It’s the gig economy, stupid

The vast majority of new jobs in the UK were created by the self-employed. Unless we’ve had a sudden rush of entrepreneurialism, it’s a warning sign that the gig economy is changing the structure of work.

Bill Clinton’s campaign strategist James Careville coined the phrase ‘It’s the economy, stupid”. If I was a strategist for Jeremy Corbyn – and I never will be – I’d be updating the phrase. Why does the UK have record employment but slowing wage growth – it’s the gig economy, stupid.

more than three quarters of those can be accounted for by the growth in self-employed people

Although nobody can say for sure, it does seem it’s at least a contributory cause to the slow growth in wages which is shackling the western world. Whilst yesterday’s employment data shows there are 160,000 more people employed in Q4 2014, compared with the same quarter a year earlier, more than three quarters of those can be accounted for by the growth in self-employed people. That seems to be the headline the media missed.

There’s nothing new in this. Take a look at the chart. The number of jobs has been steadily growing, but so has the proportion of those jobs that are really self-employed people. Of course, jobs have to grow in number because the population is increasing, but the proportion who are self-employed points to the rising emphasis of the gig economy.

Sure, many of those self-employed will be entrepreneurs and business people striking out on their own. Many though, will be zero hours contractors forced to set-up as sole traders to compete for lower paid jobs with employers who want to minimise their outlays on pesky things like pensions.

Data source: Office of National Statistics

What’s more, this trend seems to be accelerating. If we look at year on year growth for Q4 over the last few years, we see the number of new jobs accounted for by the self-employed going from 15 percent to 36 percent to 76 percent in Q4 2016..

If most of the newly self-employed are people forced to take zero hours contracts as sole traders, that’s not something the government would be shouting from the rooftops. Best for them that too many people don’t notice the statistics lying beneath the headlines.

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