Why are more young people considering self-employment?

For decades, the traditional career path followed a familiar formula: education, employment and gradual progression up the corporate ladder.

Increasingly, however, there is a new option on the table for young people: self-employment.

While fewer young people are self-employed than older workers, interest in working independently continues to grow.

In this article, IPSE's insurance partners, Qdos, look at why the time-honoured move into life as a full-time employee is proving less enticing for young people.

Figures published by Statista show the self-employment rate among 16 to 24-year-olds stood at about 4.9% in the first quarter of 2025, compared with 11.3% among those aged 25 to 49.

While this suggests younger workers remain underrepresented within the self-employed population overall, it does not paint a full picture.

A report from the Youth Futures Foundation found entrepreneurial interest exists, but certain barriers to entry mean this hasn’t yet converted into self-employment.

The study found that among 16 to 25-year-olds, a third of males and a fifth of females want to start their own business.

It also stated:

• One in five people up to the age of 30 who are currently unemployed have plans to start a business.
• Levels of job satisfaction are higher for those who are self-employed than for people in full-time employment.

Separately, research from IPSE found there has been “an increase in self-employment and side hustling” among Gen Z, those aged between 14 and 29.

Such side hustles allow people the chance to develop a business, generate income and develop a client base before committing fully to self-employment.

Today’s younger workers have entered the labour market during a period of significant economic and social change. Many have experienced the effects of the Covid pandemic, rising living costs, technological disruption, and shifting workplace expectations.

As a result, many young professionals place a greater emphasis on flexibility, autonomy and the ability to shape their own careers.

Self-employment offers several advantages that align with these priorities:

• Greater control over working hours
• The ability to choose clients and projects
• Opportunities to build multiple income streams
• The potential to scale a business or personal brand
• Freedom to work remotely or from different locations

For younger generations who have grown up in a digital-first world, self-employment is increasingly viewed as a legitimate and aspirational career choice.

One of the biggest drivers behind growing entrepreneurial interest is technology.

Twenty years ago, launching a business often required significant upfront investment in premises, equipment and marketing. Today, many businesses can be started with relatively modest costs.

Cloud-based software, online marketplaces, social media platforms and digital payment systems enable young entrepreneurs to reach customers quickly and efficiently.

A graphic designer, consultant, software developer or content creator can establish a professional online presence, market their services and secure clients without the overheads associated with a traditional business model.

Social media has transformed how entrepreneurship is perceived. Younger people are regularly exposed to stories of founders, freelancers, consultants and digital business owners who have built successful careers.

While social media can create unrealistic expectations about the ease of building a business, it has undoubtedly increased awareness of self-employment as a viable option.

Online communities, podcasts, mentoring networks and educational content have also made entrepreneurial knowledge more accessible.

Information that once required formal training or industry contacts can now often be accessed freely online.

The move towards self-employment among the younger generation can also be seen in the attitudes of Gen Alpha, those born between 2010 and 2024.

The oldest members of this cohort are set to move into the world of work having grown up in a hyper-digital and ‘always online’ world. It is second nature for them to shape the digital landscape using skills like coding, online creation and artificial intelligence.

Research around the preferences of Gen Alpha reveals a proclivity towards autonomy:

• Almost half of Gen Alpha (46%) use AI as a search engine, while 93% of 15- to 16-year-olds own a smartphone, giving them the ability to shape their own pathway in life and work.
• The world of the influencer is also becoming increasingly popular, with many in Gen Alpha aspiring to become TikTokers, YouTubers or vloggers.
• A 2023 study by Visa found 76% of children aged between eight and 14 want to be their own boss or have a side-hustle

The factors driving young people towards self-employment appear unlikely to disappear.

For small business owners, this represents both an opportunity and a challenge. A growing pool of young freelancers, contractors and entrepreneurs will continue to reshape how work is delivered, how businesses access talent and how new ventures are created.

While success is never guaranteed, many young people see entrepreneurship not simply as an alternative to employment, but as a route to greater autonomy, innovation and long-term opportunity.