Think tank calls for more help for self-employed

26 February 2016

Think tank calls for more help for self-employedAn independent think tank is calling for a new "welfare settlement" to support the growing numbers of self-employed workers in the UK.

A new report from think tank Bright Blue has highlighted the plight of many of the UK's low paid self-employed workers. Its findings show that 20% of self-employed people are in low income households, compared to 10% of employees. It means that over 900,000 individuals are self-employed and in a low income household.

The research also found that:

  • Self-employed individuals in low income households work markedly more hours on average (38 hours per week) than employees in low income households (26 hours per week);
  • However, self-employed individuals on low income are overwhelmingly satisfied with their job (80%), and are more satisfied than employees on low incomes (74%);
  • 75% of self-employed individuals in low income households say that their ambition is to sustain a good standard of living; just 13% say that it is to grow their business;
  • The top three challenges for self-employed workers are: income fluctuations (55%); lack of holiday pay (37%); and saving for a rainy day (36%).

David Kirkby, author of the report and senior research fellow at Bright Blue, said: "Earnings from self-employment have fallen in recent years and the self-employed are now more likely to be on low income than employees.

Self-employed individuals … typically experience significant fluctuations in their income, which can be difficult to manage. They receive only limited access to existing state welfare and have low savings rates."

Bright Blue is asking the Government to establish new personal welfare accounts for self-employed individuals that they would pay into and draw down upon in times of need, such as unemployment or illness.

Kirkby said: "This 'welfare settlement' would boost the financial resilience of the self-employed and boost the control and personal responsibility they have for insuring themselves against times of hardship."

Bright Blue is also proposing that Local Enterprise Partnerships (LEPs) should be financially incentivised to develop local advice networks for self-employed individuals and business owners within a given locality. In addition, it says, there should be a requirement for a certain proportion of LEP board members to be self-employed.

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