The Self-Employed Landscape Report 2020

  • The total solo self-employed population has shrunk by 5 per cent since 2019 after 11 years of continuous growth
  • The number of self-employed claiming Universal Credit rose by 341 per cent
  • The sharpest decreases were among young self-employed (-11%), less highly skilled male self-employed (-11%) and disabled self-employed people (-8%)
  • Regionally, Yorkshire, Wales and the East of England saw the biggest drops
  • Of all skill groups, the biggest decline was a 20% drop in the number of process plant and machine operatives (SOC8)

The number of solo self-employed in the UK (excluding those who have others working for them) has fallen by five per cent from 4.6 million in 2019 to 4.4 million in 2020. This is a sharp drop for a sector that grew continuously between 2008 and 2019 – by a total of 40 per cent.

The financial impact of the pandemic has been uneven across the sector, with the sharpest drops in solo self-employed numbers among young people, men, disabled people and those in less highly skilled groups. The impact varies significantly across regions too, with the sharpest declines in Yorkshire, Wales and the East of England. The financial hit has also led to an enormous increase in solo self-employed people accessing the benefits system.

Skills and occupations

In terms of skills and occupations, the biggest drop was in Standard Occupational Category (SOC) 8. The number of people in this group – which includes process plant and machine operatives – fell by over 90,000 between 2019 and 2020 (a decrease of 20%). However, there were moderate decreases in almost all SOC groups.

The only skill groups that grew in the last year were the second and third highest-skilled groups, SOC2 and SOC3. SOC2 (professional occupations) grew by two per cent and SOC3 (associate and technical occupations) grew by three per cent compared to last year. The result is that the composition of the solo self-employed sector has shifted, so highly skilled freelancers (SOC1-3) now make up nearly half the entire sector (49% - up 3% on last year). The rise of highly skilled freelancers may also account for the fact that despite overall decline, the self-employed sector’s estimated contribution to the economy has risen from £305bn to £316bn in the last year.

Looking at specific occupations, although most declined somewhat between 2019 and 2020, there was also significant variation. The number of people working in the biggest solo self-employed occupational group, construction and building trades, dropped by eight per cent to 405,000. Road transport driver numbers fell by 20 per cent to 261,000 and agricultural and related trades occupational numbers fell by 18 per cent to 175,000.

Among highly skilled freelancers, there was even more variation, with some groups actually seeing growth. While the biggest freelancer group – skilled artistic, literary and media occupations – remained roughly stable at 16 per cent of the freelance sector, the second-biggest freelancer occupational group, managers and proprietors, grew by two per cent. There were also increases in the number of freelancers working in healthcare (+19%), design (+17%), information technology and telecommunications (+8%), sport and fitness (+7%) and business, research and administration (+7%).

Conversely, the third-biggest group, teaching and education professionals, shrank by 11 per cent. There were sharp declines in the number of public service professionals (-29%), mangers and proprietors in hospitality and leisure services (-18%), engineering professionals (-17%), therapy professionals (-15%) and sales and marketing professionals (-8%).

Exclusion and benefit use

Worryingly, one in seven people in the sector (15%) said they became solo self-employed between 2019 and 2020. This equates to 591,000 people who would not have been able to access the government’s Self-Employment Income Support Scheme (SEISS) because they did not file a tax return in 2018/19. Even more newly self-employed may have been excluded too, because this figure only includes those who were still self-employed by Q2 2020: others may have given up their business before then.

Exclusion from SEISS may be a factor in the enormous increase in benefit use among the self-employed. The number of solo self-employed accessing Universal Credit rose by 341 per cent from 47,000 in 2019 to 206,200. Many of these will also have been able to access UC because the government suspended the Minimum Income Floor application criteria.

Disabled self-employed people

Another worrying change in the sector is the steep drop in the number of solo self-employed disabled people – by eight per cent since last year. This marks a sharp break with the last decade, when there was continuous growth in this group as more and more disabled people turned to self-employment for freedom and flexibility. The decline was particularly driven by men (-16%) and over-60s (-16%).

Gender and age

In terms of age, the biggest decline was among the youngest group of freelancers – those aged between 16 and 29. This group – historically already the smallest – contracted by 11 per cent this year. The second-biggest decline was in one of the biggest age groups, 40-49-year-olds, which shrank by seven per cent. There were declines in all other groups except 30-39-year-olds, which remained stable.

The last year has brought about a shift in the gender proportions of the solo self-employed sector. The sector is now 38 per cent female and 62 per cent male – an increase of two percentage points in the proportion of women to men. This is driven by the fact that the decline in the sector has been sharpest among men, with a three per cent decrease in the number of highly skilled male freelancers (SOC groups 1-3) and an 11 per cent decrease in the number in SOC groups 4-9.

Conversely, while there has been an eight per cent decrease in the number of women in SOC groups 4-9, the number of highly skilled female freelancers has actually increased by six per cent. The highly skilled freelance sector is now therefore closer to gender parity at 56 per cent male and 44 per cent female.

Across the UK

The decline of the solo self-employed has been very varied across the UK’s regions. There was a moderate decrease in most regions and the only increases were in the East Midlands (+4%) and Northern Ireland (+17%). The sharpest declines were in Yorkshire and the Humber, the East of England and Wales, all of which saw a drop of 10 per cent. The sharpest declines in the highly skilled freelance sector were also concentrated in the North of England.

Read the full report here

 

Meet the author

Chloe Jepps

Head of Research

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