Myths and realities of self-employment
This article was produced in association with IPSE
A discussion on the “myths and realities of self-employment”, chaired by Tom Clark, Prospect’s Editor, revealed some key points into what the growth of self-employment really means for the economic and cultural reality of the UK. Although almost all the speakers agreed on the important role which this sector of the workforce and its potential to aid the UK in the future, the speakers differed on possible solutions and policy implementation to aid and include self-employed workers.
The talk began with Simon McVicker, Director of Policy and External Affairs for IPSE, who commented: “as far as we are concerned the gig economy is a relatively small part of self-employment. Self employed people are mostly highly-skilled, contribute approximately 225 billion to the economy every year.” This makes it more important than ever to nurture this growth in a post-Brexit economy to ensure the country’s financial flexibility, especially when they will be likely to contribute 45 billion to the treasury by 2025 (McKinsey Global Institute).
Andrew Burke, Dean of Trinity Business School and Chairman of the Centre for Research on Self-employment in London, also underlined this by contributing the more comprehensive notion that “businesses these days have to be agile, they have to be innovative in order to thrive . . .[if] they had to rely on their own workforce they wouldn’t have the means . . . to achieve this.” This influences the economy significantly by “enabling businesses to use specialized labour in the first place” and to pay them only for the part of the project required.
This overall sentiment was shared by Ben Bell, from Uber, who also spoke of the changing attitudes of workers themselves by advocating the need to consider the “wider trend” of many people not wanting a traditional job. He cites McKinsey to show that for every person who wants a traditional job “there are more than two people . . . who would like to move in the opposite direction and . . . that people value the autonomy and flexibility which come from self employment” not to mention the possibilities available for individuals who use self-employed work to augment their income. He went on to state that, although Uber has been held as the “poster child of the gig economy” they simply follow a natural cultural progression by finding ways of helping people work around their life. This can unlock economic possibilities by promoting inclusivity in the labour market. This, Bell concluded, is an “opportunity to be grasped other than feared.”
Following this, Damian Hinds, Minister of State for Employment, warns caution in placing as much emphasis on the growth of self-employment as his fellow panelists have done, since it is a “feature of the last 30 years. . . [ and] most of the growth in jobs has been in employment” with 85% of the workforce continuing to hold traditional positions.
Despite this, the panelists seemed to agree overall on the necessity for a better understanding of the motivations which drive individuals towards self-employment if we want to implement more effective policies. McVicker argued that there is a need for the government to step in and protect this increasingly valuable sector of the workforce from the possibility of exploitation by unscrupulous companies, since self employment is not yet “defined in the UK law.” “The difficult thing”, he continued, “is to restore the workers’ rights while also protecting [its] vital flexibility” which would in turn enhance productivity and dynamism for the future. This last point was somewhat echoed by Burke who remarked on the misguided and unhelpful contribution of the media who often force a complex issue into simplicity creating in this case an “unfortunate cocktail” which loses the major part self-employment plays in the economic growth. He agreed with McVicker in stating that “we need to start to set the record straight [on this] depiction of the self-employed workforce as being homogenous” and that it is important to identify the vulnerable segments as well as privileged ones in order to take away the pressure put on policy makers by the media to adopt a singular solution to a multi-faced problem.
The possible solutions put forth by the panelists showed further the complexity of the issue. While McVicker advocated the need for a “statutory definition of self-employment” which would clear the confusion in the gig economy, define the distinction between who is legitimately self-employed and who is to be considered a vulnerable worker, as well as allow the government to enforce workers’ rights with more ease and efficiency, others disagreed. For instance, Burke stated: “I am not convinced that control has anything to do with legitimacy itself” and suggested the institution of a minimal income for the self-employed. This would greatly aid those who fall under the more vulnerable segments of the sector without necessarily touching those privileged tiers who add greatly to the economy. Bell took these solutions even further, advocating for more institutional and governmental involvement. He states that the UK market has changed but that “arguably policy hasn’t caught up with these trends” so we have to “find creative solutions” by using technology and the example of other forward-thinking economies.
Finally, Hinds expressed a less inclusive point of view by arguing that the 10-14% of people who feel like they have no choice in the matter of being self-employed are those who are the most concerning in terms of public policy. Moreover, he described the role of the government to be mainly educative: “what we need to make sure . . . people have to know what the risk are. . . and more broadly there needs to be a balance between rights and responsibilities [of individual workers].”
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