Why the self-employed population could be more buoyant than we thought

Newly released data from the 2021 Census indicates that the self-employed population could in fact be far more buoyant than previously thought.

With Census information arriving only once every decade, we’ve relied on the Office for National Statistics’ Labour Force Survey to give us an indication of overall self-employed numbers in the interluding years. The results suggested that the UK self-employed population fell by an estimated 700,000 individuals since 2019, to 4.3 million.

However, the latest employment data from the 2021 Census calls into question everything we previously thought about the self-employed population. Instead, the overall number operating as self-employed in the UK is closer to 4.7 million, according to the Census.

That is not to say we should stop relying on the ONS’ Labour Force Survey for an estimate, as it is exactly that – an estimate – and our most accurate one at that. It surveys a nationally representative sample of 40,000 people each quarter and continually replaces 20 per cent of that sample each time.

The Census, on the other hand, can be considered the authoritative indicator. Over 24 million households responded to the 2021 Census, capturing a truly representative dataset.

What does the Census 2021 data reveal about self-employment?

As noted above, 4.7 million individuals currently operate as self-employed in the UK, according to the Census. This would account for almost one in ten residents aged 16 years and over (9.6%) and indicates that self-employment continues to play a vital role in the UK economy.

In fact, looking back at the results from the 2011 Census reveals a 7 per cent increase in the self-employed population over the past 10 years (4.4 million in 2011), equivalent to some 300,000 additional individuals operating as self-employed.

Looking at the 2021 Census more closely reveals that 748,000 were self-employed with employees whilst 3.8 million were self-employed without employees. This closely aligns with the findings from our Self-Employed Landscape Report for 2021, which found that there were just over 4 million solo self-employed individuals operating in the UK.

Self-employment also varied at a regional level in 2021, with London and the South West accounting for the highest proportion of the self-employed at 20.3 and 18.4 per cent respectively. At the other end of the spectrum, the North East and the East Midlands accounted for 14.6 and 14.8 per cent.

How does this change our view of the UK's employment rate?

Interestingly, the revised upwards estimation for those operating as self-employed in the UK has changed what we previously thought about the employment rate in the UK, with the number of employees down compared to the Labour Force Survey.

In fact, the data from the Census 2021 shows one million fewer UK workers than in the Labour Force Survey – in sharp contrast to the record-high employment rate that we’ve all heard so much about.

When government has repeatedly celebrated record high employment figures, it is vital that they now recognise the dynamic and often-overlooked role of the self-employed in driving productivity and growth, rather than hitting the sector with tax increases and ill-thought through tax rules.