Numbers of self-employed set to outstrip public sector workers

Microbusiness owners and the self-employed are emerging as a powerful electoral force that political parties will need to win over if they’re to gain office, an RSA project is set to argue.

Some of the key findings of The Power of Small include:

• Firms with 1-9 employees have gone up by 550,000 since 2008.

• Self-employed and micro-businesses emerge as the a electoral group.

• 65 percent of microbusinesses think that the Government is not providing enough support.

• Only ten percent of microbusiness owners think that Labour has the best pro-business policies.

View the The Power of Small report

Carried out in partnership with Etsy.com, the RSA found that the UK’s microbusiness community is booming, with numbers increasing by around 13 percent, or 620,000 since 2008.

Their upcoming report, to be published in May, is expected to conclude that on current rates of growth, the number of self-employed people will outstrip those working in public sector jobs by 2018.

According to the ONS, microbusinesses now account for 95 percent of all private sector businesses and 32 percent of all private sector employment in the UK.

However, RSA researchers found that currently over half of microbusinesses (defined as firms with one to nine employees) fold within their first three years of trading.

Their upcoming report is likely to argue that the Government should re-examine whether its support for small businesses goes far enough, and whether its tax and welfare policies encourage microbusinesses to grow into small and medium enterprises.

Emerging data from an RSA/Populus poll of 1006 microbusinesses, commissioned to coincide with the report, revealed that currently nearly half of microbusiness owners (43 percent) think that the government is not doing enough to support them. Carried out between Feb 24th – March 12th 2014, the survey showed that:

• 22 percent strongly agree and 41 percent slightly agree that the economy is getting better and the country is heading in the right direction.

• 77 percent do not trust politicians to put the interests of the country above the interests of their party and themselves, and 61 percent disagree that the welfare system is fair to them.

• Only ten percent of microbusiness owners think Labour has the best pro-business policies (Conservatives 46 percent, UKIP 7 percent, Lib Dems 5 percent).

• 63 percent support a significant cap on immigration (19 percent against).

• They are split when it comes to voting YES in a referendum to leave the European Union (37 percent in favour, 41 percent against).

Commenting on the report, RSA Senior Researcher Benedict Dellot, said:

“Microbusinesses are the new political force to be reckoned with, but the government has yet to win their favour. Business support remains confusing and superficial, and we have an archaic welfare system that does little to recognise or reward those who want to work for themselves. This is despite small business owners being the country’s biggest job creators. The key lesson from our survey is that parties of all sides need to get beyond the rhetoric and start delivering policies that actually help the go-getters and the risk-takers to achieve their potential – not just for their benefit but for that of wider society.”

The Power of Small found long-term drivers of the microbusiness boom to include:

• New culture – More people now value autonomy and meaning at work, particularly young people who dislike hierarchy more than their forebears. We are witnessing a shift in values where people want to be masters of their own fates

• New organisations – Typical wage work in organisations is becoming more precarious as benefits are squeezed (e.g. pensions) and real wages stagnate. The result is that self-employment has become a more attractive alternative

• New demographics – An ageing society has increased the supply of healthy retirees looking for work, while at the same time a baby boom is creating a new breed of families searching for more flexible forms of working

• New markets – The UK’s industrial base continues to shift from manufacturing to the service sector (e.g. healthcare), where small businesses thrive. Moreover, we are seeing the growth of the ‘artisanal economy’, with consumers looking for more personalised, tailored, niche products – things small businesses are more able to deliver

• New technology - Ebay and Etsy have enabled people to turn their hobbies into fully fledged businesses, while freelancing websites like Odesk and Elance have allowed more people to earn money from their talents

View the The Power of Small report

Notes to editors

1. For more information contact RSA Head of Media Luke Robinson on 020 7451 6893 or 07799 737 970 or luke.robinson@rsa.org.uk 

2. Etsy is a marketplace where people around the world connect to buy and sell unique goods. Their mission is to re-imagine commerce to build a more fulfilling and lasting world. Etsy is headquartered in Brooklyn, NY.