Self-employed workers in the UK have seen average earnings drop by £60 a week over the past ten years, according to a study by the Resolution Foundation.
Average weekly earnings of a self-employed worker in 2014/15 was around £240 a week, about 15% lower than in 1994/95 after adjusting for inflation.
One in seven workers in Britain are self-employed. The number has increased 45 percent since 2000 to 4.8 million.
Adam Corlett, economic analyst at the Resolution Foundation, said: “While the self-employed workforce is getting bigger, typical earnings are actually lower than they were 20 years ago.
“Prior to the financial crisis, this stagnation was as much about the changing nature of self-employed work, rather than individual rewards.
“But since the crisis, the returns to self-employment have fallen sharply even when measured on a like-for-like basis.
“Modern self-employment is less likely to involve very long working weeks, and today’s workers are far less likely to be business owners with staff of their own.
“While returns may have increased recently, many workers are still feeling the painful effects of the financial crisis.
“For many people, self-employment brings a freedom that no employer can provide. But the growth of low pay and short hours, along with a summer of protest about conditions, means that its no surprise some workers in the ‘gig economy’ feel that self-employment is just a positive spin on precarious work.”
A separate analysis by the Social Market Foundation think tank revealed that approximately 45 percent of self-employed workers in the UK earn less than the “National Living Wage” of £7.20 an hour.
The SMF found that self-employment and low earnings were particularly common in the transport sector – around 17 percent of transport workers are self-employed.
Nida Broughton, the SMF’s chief economist, said: “If the government really wants to build ‘an economy which works for everyone’, and deal with the problem of low pay among the self-employed, it must address the tax and regulation gap between employees and the self-employed, give the self-employed a stronger voice, and look at how training, better advice on business growth and wider opportunities can help people decide whether self-employment is the correct career path for them.”
“We need more decent jobs that people can live on,” says TUC general secretary
TUC general secretary Frances O’Grady said: “Britain’s new generation of self-employed workers are not all the budding entrepreneurs ministers like to talk about. While some choose self-employment, many are forced into it because there is no alternative work.
“Self-employment today too often means low pay and fewer rights at work. We need more decent jobs that people can live on, not a return to the sort of working practices we saw in Victorian times.”
Government working to support and protect all workers
A Business Department spokesman said: “The Government is committed to building an economy that works for everyone and while the national living wage has given one million workers a pay rise, the Prime Minister has made clear the labour market must support and protect all workers.
“That is why she has asked Matthew Taylor to lead a review of how changing employment practices affect job security, workplace rights and opportunities for progression.”