Almost half of self-employed people aged over 25 are earning less than the minimum wage, according to new research.
The TUC has published an analysis indicating that up to two million people are earning less than the hourly rate of £7.83 for over-25s, which it blamed largely on “sham self-employment”.
The representative body for the self-employed, however, accused the TUC of conflating self-employment with grey areas within the gig economy and including part-time self-employment in its figures.
The TUC report claimed that the two million people who were in low-paid self-employment were part of at least 3.7 million people in insecure jobs, with the remaining 1.7 million including agency workers, casual workers, seasonal workers and others with zero-hours contracts.
The analysis, drawing on the ONS Labour Force Survey (Q2, 2018) and the Family Resources Survey, found that in 2016-17 (the most up-to-date figures) self-employed people earned on average £12,300 compared with £21,600 for those in employment – a fall from £13,200 in 2015-16.
TUC general secretary Frances O’Grady said although she recognised that self-employment was a great option for some, it was “clear that it’s not working for everyone, with millions of self-employed workers stuck on poverty pay”.
She added: “Too many workers have been forced into sham self-employment – like at Uber and Hermes. It’s not about helping workers, it’s all about companies dodging tax, ducking the minimum wage and denying workers their full rights.
O’Grady criticised the prime minister for not acting on the issue. “Theresa May promised to change things for ‘just about managing’ families, but she’s done nothing. She should be cracking down on businesses that use sham self-employment. She should ban zero-hours contracts. And she should give agency workers the right to equal pay to stop undercutting and encourage employers to create more permanent jobs.”
The TUC called on the government to act on the Taylor Review and end the Swedish Derogation (a measure that ministers had signalled earlier this year it would repeal), which it said had been used to undercut the pay of employed staff and reduce the pay of temporary staff. Under the Agency Worker Regulations 2010 temps should, after 12 weeks, receive the same basic pay and conditions as permanent staff.
The Association of Independent Professionals and the Self-Employed (IPSE) agreed that more protection was needed for the self-employed but Andy Chamberlain, deputy director of policy, said: “The TUC’s limited analysis does not chime with what the self-employed themselves say about their experiences. Survey after survey tells us loud and clear that on average the self-employed are happier than employees, valuing autonomy and flexibility.”
He added: “There are 1.5 million part-time self-employed people in the UK, and it is likely these account for many of the people the TUC analysis suggested were earning less than the minimum wage. For most, gig economy work provides a source of additional, flexible income that the majority are very happy to have.”
He warned against conflating terms like bogus self-employment with the gig economy or wider self-employment and cited a new report from Oxford University indicating that Uber drivers earned £11 an hour after costs while working a 30-hour week. The voluntary London Living Wage is set at £10.20.
Chamberlain added: “While we must protect vulnerable workers, it would be a mistake to conflate ‘bogus self-employment’ with the ‘gig economy’ or wider self-employment – and then try to regulate these ways of working into oblivion. That just hurts the overwhelming majority of people who actively chose to work in this way.”
The Oxford Uber report found that the median self-reported gross weekly income (including income streams other than Uber) among drivers was £460, considerably lower than the £596 median gross weekly pay among London workers. But most drivers reported higher satisfaction levels than the London average.