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August 22, 2014

Self-employed earn much less than employees

Self-employed earn much less than employees

Self-employed people typically earn less than half as much as the average employee takes home, according to new data from the Office for National Statistics (ONS).

Average weekly earnings (excluding bonuses) for employees were £450 a week in June 2014. The latest estimate for median weekly income from self-employment is £207 a week.

At the same time, however, fewer people are leaving self-employment. Of those who were self-employed in 2009, 23% were no longer so by 2014.

According to the ONS, this is the lowest outflow rate from self-employment for any period over the last 20 years. Some 886,000 people who were self-employed in 2009 had left by 2014, compared with 1.3 million who were self-employed in 2004 leaving by 2009.

Key reasons that more people are staying in self-employment include the fact that more people are working beyond the pension age as well as reduced employment opportunities.

The ONS report also looked at hours worked by the self-employed compared with employees. 35% of self-employed workers normally work 45 hours or more per week in 2014, compared with 23% of employees. Additionally, 12% of self-employed people usually work 60 hours or more per week compared with 5% of employees. However, 5% of self-employed people work less than eight hours per week, compared with 2% for employees.

 

Frances O'Grady, TUC general secretary, said: “Self-employment appears to be a key factor in the UK economy's shift towards low-paid work. Many people want to work for themselves. But the growth in self-employment is reducing people's pay, job security and retirement income – and is likely to be reducing the government's tax take too.”

She added: “Today's figures nail the myth perpetuated by ministers that the UK's new self-employed workers are all young entrepreneurs. In fact, almost half are over the age of 50. It's great that older people are using self-employment to stay working and earning as they approach and even pass their state pension age. But it's worrying that much of the recent increase is due, as the ONS says, to the limited opportunities for people to move out of self-employment.”

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