Covid leading many to consider leaving self employment

More than half (58%) of self-employed workers had less work than usual in August 2020 – and one in five now anticipate leaving self-employment, according to a new study.

Research from LSE’s Centre for Economic Performance (CEP), says the easing of pandemic restrictions over the summer only had a marginal effect on the self-employed with 32 per cent of self-employed workers saying they had fewer than 10 hours of work a week in August.

However, self-employed workers who find work through digital apps in the “gig economy” – for instance, delivery drivers and private hire drivers, had a different experience, with more than a quarter (28 per cent) reporting more work than usual in August.  Nevertheless, 78% said they felt their health was at risk as a result of working, but they feared losing future work if they didn’t keep working.

Women were more likely to have less work than usual in August than men, after taking account of differences in respondents’ ability to work from home.

The report – Covid-19 and the Self-Employed: Six Months into the Crisis – also finds that:

• 28 per cent of respondents had applied for a second grant under the Self-Employment Income Support Scheme (SEISS).
• Of those who had not applied for either the first or second rounds of SEISS grant almost two in five (38 per cent) were not sure of their eligibility.
• A third of respondents think normal activity will not resume until after February 2021 – and one in 10 think it will never resume.
• One in five consider it likely that they’ll leave self-employment as a result of the crisis – this rises to 59 per cent of those aged under 25.
• The newly self-employed are more than twice as likely to report having trouble with basic expenses when compared to other self-employed workers (52 per cent versus 24 per cent).

Stephen Machin, co-author and director of the Centre for Economic Performance, said: “While the growth in self-employment has been one of the key trends in the labour market in the past two decades, there are now early signals that this trend could be set to reverse.

“By the summer, there had already been a sharp fall in the number of self-employed workers – this may be primarily due to the lockdown, but for some it will be due to realising the risks of self-employment. The Covid-19 crisis has vividly illustrated the social insurance available to different types of workers, with many experiencing the basic safety net of Universal Credit for the first time.”

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