Changes in UK self-employment by regions and gender

By Darja Reuschke, Victoria Price, Andrew Henley and Elizbeth Daniel. 10th November 2020.

Darja Reuschke is Associate Professor in the School of Geography and Environmental Science at the University of Southampton. She is the Principle Investigator of the project “Addressing inclusivity in the spatial and social impacts of COVID-19 on the self-employed in the UK” funded by the Economic and Social Research Council (ESRC) as part of the UK Research and Innovation’s rapid response to COVID-19.

Victoria Price is Associate Researcher on the UKRI/ESRC self-employment project and PhD student in the School of Geography and Environmental Science at the University of Southampton.

Andrew Henley is Professor of Entrepreneurship and Economics in the Cardiff Business School. He has published research spanning Entrepreneurship and Small Business, Regional Economics and Labour Economics.

Elizbeth Daniel is Professor of Information Management at the Open University. Her research has included the effective use of information systems by organisations, digital entrepreneurship including home based online-entrepreneurship and digital ethnic entrepreneurship.

New evidence based on the ONS Labour Force Survey

The self-employed are a significant group of workers in the UK economy. Their proportion in the workforce had grown to 15.3% in 2019. Using the Quarterly Labour Force Survey (LFS) and the Two-Wave Longitudinal LFS, we have investigated what happened to self-employment during April to June 2020 compared with the previous quarter 2020 and previous years. The examination of change hence covers the period of the full national lockdown. The report provides an early assessment of changes to self-employment in the COVID-19 crisis, with a focus on social characteristics of the self-employed and regions.

The key findings of the report are:
• The strong rise in self-employment in the UK has reversed back four years to 2016 levels.
• Almost half of the total reduction in self-employment in the UK in April-June 2020 compared to Jan-March 2020 happened in London (47% or 109,000 people).
• The dramatic reduction in self-employment is due to more people leaving and fewer people entering self-employment in April-June 2020 compared to previous years. Those who were part-time self-employed or were only self-employed for a short period of time in January-March 2020, were more likely to exit self-employment in April-June 2020.
• Self-employment was most resilient to the crisis in real estate, health and social work and information and communication, that are sectors that were not affected by social distancing measures or were essential sectors. However, there are substantial variations by gender.
• The number of self-employed men decreased proportionately more than the number of self-employed women between Jan-March 2020 to April-June 2020: by -6% versus -0.3%. In some industries, however, women had a greater decrease in self-employment compared to men such as in information and communication and other services.
• Self-employment dropped most in April-June 2020 compared to the previous quarter (Jan-March 2020) in London. London, however, had still the highest self-employment rate in April-June 2020 at 17.3%.
• Compared to the previous year (April-June 2019), Wales experienced the greatest drop in self-employment (by 12% from 14.8% to 12.7% in April-June 2020), but most of this took place before the Covid-19 lockdown.
• Counter to the national decline, self-employment grew in Scotland and the West Midlands between the first and second quarters of 2020, and Northern Ireland remained largely unchanged.
• Eligibility for SEISS has impacted on exits from self-employment which explains some of the disproportionate drop of self-employment in London.

Dr Darja Reuschke
Dr Darja Reuschke