More British People Are Working For Themselves

More British workers are self-employed

In the UK, as elsewhere, the nature of employment is changing rapidly. The share of traditional jobs—full-time, regular, open-ended positions—is falling and a growing proportion of workers earn a living from atypical forms of employment, defined as jobs that don’t fit the standard or “typical” model of employment. Moreover, one particular form of atypical employment—self-employment—has registered the biggest gains.

This trend has become a defining characteristic of the UK labour market in recent years. When we look at jobs created since the financial crisis a decade ago, the contribution of self-employment stands out both by historical standards and in comparison with other EU countries. The shift is striking:

  • Between 2008 and 2016, self-employment as a share of total UK employment expanded 15%, more than twice the pace it had grown during the previous eight years, data from the Office for National Statistics (ONS) show.
  • In the same period, the UK had the largest increase in the number and the fourth-largest increase in the share of self-employed workers among EU15 countries, according to Eurostat.
  • Only 31% of UK net employment growth registered since 2008 consisted of full-time, regular, open-ended jobs.
  • By contrast, 43% of net employment created since 2008 was made up of jobs in which people worked for themselves, including sole proprietors and those who employed other workers.

To be sure, 63% of UK workers are still full-time employees, down from 65% in 2006. But the pattern of job creation in recent years points to a continued drop in the share of workers employed by others.

Indeed data confirm that the UK’s surge in self-employment is keeping its momentum. Since 2014, searches on indeed.co.uk using the terms “self-employed” or “freelance” have shown a clear upward trend, even after accounting for the rise in total traffic on Indeed.

The profile of self-employment is changing

The overall statistics do not tell us who self-employed workers and job seekers are and what kinds of jobs they are doing or seeking. To find out more, we did a deeper dive into ONS and Indeed data.

Since 2011, several trends have stood out in the evolution of self-employment in the UK.

  • A growing number of self-employed people are working part-time hours.
  • Women are setting the pace. Between 2008 and 2016, more women than men started working for themselves.
  • Self-employment is climbing the skill ladder, a development known as upskilling. Of all the self-employment jobs created since 2011, almost one in three is high-skill.

Part-time self-employment is on the rise

Since 2008, the British labour market has gained a net 2.2 million jobs after accounting both for jobs created and destroyed. Part-time positions represent roughly half the net gains. To put this in perspective, between 1999 and 2007, only one in five jobs created were part-time.

The rise in part-time employment was driven by big gains in part-time self-employment. Before 2008, the contribution of part-time self-employment to job creation was half that of full-time self-employment; after 2008, part-time and full-time self-employment contributed equally. In 2016, 16.2% of part-time workers were self-employed, up from 12.3% in 2008—a 31% jump. Full-time self-employment increased only 10% over the same period.

Traditionally women have been much more likely than men to work part-time hours. Hence, over a period that saw big gains in part-time self-employment, the proportion of women among the self-employed jumped. In 2016, 33% of all self-employed workers were women, up from 27.3% in 2008, a 20% increase. Men are still more likely than women to be self-employed in the UK, but, between 2008 and 2016, more women than men became self-employed. Increasingly, they did so by working part-time. Since 2008, 52% of the growth in female self-employment has been in part-time jobs.

What jobs do self-employed workers do?

To better understand which jobs self-employed people are likely to hold, we broke down the data one step further. More than two-thirds of the jobs held by self-employed people in the UK fall under the ONS’s middle-skill occupation category. This group includes some lower middle-skill jobs such as machine operation, driving, caring, retailing, and clerical or secretarial positions. But it also takes in a number of technical and trades occupations, along with proprietors of small businesses. These jobs typically require a good general or post-compulsory education plus some work-related training or experience, which can be significant for the most technical positions.

Overall, 25% of all self-employed workers in 2016 were in occupations the ONS classifies as professional. But, as Table 1 shows, these jobs are seldom among the occupations with the highest share of self-employment.

However, the picture is different if we focus on self-employment created between 2011 and 2016. Self-employment growth over this period displays some upskilling in that it was spread across a range of middle and higher-skill occupations. Of all the self-employment jobs created since 2011, almost one in three fell in the ONS’s high-skill category—professional occupations that normally require a degree or an equivalent period of relevant work experience.

The upskilling in the mix of jobs held by self-employed workers is also reflected in the ranking of occupations that posted the largest gains in the prevalence of self-employed workers between 2011 and 2016. Jobs in management, healthcare, and law stand out on the list.

Note: Based on changes in the share of self-employed workers within minor occupations as reported by the Quarterly Labour Force survey, weighted to represent the UK labour force. Only occupations with at least a number of self-employed workers in 2016 above the 25th percentile of the distribution (i.e. 8737) are considered.

The ride service Uber has come to symbolize the gig economy, yet the category road transport drivers is not among the occupations that posted the biggest relative gains from 2011 to 2016. True, the road transport category registered the fifth largest rise in the absolute number of self-employed. But 30% of workers in this category were already self-employed in 2011, meaning that the prevalence of self-employment increased only slightly. However, job postings for “driver” or “courier” are among those job seekers searching on indeed.co.uk click most often, using such keyword as “freelance” or “self-employed.”

The future of self-employment

Rising self-employment has emerged as one of the most notable features of the British labour market. Whether high levels of self-employment are to persist in the UK will depend in part on future policy changes. British policymakers are likely to look to an upcoming review on modern employment practicesled by Matthew Taylor, chief executive of the Royal Society of Arts, who has been charged with examining whether regulation is keeping pace with the changing world of work. Any proposed reforms will have to take into account the increasingly significant role self-employment plays in the UK.