Do You Want To Be Your Own Boss?

Greater numbers of people are choosing to become self-employed as they decide to be their own boss. But the trend towards making your own decisions is changing the make-up of the economy. 

A growing trend

Government and the media are enthusiastic supporters of self-employment but those who choose to work for themselves face delight and dismay in equal measure.

The number of self-employed people in the United Kingdom has almost doubled in the last 20 years to over four and a half million.

They are celebrated for their enterprising nature and ability to create a job for themselves and others.

But there is a tinge of concern as self-employment is also thrust upon less willing participants as employers transfer costs to external contracts.

Behind the headlines it is apparent the new population of the self-employed is made up of happy entrants who create new businesses and less happy recruits who work hard to make a modest living.

In recent years the shift to self-employment has gained ground as the economy adjusts to the aftermath of the financial crash and firms outsource at every opportunity.

A continuing trend

The movement, regardless of the burden placed on individuals, is unlikely to slow down, as technology and the economy combine to create a cohort of low-paid workers.

For employers there is a prize as moving employees to self-employment yields savings in National Insurance and overhead costs.

For employees there may be an initial honeymoon period but lower earnings and insecurity can soon reverse any temporary gain.

For government there is a loss in National Insurance payments from employer and employee that is already affecting the Chancellor’s budget.

In a scenario where self-employment continues to grow, which is likely to be the case, government revenue, which is already suffering, will be driven lower.

On the positive side, self-employment creates jobs and new types of jobs in new areas of the economy and generates new taxes.

But whether such taxes will be enough to address the structural change that is taking place in the economy remains to be seen.

The real issue, however, is the effect self-employment has on new entrants who work hard but struggle to pay their bills and look after their families.

There is a long-term issue for government too as those who are just about managing will find it difficult to plan for ill health or retirement.

For government there is also a concern about where money to pay for education, health and other services will come from as the economy changes with the resultant effect on taxes.

So, self-employment is creating jobs in many parts of the economy and for those involved it brings its own rewards and challenges.