Self-employment in Europe
Much more than other countries in Europe, the UK's jobs recovery is being led by a surge in the number of self-employed workers. Who are these new self-employed, and what new issues are raised by a potentially deep change in the British labour market?
Since 2010, 40 per cent of the rise in jobs in the UK has been in self-employment, which has prompted a complex debate about the extent to which this should be celebrated. Some commentators have heralded it as a sign of entrepreneurial spirit, innovation and future economic growth, while others fear it is primarily indicative of a rise in precarious, insecure work. Looking at Europe as a whole, the UK is an anomaly: self-employment remains a dominant feature of economies in southern and eastern Europe, but these countries are yet to see overall jobs growth, while the countries of northern and western Europe are seeing jobs growth dominated by employee jobs.
This paper provides an analysis of the characteristics of self-employed workers in different countries (including age, gender, skills and qualifications, occupations and industries), and provides some insight into the uneven pattern of self-employment in Europe.
Self-employment, while offering greater freedom and flexibility, can also present significant challenges. Self-employed workers often don't have basic employment rights, and are subject to greater financial instability, particularly when starting out or when businesses are not performing well. They are also less likely to have paid into a private pension, and work can be irregular and insecure. Our data analysis suggests that the earnings of the self-employed across Europe are falling relative to employee earnings, while more and more workers are looking for more hours or another job.
Policymakers need to consider self-employment carefully in order to help support economic growth, as well as the living standards of this group. This is particularly relevant in the UK, where self-employment has become a greater part of the labour market since the recession. Self-employment can present a route to the labour market for disadvantaged groups, but it should be presented as part of a range of options for those looking for work, rather than a catch-all solution.