The Association of Independent Professionals and the Self Employed (IPSE) has welcomed a new report by the Intergenerational Commission for the Resolution Foundation entitled A New Generational Contract: The final report of the Intergenerational Commission, which emphasises the significance of self-employment among baby boomers, Generation X and millennials.
The report focused on intergenerational gaps in opportunity and income between the three generational groups, but also reveals that, while self-employment has been growing in each, it is especially prevalent among the youngest (millennial) group if they do not possess degrees.
Self-employment, a category which includes highly skilled contracting professionals and successful entrepreneurs at one end of the scale and low-skilled, more precariously engaged “gig” workers at the other, has grown by 50% since 2001 to hit a grand total of 4.8 million people – 15% of the British workforce.
In the 16 to 24-year-old category, however, self-employment has soared by 74%, rising from 104,000 in 2001 to 181,000 in 2016. Over the same interval, it rose from among those aged 65 years and over from 159,000 to 469,000.
Among the recommendations arising from the study is a form of pension auto-enrolment. While independent contracting professionals working via Umbrella Companies already benefit from this, in general the number of self-employed people saving for their retirement is in decline.
The Resolution Foundation proposes defaulting self-employed people into a pension, probably with Nest who already manage much of the auto-enrolment pension funds of employees. An end client would be required to make a pension contribution for any self-employed person they engage upon completion of the contract.
IPSE, however, has drawn attention to the fact that self-employed people, by contrast with employees, have no entitlement to tax relief for training in new skills. Chris Bryce, the association’s CEO, said that the new report confirmed what IPSE had been saying for a long time: namely, the burgeoning growth in self-employment since 2000 amounts to a structural, not a cyclical, change in the country’s workforce.
“However, with close to 4.8 million people now choosing to work for themselves, the Government’s training and skills policy is increasingly out of touch with the way people work.
“One of the biggest barriers to self-employed people improving their circumstances is poor access to training. Extending tax relief for training to the self-employed will help younger self-employed people gain skills to enable them to progress in their careers. It will also ensure that the UK can extract maximum benefit from its flexible labour market.”