High-Earners Lead Self-Employment

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The UK has seen significant growth in self-employment over the past several years, and a recent report has shed new light upon the nature of this trend. According to a study by an economic think tank, it is high-earning individuals who have been the driving force behind the increase in self-employment.

Self-employment undeniably plays a major role in the UK economy at present. It has been a rapidly-growing area for several years now, accounting for half of the employment growth in the UK during that time. There are currently just under five million individuals in the UK who are self-employed (including those who have a second job or “sideline” in self-employment alongside an employed role). This is well ahead of many other types of somewhat non-typical employment. For example, the UK’s agency workers currently number only around 850,000.

The Resolution Foundation examined trends in self-employment, and found that higher-earners were disproportionately represented in the growth of self-employment over the past several years. Since 2009, 57% of self-employment growth has been made up by what the foundation called “privileged” self-employed individuals – those who are well-qualified and work in higher-paid fields. These include professionals in the accountancy, legal, and health sectors among others. These “privileged” self-employed people commonly achieved income in the £45,000-65,000 range annually, much more than that of the average UK worker.

There is such a divide between these workers and other self-employed individuals, the Resolution Foundation says, that the self-employed are now not so much one group as two quite separate and distinct ones. Those who do not fit into the privileged group not only earn less, but are more likely to be underemployed and to receive tax credits.

The Resolution Foundation’s Adam Corlett says: “Rising self-employment has been the biggest jobs story of the last decade… but behind the headlines the real recent growth area for the self-employed has been in lucrative sectors such as advertising and banking.”

Many news stories and much popular discussion about self-employment growth has focussed on typically lower-earning individuals finding new and more lucrative opportunities by striking out on their own. However, this is in many ways at odds with the picture of self-employment painted by the Resolution Foundation’s report, in which individuals who are already well-qualified high-earners are heavily represented. Many of those who have been the subject of public discussion, such as self-employed drivers for delivery services or drivers for Uber, have found themselves in a work situation which the foundation describes as “precarious.”

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