportions to employees • London has the highest concentration of self-employment Hours and absences • On average self-employed people work more hours per week compared to employees, however this gap has halved since 2006 • Self-employed also tend to work a wider variety of number of hours per week, employees cluster more around 36-40 hours • A slightly lower proportion of self-employed take sick days compared to employees

6. Evidence slides

7. The UK is below European averages for male and female self-employment rates between the ages of 20-64 Total, male and female European averages ** Data from Eurostat published data

9. Self-employed made up 12.8% of total employment in 2004 ** Data from LFS Q2 using 2014 weights

10. Recent growth in self-employment is part of a longer trend … • Over the last 13 years, the number of people reporting themselves as self-employed in the UK has increased by 40%. • In 2013, they represented about 10% of the UK population. • The trend in the adjusted measure (excluding those identified as not technically self-employed) is similar to the trend for the overall self-reported measure. • The adjusted measure is around 470,000 less on average.

12. ** Data from LFS Q2 using 2014 weights

13. Rise in female self-employment due to a recent reduction in outflows 1 Self-employed people who did not state how long they have been self-employed have been apportioned to the table according to the proportions of those who did2 Datasets used are for April to June 1994, 1999, 2004, 2009 and 2014 3 This is the difference between the total number of people self-employed for a given year and the total number of people self-employed 5 years earlier (eg. For 1999 this is (a) 1999 – (a) 1994).4 Outflows (e) are calculated by (b) – (d).5 Percentage of self-employed people each year who had entered within five years (eg. For 1999 this is (b) 1999 / (a) 1999).6 Percentage of people who had left self-employment compared with five years earlier (eg. For 1999 this is (e) 1999 / (a) 1994).

15. ** Data from LFS 2014 Q2 using 2014 weights

16. ** Data from LFS 2014 Q2 using 2014 weights

17. ** Data from LFS 2014 Q2 using 2014 weights

18. The increase of 1.8 million (up 51%) in the business population since 2000 tracks self-employment growth. • This includes people self-employed in either first or second jobs (based on the adjusted measure excluding mis-reporting) • Many (but not all) self-employed are non-employers, and the trend is most similar for this group

19. Composition of the UK private sector population has changed over time • Non-employers include self-employed without employees and sole director companies • 31% growth in sole directors companies since the start of 2010 • 19% growth in non-employing businesses with self-employed owners

23. Self-employed and employees show similar proportions of qualifications and years of schooling ** Data from LFS Q2 2014 using 2014 weights

24. Proportions of part-time employees/self-employed who want full-time work Involuntary part-time work has increased for both self-employed and employees since 2004 ** Data from LFS Q2 2014 using 2014 weights * NOTE: refers to part-time workers who couldn’t find full-time work

26. A smaller percentage of self-employed had been working in the same job for a short period (3.5 years or less) in 2014 compared to 2008 ** Data from LFS Q2 using 2014 weights

29. Increase in self-employment stocks due to stable inflows and decreasing outflows 1 Self-employed people who did not state how long they have been self-employed have been apportioned to the table according to the proportions of those who did2 Datasets used are for April to June 1994, 1999, 2004, 2009 and 2014 3 This is the difference between the total number of people self-employed for a given year and the total number of people self-employed 5 years earlier (eg. For 1999 this is (a) 1999 – (a) 1994).4 Outflows (e) are calculated by (b) – (d).5 Percentage of self-employed people each year who had entered within five years (eg. For 1999 this is (b) 1999 / (a) 1999).6 Percentage of people who had left self-employment compared with five years earlier (eg. For 1999 this is (e) 1999 / (a) 1994). **Data from LFS Q2 using 2014 weights Increases over time of levels of self-employed people is due to more people entering self-employed than leaving (rather than people entering self-employment at a faster rate than previously

32. A lower proportion of self-employed do shift-work compared to employees ** Data from LFS Q2 2014 using 2014 weights

33. Self-employed tend to work from or very near to home at much higher rates than employees Self-employed Employees **Data from LFS 2014 Q2 using 2014 weights

34. Distributions of employed/self employed comparable across UK countries Self-employed employee ** Data from LFS 2014 Q2 using 2014 weights

35. London has the highest concentration of self-employment Composition of employment by region Data taken from LFS 2014 Q2 using 2014 weights

37. A higher proportion of self-employed reside in the UK's south as compared to employee distribution Self-employed employees ** Data from LFS Q2 2014 using 2014 weights