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Of people who were self-employed in 2009, 23% were no longer so by 2014, the lowest outflow rate from self-employment for any period over the last 20 years, a new report from ONS has found. Therefore the rise in self-employment can be accounted for by fewer people leaving self-employment than in the past. 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. 

ONS surveys do not ask why people are not leaving self-employment, but the fall in the outflow from self-employment could be the result of several economic and social factors which may include:

• More people (both self-employed and employees) continuing to work beyond the state pension age, with self-employment among those aged 65 and over doubling from 241,000 in 2009 to 428,000 in 2014

• Reduced opportunities to work as an employee at the onset of the economic downturn, limiting the opportunity for people to move from self-employment

The rise in employment over the past six years has been predominantly among the self-employed. There were 1.1 million more workers in April-June 2014 compared with January-March 2008, among whom there were 732,000 more self-employed.

In total in April to June 2014 there were 4.6 million people who were self-employed, and the three top self-employment roles were in 2014 construction and building trades (167,000 people), taxi drivers and chauffeurs (166,000 people) and carpenters and joiners (144,000 people).

Self-employment is common within the construction industry, but the economic crisis hit this sector the hardest, to the extent that comparing 2014 to 2009 it had the slowest growth in self-employment compared with other major industry groups. Over the same period the rise in self-employment was largest in professional, scientific and technical activities which include roles such as management consultancy, book-keepers, photographers and chartered accountants.

Looking at the different parts of the country, 17.3% of Londoners in work were self-employed,  followed by the South West at 16.6%; the lowest proportion was in the North East, at 10.8%, followed by Scotland at 11.5%. At a local level, the area with the highest rate of self-employment was the Isle of Scilly, at 33.2%, followed by the Orkney Islands at 28.2%.

The report also looks 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 just 5% of employees. However, self-employed people are also more likely than employees to work short hours – 5% usually work less than eight hours per week, compared with 2% for employees.

Across the European Union, at 15% the UK had a similar proportion of its workforce in self-employment than the EU average. Greece had the highest (32%) percentage of its workforce who were self-employed, a product of its large agricultural sector and the effects of tourism.

Comparing January-March 2014 with the same period in 2009, self-employment increased by around 19% in the UK, equivalent to around 720,000 people. This percentage increase was the third highest in the EU, behind Slovenia (23%) and Estonia (20%), although these countries are relatively small in comparison.

Background notes

1. The report is on the ONS website at http://www.ons.gov.uk/ons/rel/lmac/self-employed-workers-in-the-uk/2014/rep-self-employed-workers-in-the-uk-2014.html
2. The report uses primarily uses data from the Labour Force Survey. It also includes data from the Family Resources Survey and Census 2011.
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