Last updated on January 30th, 2015 at 04:08 pm
There has been a lot of coverage in the press recently about the rise of self employment in the US and the UK. Surveys suggest that this latest rise in self employment has corresponded with the recession and the resultant high unemployment, which is not surprising as entrepreneurial individuals have used self-employment as a way out of unemployment.
But, what has been interesting is that according to ONS figures, self employment continued to rise even when job vacancies were also rising. Even though the default setting for most workers is for employment not self employment, these ONS statistics reveal that a large number of people are choosing self employment over employment and not simply being forced into it.
Actually, within the millennial generation, (who will incidentally make up 50% of the work-force by 2020), it seems that 35% of employed millennials have a business on the side and 72% wish to quit their jobs to become independent suggests a study by global freelance marketplace, oDesk and Millennial Branding.
So, what’s the appeal, why are work workers still being drawn into self employment even though employment opportunities are rising?
Well, following the 2008 crash and ensuing: recession, mass redundancies and high unemployment, employment within companies stopped feeling like a certainty or a safe place to be. The sense of job security had been severely eroded. As well, as this due to increased market competition and lay-off, many employees were having to work longer hours, doing more work and with limited pay rises, which has led to 87% of the employed feeling disengaged or actively disengaged from their jobs, according to a Gallup survey.
Its no surprise then that given the backdrop of job insecurity and worker disengagement that self employment and contracting look like a very attractive option. For example, you are master of your own destiny and can’t easily be fired, you have more flexibility, you can earn substantially higher hourly rates and you have more choice over the type of work you do. In fact, studies show that self employed workers are more satisfied with their jobs than the employed.
Also, thanks to the rise of online freelance marketplaces like oDesk and elance, its never been easy for a rookie or experienced contractor to find freelance work and develop a portfolio of clients , spreading risk and not having your eggs all in one basket like with a job. So, in this sense its lower risk.
Beware although there is a perception that the self employed are richer, some studies suggest that the self employed actually earn about the same as employees when all things are considered. How can this be? Well, even though the hourly rate may be higher, self employed and contractors can often be missing out of company pension contributions, holiday pay, continuous employment, employment perks and often have to pay more to get credit, particularly mortgages. Although with a bit of research the self employed can find a competitive contractor mortgage at good rates which can help them to mitigate this particular risk. Also, the UK government has been acknowledging the rise in numbers of self-employed and is beginning to make changes to make it more financially hospitable for contractors.
So, in answer to my original question as to whether self employment is a safer bet than employment. While I can’t categorically say its safer than being employed, given the current job instability and massive rise in freelance job opportunities, I think being self employed is at least as safe as being employed and all workers should consider it as a viable career option.
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