Self-employment has been a major driver of job growth since the financial crisis. But this doesn’t mean there is a budding new generation of entrepreneurs – it illustrates the increasing ‘Uberisation’ of the labour market, where workers are given self-employment status whilst simultaneously stripped of their rights and pay.
The ONS’s April labour market release recorded 114,000 new self-employed workers compared with 192,000 employees. Self-employment has reached 4.78m workers, or 15% of the workforce. This is a substantial increase, up by 1m or 26% from 2008. Much of the growth of self-employment has been in sectors traditionally associated with low pay. Self-employment in the ‘caring, leisure and other’ sector has grown 39.7% since 2008, and by 30.5% in elementary occupations.
Any question of whether these increases should be attributed to a burst of entrepreneurship or exploited workers can be answered by looking at earnings. Earnings of Britain’s self-employed workers have actually fallen over the past 20 years. Analysis by the Resolution Foundation found that typical self-employed earnings fell by £60 a week between 2001-02 and 2022-16.
Citizens Advice found that wrongly self-employed workers lost an average of over £1,200 per year in holiday pay, that they paid an average of £61 extra per year in national insurance contributions, and that we as taxpayers lose over £300 of employer national insurance contributions of per person per year.
However, these workers are fighting back. Last year, both the GMB won a landmark case on behalf of Uber driver members. Their case determined that Uber drivers were in fact employees and that Uber has acted unlawfully by not providing drivers with basic workers’ rights.
We spoke to Abdurzak Hadi, an Uber driver of over 10 years, who dispelled the myths about his ‘self-employment’. He told us how Uber manipulates their workers’ self-employment status, about long hours, low pay, no sick leave, about how Uber drivers are effectively subsidised by the taxpayer, and about the personal cost of this low quality employment.
The government needs to protect workers from these unscrupulous employers using self-employment as an excuse to short change their staff, and the taxpayer. The rules on self-employment need to be modernised to reflect labour market changes. Workers like Hadi need a guaranteed minimum wage (at the bare minimum), they need guaranteed hours, holiday and sick pay, employer pension contributions, and job security. They need a fair deal, and for that they need to be legally recognised as employees.
If you want to support Hadi’s campaign to fund medical treatment for his son, please donate at gofundme.com/helphadi.