More than half new 'jobs' are self-employment - and most earn below minimum wage

Wed, 14/05/2014 - 12:29 -- nick

The Office for National Statistics (ONS) has today announced another fall in unemployment and rise in employment, but recent troubling patterns are continuing.

In the three months to March 2014, unemployment fell 133,000 to 2.2 million people, or 6.8% of the working age population.

But the fake self-employment that has been dominating the figures continued, and even strengthened.

On the face of it, a rise of 283,000 in employment looks good, but when 183,000 of them are new self-employment registrations there is little positive to take from this.

Given how few of the self-employed are making a living, it is not unreasonable to consider the figures without this element.

This would actually leave an increase in unemployment in the last three months of 50,000.

Prime Minister David Cameron through light on the problem when he tweeted: "There's more to do, but it's welcome unemployment is down again. More jobs means more financial security for people."

Self-employment is the very opposite of financial security; UnemployedNet has calculated that most cannot make a living out of it.

Between 2000 and 2012, the average level of self-employed earnings fell by a third to £10,400, adjusted for inflation.

That level of income is a long way below minimum wage, which for a 40 hour week provides £13,125 per year, and this is well below the living wage.

Self-employment has become a route not to business success but into poverty for far too many.

Some have suggested that many of the new registrations are taken up by people doing odd-jobs around their communities, but there is likely to be a larger group.

Those of us who have worked in the public sector are used to hearing stories from ex-colleagues who have been made redundant in the Tory austerity drive and set up a small business in response to a lack of other opportunities.

The draconian jobcentre system is likely to be playing a part too; those entitled to contributions-based Jobseeker's Allowance are likely to be put off by the many stories of sanctions and poor treatment, and if they have savings or their partner is earning they may decide non-paying self-employment is a better bet.

The low level of self-employed earnings is not surprising; many ex-state workers only have significant networks in their own sector, and institutions that are cutting do not usually hire outside help.

With hundreds of thousands of public-sector redundancies already made and hundreds of thousands still to come, this is a damaging trend that is likely to continue for many more years.

The lack of available work in many areas, together with a mismatch in skills between public and private sectors, means it may well get worse, with more registrations and even lower earnings.

Those lucky enough to find work still find wages a problem, with the most recent figures showing only a 1.7% increase in their value.

After years of below-inflation growth, leaving most poorer, recent falls in prices mean people are no longer falling behind.

But with 13 million in poverty, and more than half of these in jobs, significant wage growth is needed for work to pay enough for the unemployed to be able to afford to take it.