A HIDDEN PROBLEM? Does the Recent Rise in Self-Employment Mask the True Extent of Joblessness in the North West? Bill Gleeson Investigates

Liverpool Echo (Liverpool, England), May 15, 2014 | Go to article overview

A HIDDEN PROBLEM? Does the Recent Rise in Self-Employment Mask the True Extent of Joblessness in the North West? Bill Gleeson Investigates


Byline: Bill Gleeson

DESPERATION: Is a lack of waged jobs driving more people into self-employment? TWO reports published last week contradicted each other about what is happening in the region's employment market.

According to centre-left think-tank Resolution Foundation, the true level of unemployment in the North West is being masked by a rapid rise in self-employment.

While at first glance, this is not necessarily a problem, the fact that many self-employed people are earning low incomes suggests that they are not thriving and have started their own businesses only as a last resort to avoid having to live off benefits.

Resolution's researchers point to figures sourced from the Office for National Statistics' (ONS) Annual Population Survey that show between 2008 and 2013 the number of employees in the North West fell by 44,000, while the number of people in self-employment rose by 62,000.

According to the report's authors, Conor Darcy and Laura Gardiner, many more people are now becoming self-employed because of a lack of alternative waged or salaried jobs than was the case before the recession.

They estimate that around 27% of self-employed people have started their own businesses due to economic distress rather than from choice. Prior to the recession, this figure was 10%.

Crucially, the authors add: "We have looked at how self-employed people are faring financially.

"Our analysis finds that self-employed weekly earnings are 20% lower than they were in 2006-07, while employee earnings have fallen by just 6%. The drop has been seen across genders and industries but is particularly notable among people of prime earning age (35 to 50 years old) whose earnings are down 26%.

"As a result, the typical self-employed person now earns 40% less than the typical employed person.

"Part of the pay drop for the self-employed is down to a reduction in the hours they are now working and part is likely to be due to a shift in the composition of the group, such as a rise in the proportion of the self-employed who are women."

It seems, that for some at least, profits from enterprise are lower than wages paid to employees.

The report continues: "Although self-employment has grown in most regions of the UK in the years since the recession, trends in employee jobs have been markedly different. Strong self-employment figures have come alongside encouraging employee numbers in some regions like London and the East but have been complemented by steep falls in employee numbers in Scotland and much of the North. There is some evidence that higher unemployment may be linked to growing self-employment."

However, Resolution's findings appear to be flatly contradicted by the latest monthly Jobs: North survey carried out by accountancy firm KPMG and the Recruitment and Employment Confederation (REC).

Far from a difficult employment market for workers, the survey suggests that market conditions are moving in their favour.

According to Jobs: North the number of permanent placements increased at a sharp, albeit slower, rate in April than in the recent past. Recruitment consultants in the North of England indicated that the number of staff placed in permanent positions rose, marking an unbroken 12-month sequence of growth. …

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