Two million self-employed adults earn less than the minimum wage

New analysis published by the TUC today (Friday) shows that half (49%) of self-employed adults aged 25 and over are earning less than minimum wage – a total of two million people.

Self-employment has accounted for a growing share of the workforce in recent years, rising from 12% of workers in 2001 to 15% in 2018.

But the self-employed earn considerably less than those in employment. In 2016/17 they earned on average £12,300, compared with £21,600 for those in employment. This was also a fall from £13,200 in 2015/16.

The TUC is concerned that the growth in self-employment is driven in part by sham forms of self-employment, which are used by some employers to reduce tax liability, duck the minimum wage and deny workers their rights.

Sham self-employment includes some gig economy workers, and people who are contracted to a single employer through a personal service company, rather than being contracted as an employee.

The two million people in low-paid self-employment are part of at least 3.7 million people in insecure jobs. The other 1.7 million include agency workers, casual workers, seasonal workers, and those whose main job is on a zero-hours contract.

The Taylor Review into modern working practices was published a year ago, but the government has so far failed to take action to tackle insecure employment.

TUC General Secretary Frances O’Grady said:

“Self-employment can be a great option. But it’s clear that it’s not working for everyone, with millions of self-employed workers stuck on poverty pay.

“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.

“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 wants the government to follow up the Taylor Review with:

• A 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.
• A ban on zero-hours contracts to ensure workers get guaranteed hours, allowing them to pay bills and plan childcare.
• Equal pay for agency workers, by ending the Swedish Derogation which acts as an Undercutters’ Charter.
• Allowing trade unions to access workplaces, to support workers most in need of representation.
• Increased resources and powers for enforcement, so that dodgy employers have nowhere to hide.