Self-employment and poverty

Self-employment made up 44%, or 540,000, of new jobs since 2010. Half of this number is made up workers aged 50 and up. In addition, more than 40% of the self-employed jobs created in that year were part-time. There are now a total 4.5 million people working for themselves in the UK.

Nearly 80% of self-employed people in the UK are living in poverty, according to recently updated government statistics from the 2012-2013 tax year. Earning £15,000 or less, or two-thirds of the median level of pay, classifies a person as living in poverty. Many self-employed people are forced to subsidize their poor wages by seeking out part-time employment elsewhere, such as becoming a delivery driver or working in a pub.

According to the statistics, the average income for a self-employed person was just £14,655. The top 1.7% of the group make 30.7% of the total of self-employed profits, and are often lawyers and accountants who are taxed as self-employed and who can earn up to 25.5 times more than the average.

According to Richard Murphy of Tax Research UK, “The rise in self-employment has been apparent since 2010 as a consequence of changes to benefit system in UK, where people have been encouraged to take self-employment positions.” Murphy says that the self-employed jobs created since the coalition government came to power are not proving profitable: “The average rate of profit for a person who is self-employed in the UK is falling - these are primarily marginal, unpaid and unskilled jobs. We have the appearance that there are jobs in the UK but the reality is that the jobs people have are underpaid.”