Trends in self-employment Nick Palmer, Labour Market Statistics ONS Economic Forum 10 July 2014

1. Trends in self-employment Nick Palmer, Labour Market Statistics ONS Economic Forum 10 July 2014

2. Economic Forum 10 July 2014: self-employment • Contents • Summary of the recent growth in self-employment • – based on headline statistics as published • Address some questions and perceptions • - using supplementary data from the Labour Force Survey

3. 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) ?

4. Economic Forum 10 July 2014: self-employment

5. Economic Forum 10 July 2014: self-employment

6. Economic Forum 10 July 2014: self-employment

7. Economic Forum 10 July 2014: self-employment

8. Economic Forum 10 July 2014: self-employment

9. Economic Forum 10 July 2014: self-employment

10. Economic Forum 10 July 2014: self-employment

11. Economic Forum 10 July 2014: self-employment

12. Economic Forum 10 July 2014: self-employment

13. Economic Forum 10 July 2014: self-employment

14. Economic Forum 10 July 2014: self-employment

15. Economic Forum 10 July 2014: self-employment

16. Economic Forum 10 July 2014: self-employment

17. Economic Forum 10 July 2014: self-employment

18. 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 “stop-gaps” • dominated by long-term self-employed – implying lower outflows • “entrepreneurship“/business growth: continues to be just a small factor

19. 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.

20. Mixed income - compilation Profits and rental • Rental = income earned through ownership of buildings • Annual data source is HMRC data based on self-assessment 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

21. 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

22. Experimental estimates of productivity of self-employed • 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 four-quarter moving averages, based on 2010=100

23. Economic Forum 10 July 2014: self-employment Productivity of Employees and Self-Employed4 Quarter Moving Average

24. Economic Forum 10 July 2014: self-employment Productivity of Employees and Self-Employed4 Quarter Moving Average

25. Economic Forum 10 July 2014: self-employment Productivity of Employees and Self-Employed - Construction4 Quarter Moving Average

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