Two million self-employed adults earn less than the minimum wage

New analysis published by the TUC shows that half (49 per cent) of self-employed adults aged 25 and over are earning less than minimum wage – a total of two million people.

Self-employment has accounted for a growing share of the workforce in recent years, rising from 12 per cent of workers in 2001 to 15 per cent in 2018.

But the self-employed earn considerably less than those in employment. In 2016/17 they earned on average £12,300, compared with £21,600 for those in employment. This was also a fall from £13,200 in 2015/16.

The TUC is concerned that the growth in self-employment is driven in part by sham forms of self-employment, which are used by some employers to reduce tax liability, duck the minimum wage and deny workers their rights.

Sham self-employment includes some gig economy workers, and people who are contracted to a single employer through a personal service company, rather than being contracted as an employee.

The two million people in low-paid self-employment are part of at least 3.7 million people in insecure jobs. The other 1.7 million include agency workers, casual workers, seasonal workers, and those whose main job is on a zero-hours contract.

The Taylor Review into modern working practices was published a year ago, but the government has so far failed to take action to tackle insecure employment.

TUC General Secretary Frances O’Grady said:

“Self-employment can be a great option. But it’s clear that it’s not working for everyone, with millions of self-employed workers stuck on poverty pay.

“Too many workers have been forced into sham self-employment – like at Uber and Hermes. It’s not about helping workers, it’s all about companies dodging tax, ducking the minimum wage and denying workers their full rights.

“Theresa May promised to change things for ‘just about managing’ families, but she’s done nothing. She should be cracking down on businesses that use sham self-employment. She should ban zero-hours contracts. And she should give agency workers the right to equal pay to stop undercutting and encourage employers to create more permanent jobs.”

The TUC wants the government to follow up the Taylor Review with:

  • A crackdown on bogus self-employment and steps to ensure workers enjoy the same floor of rights as employees, including redundancy pay and family-friendly rights.
  • A ban on zero-hours contracts to ensure workers get guaranteed hours, allowing them to pay bills and plan childcare.
  • Equal pay for agency workers, by ending the Swedish Derogation which acts as an Undercutters’ Charter.
  • Allowing trade unions to access workplaces, to support workers most in need of representation.
  • Increased resources and powers for enforcement, so that dodgy employers have nowhere to hide.

 

Andy Chamberlain, IPSE’s Deputy Director of Policy, comments:

“IPSE agrees more must be done to protect self-employed people at risk of being vulnerable. Our research with the Community Union showed this is likely to be between nine and 13 per cent of the self-employed.

“We want the Government to back training as a route out of low pay for the self-employed, and to tackle exploitation by unscrupulous employers through a statutory definition of self-employment.

“But the TUC’s limited analysis does not chime with what the self-employed themselves say about their experiences. Survey after survey tells us loud and clear that on average the self-employed are happier than employees, valuing autonomy and flexibility.

“Rather than misleading characterisations of self-employment, we need a strong focus on the real challenges the self-employed face, whether that’s being paid on time, receiving a fair deal on maternity pay and Universal Credit, or negotiating a complex tax system.

“Research by BEIS also confirms that most people in the gig economy are satisfied with this way of working, and do not rely on it for their main source of income.

“There are 1.5 million part-time self-employed people in the UK, and it is likely these account for many of the people the TUC analysis suggested were earning less than the minimum wage. For most, gig economy work provides a source of additional, flexible income that the majority are very happy to have.

“While we must protect vulnerable workers, it would be a mistake to conflate ‘bogus self-employment’ with the ‘gig economy’ or wider self-employment – and then try to regulate these ways of working into oblivion. That just hurts the overwhelming majority of people who actively chose to work in this way.”


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