Why self-employment matters

Economy A man tiling a floor
ViewsMay 25th, 2021

Helen Cunningham looks at the rise of self-employed people in Wales and why a deeper understanding is needed post-pandemic.

Self-employment in Wales- as in the rest of the UK -has seen a rapid increase in recent years. It now represents around fifteen percent of employment and in some parts of Wales, it accounts for a quarter of employment. That means there are around 250,000 people in Wales whose financial well-being is directly linked to their self-employed status.

The reach of self-employment

In the run up to the recent Senedd elections, we advocated guiding principles to economic development, including a “whole economy” approach. Rather than picking winners or singling out specific industries for growth, public policy should neither favour or overlook different types of economic activity – all make some contribution and should be valued. This could just as well apply to self-employment, which, traditionally, has been relatively overlooked in discussions about the economy in Wales. Yet freelancers, platform workers, sole traders, contractors and other types of self-employed people work in all kinds of sectors and right across Wales every day. The chances are, each of us will rely on a self-employed worker for some aspect of meeting our needs – from the internet browsing we do on our mobile phones to the food we order, from grabbing a taxi to developing a new appreciation for long overdue haircut.

Vulnerabilities exposed

As with many issues, the Covid-19 pandemic brought to the fore the predicament of those self-employed people who found themselves out of work due to restrictions or as a result of plummeting demand. The relative lack of a safety net compared to employed people whose employers had taken up the furlough scheme or those working in the public sector highlighted some specific vulnerabilities and the need for support. While the UK government’s Self-Employed Income Support Scheme was conceived to support those had lost income due to the crisis, it initially overlooked the newly self employed and questions have been raised about the extent to which it reached those that needed it the most. The Welsh Government’s own Freelancer (Cultural Recovery) Fund also provides support– principally to those working in the creative and cultural industries.

Low pay and precarity

Self-employment matters because of the numbers of people who rely on it financially – either as their main source of income or as a means to supplement  incomes. It matters because some forms of self-employment are associated with low income – half of self-employed people earned less than £295 a week in 2016. The precarity of some self-employment is also significant, as are the extra considerations for self-employed workers of social protections and basics such as insurance for unforeseen or adverse circumstances, to pension provision for old age. Our recent work on financial insecurity revealed some self-employed people facing real financial difficulties. At the same time, there is relatively limited understanding of low-income self-employment in Wales, which is what we will be exploring over the next twelve months in our new project.

It is too early to say if the pandemic will trigger a change or even reverse the trend in increased self-employment. While the crisis highlighted some issues, a more in depth understanding of the needs and experiences of low income and precariously self-employed people, beyond the pandemic is required. Only by better understanding it can public policy respond with action to help ensure that low-pay and precarity are mitigated and designed out of work in Wales.

Helen Cunningham is a Project Officer at the Bevan Foundation

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