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Many self-employed workers are now earning less than the self-employed in 1995

Authored by Phil Meekin

Phil Meekin

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Approximate read time: 4 minutes

Recent research has revealed that the average wages of those that are self-employed are lower than they were in 1994-95. The Resolution Foundation who conducted the research found that while the number of self-employed people in the UK has risen by 45% since 2001-02, their earnings per week have fallen by £60.

The foundation has blamed this on the rise of lower paid jobs and the financial crisis which reduced pay rates across the board. The report is timely in its release as the case on pay for self-employed drivers for Uber is expected to have its ruling soon.

Currently, there is a record high number of self-employed workers in the UK; the current number is sitting at around five million workers which accounts for one in seven workers. These workers include many professions such as construction workers, taxi drivers, tutors, hairdressers and more.

The research found that the average self-employed wage for 2014-15 was £240 a week whereas in 1994-95, it was £300. The Resolution Foundation, which aims to improve pay for families, suggested that the changing nature of the self-employed workforce was partly to blame.

This is because many people are having to take up low-paid jobs in the ‘gig’ economy, this is where workers are aligned with a company, such as Uber or Deliveroo, but are technically self-employed as they choose the times when they work to suit their lives.

This kind of work is on the up and the number of self-employed business owners with their own staff has seen a big fall. The number of hours worked on a weekly basis has fallen too, in part as a result of the gig economy but the demand for shorter working hours and more flexibility spurned the gig economy in the first place.

As a result of limited wage growth, due to the financial crisis and the gig economy, many workers are earning less and still feeling the effects of the recession. However, many argue that it isn’t just the low pay that is wrong with the gig economy, the government also needs to put something in place to meet the need of worker rights.

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Frances O’Grady, general secretary of the TUC, spoke about this issue to the BBC; “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.”

The government has reiterated its commitment to create an economy that works for everyone in the UK. Their National Living Wage was a good first step by giving a pay rise to many workers but employees and groups are calling for employee protection. The government confirmed that there will be a review into how changing employment practices could affect job security, workplace rights and opportunities to progress.

The Uber case is the main factor which has spearheaded the call for a look into workers’ rights, especially for those working as self-employed in the gig economy. Two Uber drivers took the firm to court after claiming that it was acting unlawfully by not paying them holiday or sick pay.

The ruling of this case could have a significant impact on the company and its costs as it currently has over 40,000 drivers in the UK. If the tribunal finds in favour of the drivers, Uber will not only have to compensate them but put in place provisions for holiday and sick pay for all their drivers.

Working in the gig economy can be a dream for some and a nightmare for others, as many face no other option but to work for themselves in this way with less job stability. If the government are truly committed to improving worker’s rights then this could help to make the gig economy a safer and more viable option for many people in the UK.

If you are unsure of your employee rights, visit the Citizens Advice website to find out everything you need to know. If you are worried that your rights may not be being upheld, get in touch with Citizens Advice or an employment solicitor as soon as possible.

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