No one source of data gives us a comprehensive picture of the income of the self-employed. However, by looking at a range of sources, we can form some tentative conclusions:
- The self-employed as a group have seen falling income since the recession
- But this is mostly down to the changing composition of self-employment
- Those individuals who have been self-employed over a number of years have seen income levels sustained, although with some self-employment earnings replaced by other sources
- There is little difference in overall life satisfaction levels between the self-employed and the employed.
Recent trends in self-employment
According to the most recent Labour Force Survey1, there are 4.613 million self-employed in the UK, 787 thousand higher than the pre-recession figure at the same time in 2008. This is a much larger proportional rise than for employees and indeed self-employment has accounted for more than 40 per cent of the total increase in employment over this time period despite only accounting for around 1 in 7 of the workforce.
Chart 1 shows how employment has changed compared to its pre-recession levels up to late 2015. The chart shows cumulative change, so that by mid-2012, total employment had recovered to its pre-recession level and it is clear that this was entirely down to the increase in self-employment. Self-employment then remained fairly stable before rising steadily through 2013, reaching a peak at in early 2014. It is only recently that the increase in employment has caught up and contributes more to the overall increase in employment since 2008.