Self-employment and the gig economy Contents


1.The self-employed are a large and growing part of the UK labour force. Five million people—15% of workers—are now self-employed, and the expansion of self-employment has played an important part in current record employment levels.1 Self-employment takes many forms: from entrepreneurs and “one man band” business owners, to consultants and contractors across industries and pay scales. New technology has facilitated the growth of the “gig economy”, which continues to alter the nature of work in many sectors. There is no good reason to believe the growth in self-employment will not continue.

Box 1: The gig economy

The term “gig economy” is used to refer to a wide range of different types and models of work. A common feature of many of these is a reliance on intermediary digital platforms or apps to connect self-employed workers with work. Gig economy companies often operate in industries that have historically relied on self-employed workforces. New technology, however, enables them to operate on a scale which has substantial implications for the nature of work, the sectors in which they operate and the welfare state.

For example, Uber relies on self-employed drivers using its app to provide taxi services to customers. Taxi drivers in the UK are usually self-employed. Uber’s employment model is therefore not new; but the number of drivers working on its platform (currently over 40,000) means that it has a substantial opportunity to disrupt and reshape existing working practices in the industry.

2.The growth of self-employment and the gig economy poses a challenge for a welfare state established at a time when paid work was primarily carried out by men in full-time employee jobs and the self-employed were a smaller and more easily defined group. Today, those assumptions do not hold true on many counts. A string of court cases testing employment status, and with it rights to minimum basic standards of support, evidence established definitions of employment and self-employment that are straining at the leash. Welfare policies have, to some extent, adapted to the growth in self-employment. Yet flagship policies such as Universal Credit and auto-enrolment were designed primarily or wholly with employees in mind. Together, these challenges encompass the two fundamental functions of the welfare system: as a system of contribution, and as a safety net.

3.How the welfare state adapts to the changing labour market is one of the great issues of our time. Our inquiry was cut short by the dissolution of parliament in May 2017 but we felt it was important to make this abridged report. We received a large volume of evidence and documentation, including contracts used by gig economy companies and testimonies from self-employed workers. These are published on our website.

29 April 2017