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Trends in self-employment Nick Palmer, Labour Market Statistics ONS Economic Forum 10 July 2014 1 Economic Forum 10 July 2014: self-employment Contents 1. Summary of the recent growth in self-employment – based on headline statistics as published 2. Address some questions and perceptions - using supplementary data from the Labour Force Survey 2 Economic Forum 10 July 2014: self-employment Questions related to recent growth in self-employment : • Post-recession effects or longer-term structural effects ? • Is it in jobs that drive economic growth ? • How much of it is part-time/limited hours, (and so low income) ? • Are people just taking up self-employment in the absence of other opportunities, • or is this a new generation of young entrepreneurs ? • To what extent is it more people taking up self-employment and to what extent is it people staying self-employed longer (inflows vs outflows) ? 3 Feb-Apr 2014 Dec-Feb 2014 Oct-Dec 2013 Aug-Oct 2013 Jun-Aug 2013 Apr-Jun 2013 Feb-Apr 2013 Dec-Feb 2013 Oct-Dec 2012 Aug-Oct 2012 Jun-Aug 2012 Apr-Jun 2012 Feb-Apr 2012 Dec-Feb 2012 Oct-Dec 2011 Employees Aug-Oct 2011 Jun-Aug 2011 Apr-Jun 2011 Feb-Apr 2011 Dec-Feb 2011 Oct-Dec 2010 Aug-Oct 2010 Jun-Aug 2010 Apr-Jun 2010 25,900 Feb-Apr 2010 Dec-Feb 2010 Oct-Dec 2009 Aug-Oct 2009 Jun-Aug 2009 Apr-Jun 2009 Feb-Apr 2009 Dec-Feb 2009 Oct-Dec 2008 Aug-Oct 2008 Jun-Aug 2008 Apr-Jun 2008 Feb-Apr 2008 Economic Forum 10 July 2014: self-employment Employment: employees compared with self-employed (000s) Self employed 4,600 25,700 4,400 25,500 4,200 25,300 4,000 25,100 3,800 24,900 3,600 24,700 3,400 24,500 3,200 4 Economic Forum 10 July 2014: self-employment Employees and self-employed: changes since Q1 2008 (thousands) 1,000 800 600 400 Selfemployed 200 Employees etc 0 -200 Total employment -400 -600 -800 2014 Q1 2013 Q4 2013 Q3 2013 Q2 2013 Q1 2012 Q4 2012 Q3 2012 Q2 2012 Q1 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2010 Q4 2010 Q3 2010 Q2 2010 Q1 2009 Q4 2009 Q3 2009 Q2 2009 Q1 2008 Q4 2008 Q3 2008 Q2 -1,000 5 Economic Forum 10 July 2014: self-employment Self-employed by industry (LFS), thousands 0 200 400 600 800 1,000 Construction Professional, scientific & technical activities Other services Wholesale, retail & repair of motor vehicles Administrative & support services Human health & social work activities Transport & storage Agriculture, forestry, fishing, mining, … Jan-Mar 2014 Jan-Mar 2013 Education Manufacturing Information & communication Accommodation and food services Financial & insurance activities Real estate activities Public admin & defence; social security 6 Economic Forum 10 July 2014: self-employment Self-employed by industry (LFS), thousands -50 -25 0 25 50 75 100 Construction Professional, scientific & technical activities Other services Agriculture, forestry, fishing, mining, energy & water Education Wholesale, retail & repair of motor vehicles Change Q1 2013 to Q1 2014 Administrative & support services Financial & insurance activities Transport & storage Real estate activities Change Q1 2008 to Q1 2013 Human health & social work activities Public admin & defence; social security Manufacturing Accommodation and food services Information & communication 7 Economic Forum 10 July 2014: self-employment Self-employed by main occupation group (thousands) 0 200 400 600 800 1,000 1,200 Professionals Craft and related trades workers Managers Service and sales workers Technicians and associate professionals 2014Q1 2013Q1 Elementary occupations Plant and machine operators, and assemblers Skilled agricultural, forestry and fishery workers Clerical support workers 8 Economic Forum 10 July 2014: self-employment 9 Economic Forum 10 July 2014: self-employment Employees and Self-employed: age distributions (%), Jan-Mar 2014 Employees Self-Employed 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 16-24 25-34 35-49 50-64 65+ 10 Economic Forum 10 July 2014: self-employment Self-employed: age distributions (%), Jan-Mar 2008 and Jan-Mar 2014 2008 2014 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 16-24 25-34 35-49 50-64 65+ 11 Economic Forum 10 July 2014: self-employment Employees: age distributions (%), Jan-Mar 2008 and Jan-Mar 2014 2008 2014 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 16-24 25-34 35-49 50-64 65+12 Economic Forum 10 July 2014: self-employment 30 Employees and Self-employed by length of time with current employer/selfemployed, % distribution, Jan-Mar 2014 Employees Self-employed 25 20 15 10 5 0 Less than 3 months 3 months but 6 months but 1 year but less 2 years but less than 6 less than 12 than 2 less than 5 5 years but less than 10 10 years but less than 20 20 years or 13 more Economic Forum 10 July 2014: self-employment Self-employed by length of time self-employed, thousands 1,200 Jan-Mar 2012 Jan-Mar 2013 Jan-Mar 2014 1,000 800 600 400 200 0 Less than 3 months 3 months but 6 months but 1 year but less 2 years but less than 6 less than 12 than 2 less than 5 5 years but less than 10 10 years but less than 20 20 years or more14 Economic Forum 10 July 2014: self-employment Usual weekly hours: % distribution, self-employed compared with employees, Jan-Mar 2014 60% Employees Self-employed 50% 40% 30% 20% 10% 0% Less than 6 Hours 6 up to 15 hours 16 up to 30 hours 31 up to 45 hours Over 45 hours 15 Economic Forum 10 July 2014: self-employment Usual weekly hours: self-employed 1,800 1,600 31 up to 45 hours 1,400 Over 45 hours 1,200 1,000 16 up to 30 hours 800 600 6 up to 15 hours 400 200 0 Jan-Mar 2007 Jan-Mar 2008 Jan-Mar 2009 Jan-Mar 2010 Jan-Mar 2011 Jan-Mar 2012 Jan-Mar 2013 Jan-Mar 2014 Less than 6 Hours 16 Economic Forum 10 July 2014: self-employment Self-employed by whether has employees or not, Q1 2007 to Q1 2014 (thousands) 5,000 4,500 Total self-employed 4,000 3,500 3,000 2,500 2,000 Self-employed persons without employees (ownaccount workers) 1,500 1,000 500 Self-employed persons with employees (employers) 0 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 2010Q4 2011Q3 2012Q2 2013Q1 2013Q4 17 Economic Forum 10 July 2014: self-employment Summary/Conclusions Recent strong growth in self-employment: • reflects a mixture of post-recession effects and longer-term structural changes • broadly based in terms of industries/occupations and working patterns • partly reflects ageing workforce generally • and older profile when compared with employees • mostly among the longer established / little evidence of increase in “stopgaps” • dominated by long-term self-employed – implying lower outflows • “entrepreneurship“/business growth: continues to be just a small factor 18 Self-employment income • Mixed income = National Accounts measure of the income of unincorporated enterprises owned by members of households – part of GDP(I). • Work by the owner or members of their family cannot be distinguished from the owner's profits as entrepreneur. • Mixed income for the household sector is calculated as profits + rental income – holding gains. 19 Mixed income - compilation Profits and rental • Rental = income earned through ownership of buildings • Annual data source is HMRC data based on selfassessment form – data for 2012/13 will be in BB14 • Series extended for later periods using growth in labour market indicators - LFS self employment, average weekly earnings (AWE) Holding gains • Gains and losses accrued to owners of assets and liabilities purely as a result of holding them over time. • Data supplied as part of estimation of gross capital formation 20 Output of the self-employed • ONS Interdepartmental Business Register (IDBR) used as sampling frame for the Annual Business Survey • Register includes all UK businesses registered for either value added tax (VAT) or pay as you earn (PAYE) • But missing units include self-employed, businesses not registered for VAT/PAYE, businesses without employees, etc. • To overcome this issue, IDBR under-coverage adjustments are made as part of annual Supply and Use balancing process • An adjustment factor is applied to estimates of market sector output and intermediate consumption at the UK SIC (2007) class level • Adjustment factors vary by industry; based on periodic analysis using additional data from HMRC – last formally updated for Blue Book 2006 21 Experimental estimates of productivity of selfemployed • No direct information is collected on the output of employees or the self-employed • Income approach is used to apportion output, utilising development work from the sectional unit labour costs system. Income weights are defined as (COE+GOS)/GDP(Y) for employees, and one minus this (= mixed income/GDP(Y)) for the self-employed • These income weights are consistent with those implied in the national accounts, and are applied to indices of GVA to derive synthetic GVA indices for employees and the self-employed separately • System utilises new hours estimates developed to meet ESA requirements, with split between employees and the self-employed • Estimates are non-seasonally adjusted, and presented as fourquarter moving averages, based on 2010=100 22 Economic Forum 10 July 2014: self-employment Index 2010=100 Productivity of Employees and Self-Employed 4 Quarter Moving Average 120 110 100 90 80 Self Employed Output per Hour (Whole Economy) 70 Employee Output per Hour (Whole Economy) 60 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 23 2014 Economic Forum 10 July 2014: self-employment Productivity of Employees and Self-Employed Index 2010=100 4 Quarter Moving Average 120 115 110 105 100 95 90 Self Employed Output per Hour (Services) 85 80 Employee Output per Hour (Services) 75 70 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 24 2014 Economic Forum 10 July 2014: self-employment Index 2010=100 Productivity of Employees and Self-Employed - Construction 4 Quarter Moving Average 120 115 110 105 100 95 90 85 Self Employed Output per Hour (Construction) 80 Employee Output per Hour (Construction) 75 70 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 25 2014 Email: [email protected] Twitter: @ONS #ONSeconomy Website: ons.gov.uk/ons/about-ons/getinvolved/events/events/economic-forum/index.html 26