With more than one in seven workers now self-employed in the UK, it is no wonder policymakers are finally sitting up and taking notice. At the most recent prime minister’s questions, David Cameron announced the launch of a review into how the self-employed can be better supported. We urgently need a fairer deal for those going it alone and this review couldn’t have come at a better time.
We have witnessed a meteoric rise in self-employment in recent years. There are now 4.5 million individuals working in this way, accounting for an incredible two-thirds of new jobs since 2008.
A recent study from the RSA demonstrated how microbusinesses, including sole traders, help to spur productivity, innovation and economic growth. It makes a strong case that the growth in self-employment “should be taken as a sign of a prosperous nation transitioning into a different kind of economy”, based largely on the emergence of new technologies and rising skill levels.
Indeed, we have seen a structural shift in the labour market, with people seeking greater autonomy over how they work. This makes people happier in their work, and the whole economy benefits from the flexible expertise and innovation that independent professionals and the self-employed can deliver.
Working for yourself can be incredibly rewarding, but it is hard work and you face challenges employed people don’t experience. If you work for a big company, they contribute to your pension, have an admin team, and might even offer generous maternity or paternity pay.
When you are self-employed you are your own admin team and getting a mortgage or saving for your future poses specific challenges. The scope of the government’s review acknowledges this, and we look forward to submitting the evidence from our members over the coming months.
Lenders need to recognise the reality of modern working, while government should explore creating a flexible pension scheme, allowing individuals to withdraw the last two years of contributions without penalty.
Maternity pay arrangements for the self-employed clearly need urgent reform too. At present, self-employed women are only eligible for maternity allowance, which is typically less than statutory maternity pay (SMP). There is no good reason for this disparity: the self-employed should be able to claim SMP based on an average of their earnings over the last two years, simplifying the system and making it fairer too.
There are other areas that we will be urging government to explore and address in its review. For example, late payment, access to quality training, and how our smallest firms bid for procurement contracts are all issues faced by sole traders, and areas where policy needs to catch up with the reality of working for yourself.
Government’s approach to the rise in self-employment must be rational. We need to help those who are struggling while encouraging individuals who are doing well and want to expand or scale up their business. IPSE will be working closely with government as the scope of the review becomes clearer, ensuring those who work independently get a fair deal.
In a few years’ time we will be talking about a population of 5 million self-employed in the UK and it’ll be even clearer that the world of work has fundamentally and irreversibly changed. Independent workers will be even more pivotal to the UK’s economic success, and policymakers simply cannot ignore them any longer.
Chris Bryce is chief executive of the Association of Independent Professionals and the Self-Employed (IPSE)
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