Many countries offer public funding to help people their own businesses or stay self-employed, because self-employment is seen as a driver of innovation, job growth, and economic development – but research using Understanding Society suggests public spending on self-employment policies could be better targeted.
Author Lixin Cai at the Future of Employment and Skills Research Centre at the University of Adelaide used Waves 1-10 of Understanding Society to look at people’s labour market status over time. He wanted to see how many people moved from being self-employed to employing others, which has not been widely studied up to now.
Most self-employed people begin as sole traders, and the research asked: “Is solo self-employment a pathway to becoming an employer? If it is, then public investment in self-employment is justifiable because it can lead to more job opportunities in the future. Otherwise, the policy’s effectiveness is in doubt.”
The results showed:
- Compared with those who were not employed in the previous year, people in solo self-employment have a probability of employing someone which is only 1.4 percentage points higher for men and 0.8pp for women.
- Compared to employees, the differences are even smaller: 0.3 and 0 percentage points, respectively.
The research concludes that “there is no evidence to support that solo self-employment acts as a steppingstone to employership for UK workers”, and adds: “These findings suggest that public spending on self-employment policies could be of better value for money if it is targeted at workers who are more likely to grow into an employer.”
EmploymentPolitics and social attitudes
