Almost half (43%) of self-employed people have completed projects – in some cases up to £60,000’s worth – they were never paid for, a new report by IPSE (the Association of Independent Professionals and the Self-Employed) and the IPA (the Involvement and Participation Association) has found.
The report, “What makes for good self-employment?”, found that while the majority of self-employed people were happy with their working lives, poor payment culture was one of the main things dragging down wellbeing and contentment in the sector. It was a particular problem among the younger (18-34) self-employed people surveyed, 58 per cent of whom reported not being paid.
While there is now a focus on “good work” following last year’s Taylor Review, the aim of the report was to identify what exactly made for “good self-employment”. As well as payment practices, the new report also identified three other factors: client relationships, work-life balance and skills, progression and a sense of purpose. The report found that beyond the lower-paid end of self-employment, skills development and sense of purpose are actually the most important determinants of overall work satisfaction.
Based on these four key factors, the report made several recommendations to improve the quality of self-employment:
- Tackle late- and non-payment of invoices – by enshrining the Prompt Payment Code in law and giving the Small Business Commissioner tougher powers to act.
- Clarify client obligations and promote good practice – to ensure clients are able to work even more productively with the self-employed, while respecting their autonomy.
- Encourage the self-employed to upskill – through adult education vouchers and ensuring the self-employed benefit from the Apprenticeship Levy and the Flexible Learning Fund.
- Promote co-working and co-operatives – to help self-employed people support each other.
Simon McVicker, IPSE’s Director of Policy, commented:
“This is a hugely significant and timely report. With “good work” the issue of the hour after the Taylor Review, it is vital that we understand what makes for good working conditions not just for employees but also for the self-employed.
“Although it has been good to see self-employment rising up the Government agenda, all too often discussions about it have been based on anecdote rather than fact. This report – based on detailed focus groups as well as a survey of hundreds of self-employed people from across the UK – drills down into the reality of self-employment.
“The findings are remarkable. Firstly, although it is good to see that the self-employed are generally very happy with their work, it is truly shocking to discover how far poor payment culture still goes. While the Government has taken some steps to improve it, it is simply unacceptable that 43 per cent of self-employed people are still finding themselves up to £60,000 out of pocket because of their clients’ failings.
“It was also extremely interesting to note that while poor payment culture clearly has a serious impact on the quality of some self-employed people’s working lives, this is not universal. For most, skills development is actually much more important for good-quality self-employment.
“With self-employment on the rise across the UK and beyond, it has never been more important to support this way of working and make sure it remains a positive choice for all. The recommendations for Government and industry in this crucial report should help to do just that.”
Nita Clarke, Director of the IPA, commented:
“The Taylor Review and debate around modern working practices have focused a great deal of attention on the ‘gig economy’ and the false categorisation of some of the self-employed. While these issues are important, however, it is also important that this debate doesn’t obscure the much bigger issue of the quality of work for the wider group of 4.8 million self-employed people in the UK labour force. As this report makes clear, what most of the self-employed want is not to become employees but to have better quality self-employment.
“It’s hugely encouraging that so many of the self-employed enjoy meaningful and satisfying work. But it’s also vital that we take a close look at those areas where work quality is less positive, such as around poor payment culture, access to Government support and misunderstanding among some client organisations about how the self-employed should be treated.
“One clear conclusion is that companies need to properly train their HR and procurement managers in the right way to engage with self-employed contractors. Another is that Government needs to look at expanding opportunities for skills development for the self-employed. Finally, there is an urgent need to look at ways of tackling the culture of late payment and unpaid work that drives so many self-employed into a state of serious financial anxiety. We hope that both Government and industry take note and act to ensure that self-employment is ‘working well’ for the millions of self-employed people in the UK.”
Matthew Taylor, Royal Society for the Encouragement of Arts, Manufactures and Commerce, commented:
“‘Working well for yourself’ is an important report reinforcing the account of self-employment coming out of a range of research including by the RSA. The self-employed are a diverse group who generally accept the downsides of their work as a price worth paying for the upsides. Unfortunately, our policy systems – particularly in relation to employment law, pensions and benefits – still don’t work as well as they should for the self-employed’”