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The ups and downs of self-employment

Brendan Martin, 29 May 2014

See also:

The Resolution Foundation report, Just the Job or a Working Compromise: the changing face of self-employment

The RSA report, Salvation in a Start-Up: the origins and nature of the self-employment boom

Staff Care: how to engage staff in the NHS and why it matters

Freedom and security at work: can we have both?

Big Society and Fractured Organisations: is HR part of the problem?

You wait years for a good report about self-employment and micro-entrepreneurship in Britain, and then … following the RSA yesterday and the Resolution Foundation earlier this month presumably there’ll be another one along in a minute.

Largely confirming the findings of Just the Job or a Working Compromise, published by the Resolution Foundation earlier this month, the RSA’s Salvation in a Start-up shows that the scale of self-employment has been growing fast, to around 15% of the workforce at any one time.

Between them, the reports suggest that a combination of cyclical and structural factors explain the increase, that self-employed earnings are below average and falling, that most self-employed people have no pension, and that many struggle with mortgage payments.

Both also show, however, that — despite those considerable downsides — most self-employed people are happy to be so. What does that tell us about how disengaged from their work many employed people must feel?

Generalisations mislead. As Nicola Smith of the TUC put it at the RSA launch, the rise of self-employment is not so much one trend as many trends happening at the same time, and their causes and effects are equally heterogeneous.

There are many whose self-employed status is dubious, in some cases because they want it that way for tax avoidance reasons, and in others because their unfair employers deny them the protections to which they are entitled.

Those are important issues for public finance and employment rights, but it would be a mistake to allow them to overshadow a key message of both reports — that most people who work for themselves are choosing autonomy over security.

As I wrote in a blog last year, however, rather than settling for a trade-off between those needs shouldn’t we be thinking about how to reconcile them more?

That involves humanising relationships in organisations that treat their staff like cogs in a machine and redesigning social security so that it is based in citizenship rather than a person’s place in the labour market.

It also means that government, employers and unions — and, for that matter, think tanks — need to listen better to what both employed and self-employed people say they need and want.

At a ‘Freelance Rights’ workshop organised by workers in the creative industries last year, a range of young people who are content to be self-employed asserted their ‘rights’ and complained that those rights are not honoured.

When the workshop examined what they meant by ‘rights’, the main bugbears were unfair contracts — loading risk on to one side of the relationship and benefits on the other — and late payment or even non-payment of fees.

This is where I have difficulty with the typology offered in the RSA report, which responds to the challenge of the heterogeneity of the self-employed experience by forcing these 4,500,000 people into six ‘tribes’, from ‘visionaries’ to ‘dabblers’.

While the typology is useful in categorising what drives people into self-employment, and some of the challenges they face, its inference that individuals are either happy and motivated or insecure and angry is mistaken.

In fact, the self-employment experience usually combines positive and negative aspects in different ways to different extents at different times — and that reality, albeit with different salient concerns, is shared by employed people too.

I write as someone who left a very secure, intrinsically interesting and fairly paid job 24 years ago to go freelance, has regretted that decision for no more than 20 minutes in all that time, and now runs a small and growing self-founded social enterprise.

I love being my own boss, and I haven’t missed wasting time and energy on office politics. But I have had periods of great insecurity and overwork, and I would have made fewer mistakes if I had enjoyed access to some basic advisory services that are still too scarce and expensive.

That is a key gap in public service provision, and it really should be filled now that one in seven are self-employed.

Neither of the new reports address that issue in detail, but both make very helpful contributions to taking the discourse beyond the stereotypes by showing that the rise of self-employment and micro-entreneurship has both positive and negative drivers and effects.

Above all they confirm that it is time for public policy to tackle more seriously and far more concretely the challenge of improving both security in life and freedom at work — and making wellbeing and happiness key goals of both.

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