13 November 2014

The TUC has released research showing that only one in forty jobs created since the recession is full-time.

Much has been made of growth and unemployment in the news recently, with official figures showing unemployment having fallen below 2m. However, stagnant wage growth has posed a challenge to the spin around the figures.

Now, the TUC has revealed that only one in forty new jobs created since the recession is a full-time post. The number of full-time jobs has fallen by 669,000 since 2008 and part-time workers now make up 38% of the workforce. Underemployment – part-time workers who desire a full-time job to maintain a decent standard of living – now stands at 1.3m, double what it was pre-recession.

Frances O’Grady, TUC general secretary, said: “While more people are in work there are still far too few full-time employee jobs for everyone who wants one. It means many working families are on substantially lower incomes as they can only find reduced hours jobs or low-paid self-employment.”

24 in every 40 new jobs created have been part-time, and 26 have been self-employed. A report released by the IPPR in August called the strength of the UK’s economic recovery into question, dubbing Britain the “self-employment capital of western Europe”. Self-employment has grown by more than 1.5 million workers in the last 13 years, now standing at 4.5 million – more than 15% of the labour force.

Spencer Thompson, the IPPR’s senior economic analyst, said “Some have seen it as a negative development, having legitimate concerns whether a lot of the new self-employed are actually employees by another name. The monetary policy committee of the Bank of England, while divided on the issue, see the rise in self-employment as a sign that the labour market may be weaker than it appears.”

False self-employment is a persistent problem, highlighted by the IER in the past. The rise in self-employment is caused in part by those unable to find full-time posts, and in part by bogus self-employment, pushed by companies seeking to evade taxes and avoid fulfilling workers’ rights – holiday pay, sick pay, pensions, and employment protections.

The problem is particularly rampant in some industries – an estimated 50% of those working in construction are falsely self-employed. The Construction Industry Scheme (CIS) is the main facilitator of false self-employment, allowing companies to deduct tax at source while avoiding employment rights.

New tax and insurance measures to combat false self-employment came into force in April 2014. The new regulations require a worker supplied to a business, who no longer passes HMRC’s test for being self-employed, must be added to pay roll and treated as a full employee, with corresponding alterations in the National Insurance Contributions (NICs). However, it has been noted that employers are attempting to circumvent the new tax regulations, with agencies attempting to force workers into “umbrella payroll companies” off-loading NICs and shirking employment entitlements rather than awarding them PAYE status.

Read the IER reports; Undermining Construction: The Corrosive Effects of False Self-Employment and Towards The Insecurity Society: The Tax Trap of Self-Employment for more about false self-employment.