The last time the Conservatives were in power for seven years, over three million people were left unemployed and sharp regional divides began to open up across the country. Because in 1986, just as the ‘big bang’ propelled the City to new and dizzying heights, rapid deindustrialisation was also dragging parts of the north and other regions down.
Fast forward to 2017 and things seem rather different after another seven years of Tory rule. Unemployment is at its lowest for 42 years and cities like Manchester and Newcastle are experiencing rapid economic growth. But behind the headline figures, the rumbles of discontent are getting louder. There is a growing list of economic problems, with stagnant wages and rising insecurity in the workplace the biggest grievances.
Jeremy Corbyn neatly summarised the concerns of many on the left in his recent Trades Union Congress conference speech, noting ‘the proliferation of low wage jobs, race-to-the-bottom agency working, zero-hours contracts and employers avoiding paying sick pay, holiday pay and even the minimum wage through bogus self-employment’.
There is much to agree with here, but this last point needs closer examination. There are now 4.8 million self-employed people in the United Kingdom, over 15 per cent of the workforce. But the recent growth of the sector has mostly been driven not by worker exploitation, but by technological advances, people’s desire to work independently and, of course, large organisations’ need for flexible expertise. And in fact, the part of the self-employed sector that has grown most in recent years is not the so-called ‘gig economy’, but highly skilled independent professionals – more graphic designers and IT contractors than delivery riders.
Individual flexibility also adds significantly to the flexibility of the UK economy. By providing their services and expertise on-demand, freelancers not only drive up productivity, but also help larger businesses cover peaks and troughs in demand.
It would be wrong, however, to be complacent about the Labour leader’s concerns. There are indeed a small number of unscrupulous employers who exploit their workers by falsely classing them as self-employed. They are able to do this because of the confusion pervading the gig economy: while ‘employee’ and ‘worker’ are both clearly defined in UK law, there is still no statutory definition of self-employment.
Although Matthew Taylor’s recent review recognised the uncertainty in the gig economy, it did not go so far as to actually recommend a legal definition of self-employment. IPSE (the Association of Independent Professionals and the Self-Employed) believes policymakers need to take this bold step to ensure self-employment remains positive for all.
Encouraging greater pension uptake would also go a long way to reducing the insecurity of self-employment. Saving is notoriously difficult for the self-employed because they have to deal with not only fluctuating incomes, but also late-paying clients. Membership organisations like IPSE as well as trade unions must do all they can to support their self-employed members with products to help tackle this. Government too must look at designing more flexible pension solutions for the self-employed.
Perhaps the best way to make self-employment more secure is by helping independent professionals with training and skills development. The government should support this by making training for new skills tax-deductible for the self-employed – just as it is for employees. More thought too needs to be put into how the new lifelong learning fund can support the self-employed, as well as whether funds from the apprenticeship levy can be used to support other types of training.
Nor is it just skills and development: there are many other areas where the self-employed just are not getting a fair deal compared to employees. Find out what can be done to make self-employment work for everyone at IPSE and Progress’s Labour party conference event:
The Changing World of Work: How do we make sure modern employment practices benefit all involved?
Join us in the Main Hall of the Friends’ Meeting House at 7.30pm this evening.
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Jordan Marshall is policy development manager at IPSE. He tweets at @JLMarshall90
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Source: Progress