Poverty pay UK - millions of self-employed earn less than the minimum wage

Published date
28 Sep 2018
Two million out of the UK’s four million self-employed workers are now stuck on poverty pay
A driver looks at a mounted smartphone app screen
We suspect that more and more gig economy workers are being forced into ‘sham self-employment’.

Working for yourself can be a great option, but it’s not easy.

Self-employed people don’t always know how much they’ll earn from one week to the next, which can make it really difficult to make ends meet.

Today we reveal just how hard things are for self-employed workers.

Our figures show that almost half of those over the age of 25 earn less than the minimum wage.

That means two million out the UK’s four million self-employed workers are now stuck on poverty pay – and at least 3.7 million working people in total are now trapped in some form of insecure work.

Self-employment is also on the rise as some gig economy employers force more and more workers into ‘sham self-employment’.

That’s why we want to see a proper crackdown on  bogus self-employment and concrete action by the government to tackle other forms of insecure work.

Poverty pay

The minimum wage for adults over 25 is currently £7.83.

But our analysis shows that 2 million out of a total of almost 4 million self-employed workers aged 25 and over in the UK are now earning less than that figure.

And they’re also earning a lot less than those in employment – just £12,300 on average in 2016/17 compared with £21,600 for employed people.

So despite Theresa May’s promise to change things for families who were ‘just about managing’, all too many people working for themselves are trapped in poverty pay.

I have no idea about how much I’ll earn from week to week, if I’ll be able to make the rent.

Male, aged 26–30, working as a self-employed journalist

Sham self-employment

Self-employment has also been growing in recent years, rising from 12% of workers in 2001 to 15% in 2018.

We suspect that this is partly because more and more gig economy workers are being forced into ‘sham self-employment’.

This isn’t about helping workers earn for themselves, but all about companies like Uber and Hermes dodging tax, ducking the minimum wage and denying workers their full rights.

Taylor Review

Last year’s Taylor Review into modern working practices was far from the game changer needed to tackle insecure work.

We want to see a proper crackdown on  bogus self-employment  and steps  to ensure workers enjoy the same floor of rights as employees, including redundancy pay and family-friendly rights. 

We’re also calling for a ban on  zero-hours contracts  to ensure workers get guaranteed hours, allowing them to pay bills and plan childcare. 

And we’re demanding equal pay for agency workers,  trade union access to workplaces, and more resources and powers for  enforcement so that dodgy employers have nowhere to hide.

But so far we’ve had no action at all from the government.

I phoned in sick and was threatened with a £50 penalty from the contractor I work for under self-employment. While not earning a wage for that day, I was also charged £50.

A self-employed courier who contacted the TUC

Not good enough

Self-employment should be a great option for workers, but it’s clearly not working for everyone.

Far from helping out those who were ‘just about managing’, Theresa May has sat on her hands and done nothing to crack down on businesses that use sham self-employment.

If she’s really serious about building a country that works for everyone, she must act to end insecure work and poverty pay so that every UK worker gets a fair deal.