Stagnant income and mental health issues for self-employed
Self-employment has been booming over quite some time, not the least among tech nomads working from wherever there is good internet connection. The number of IT specialists moving to self-employment has increased 48% in five years, according to professional services firm Procorre. But new research from LSE paints an unglamorous picture of being self-employed in general.
Around two-in-five self-employed workers would switch to a salaried job if they could secure the same income, and around one-in-eight would accept a 20% pay cut to switch, a new analysis reveals, according to a new report from London School of Economics and Political Science.
Stagnant incomes and rising costs are also having an impact on the wellbeing of the self-employed, say the authors of “The self-employment trap”, published by the Centre for Economic Performance (CEP) at LSE.
More than a quarter of those surveyed are experiencing “moderate” or “severe” mental health issues compared with 16% of the general population.
“While not being able to find a salaried job at similar pay is the main reason given for being unable to switch, the self-employed also cite concerns about having a lack of skills or training, few job openings and feeling too old.”
The study comes after previous research showing an exodus from self-employment, as incomes failed to recover after the pandemic, the researchers say.
The new report shows that 34% are having trouble paying for basic expenses – a proportion that has shown no change since August 2020. As in a previous report, energy bills are cited as the most challenging issue.
The research, which draws on a representative sample of 1,500 individuals in the self-employed population.
Stephen Machin, director of CEP and co-author of the report, said: “The self-employed, especially the solo self-employed working by themselves, are experiencing on-going challenging financial conditions.
“And more appear to be questioning whether the rewards involved in being self-employed are worth the risks. We found a significant number would be prepared to move to a salaried job for the same income – with, in particular, the solo self-employed and younger individuals expressing a desire to move to a salaried job, even in some cases when this entails a wage-cut.”
Robert Blackburn, co-author of the report and professor of entrepreneurship at the Brett Centre for Entrepreneurship, University of Liverpool, said: “We have previously found that there is a flight from self-employment but these latest results show that there are many who feel trapped. With persistent low incomes, and rising costs, these pressures are clearly affecting their wellbeing.”
Maria Ventura, co-author and PhD candidate at LSE, said that analysis of voting intentions shows that, unusually, older self-employed are switching from Conservatives to Labour.
“This willingness to shift political allegiance implies that the self-employed cannot be ignored in the manifestos of the political parties.”
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