In the face of an unprecedented rise in self-employment, the challenges for these more than five million workers are many. Labour is today convening a self-employed round table to discuss what can be offered to address disparity in social security, pay, job security and protections at work.
As Matthew Taylor indicated in his recent report Good Work, for some, self-employment is about taking up opportunities to be their own boss. However, for others, their self-employed status reflects the realities of the UK’s current labour market, where permanent, high quality jobs are being replaced by increasingly insecure, poor quality and “flexible” jobs.
Last year, we hosted a round table looking into the issues of bogus self-employment. We heard how many of these self-employed workers, including plumbers, hairdressers, construction workers, and drivers, still have to work the company hours and wear the company uniform. This bogus self-employment is often driven by unscrupulous employers dodging the responsibilities of being a decent employer, partly because many statutory workplace protections have not kept pace with the change in modern employment models.
In the worst cases, some employers have deliberately adopted a bogus self-employment business model to underpay workers and deny them their rights. In several high-profile cases, the courts have found such individuals to be employees who, therefore, must be afforded the rights of employees. Clearly, the government is not doing nearly enough to crack down on bogus self-employment.
And, whether bogus or genuine, self-employed people face disparities in the social security system. Although 45 per cent of self-employed workers are paid less than the living wage, they receive far less support than employed workers.
The Federation of Small Businesses’ (FSB) survey of their self-employed members showed that security of income was a worry for nearly one in five of them, with a similar number also worrying about not getting paid if they fall ill. A recent survey by the Department for Business, Energy and Industrial Strategy showed that one in three self-employed workers worried about getting ill and that self-employed women were going back to work within days of giving birth.
Self-employed workers have reduced access to social security support, including statutory sick pay, statutory maternity and paternity pay, and industrial injuries benefit. They do not enjoy the protection of the Equality Act. On top of this, a recent Office for Budget Responsibility report shows the impact of a “minimum income floor” (MIF) on self-employed people who have to earn a certain amount before qualifying for any support.
Under this, they are assumed to be earning the minimum wage for 35 hours every week, with support from universal credit (UC) only kicking in thereafter. The problem is that this is assessed on a monthly basis, with no discretion for the natural peaks and troughs of self-employed work, or indeed for the niceties of the occasional holiday. If they took a Christmas break, many self-employed people may suddenly have found that they have not met the DWP’s work requirements, and may be sanctioned as a result.
For some families the shortfall could be as high as £6,000 a year but one self-employed mum, Cornelia, is worried she may be £600 a month worse off on UC than under the legacy tax credit system. She said, “I’d just like to know what to expect really. I can’t budget for anything.”
Unfortunately, the measures introduced by the government in the budget to reduce the devastating impact of the UC programme on debt, rent arrears and foodbank use, did not extend to self-employed workers on low incomes.
Labour has repeatedly called for a change in UC for self-employed workers from the monthly assessment for self-employed workers to a yearly one, to account for volatile working patterns.
There are other issues self-employed workers face, very similar to other workers in insecure contract work, such as security in housing tenancies or being able to get a mortgage.
Labour’s self-employed round table will be an opportunity to discuss what can be offered to the genuinely self-employed to help them deal with the risks and issues they face, and often lack adequate protection for, especially when compared to employees. We want to discuss the mechanisms, both through the state and other organisations like mutuals, to help the genuinely self-employed deal with sickness, holidays, maternity, paternity, pension provision, mortgage provision and other issues.
The government is not doing anywhere near enough on this. The self-employed are a growing proportion of those in work now making up 15 per cent of the workforce and their concerns need to be adequately addressed. Labour is determined to do so.
Debbie Abrahams is shadow work and pensions secretary. Rebecca Long-Bailey is shadow business, energy and industrial strategy secretary
*This joint article originally appeared in the Times Red Box on 16th January 2017*