As we have seen, people tend to value the benefits of self-employment. But they also face challenges to having successful careers and making the most of London’s labour market opportunities. Self-employed workers in the capital are more likely than employees to have earnings below the poverty threshold, without the security and benefits of employment or any meaningful income from other sources. More than half of London’s self-employed workers have been financially set back by the recession – some of them without government support.
In this context, supporting low-paid self-employed workers to grow their earnings and recover from the pandemic should be a priority. Despite being well motivated, however, low-paid self-employed workers often encounter barriers to realising the benefits of self-employment. Some of the challenges they face are specific to self-employment and are usually more acute among people on low incomes.
A review of existing studies, focus groups and interviews suggests that the following barriers are undermining the quality of working life for self-employed Londoners:
- Poor client practices: Late payment and last-minute cancellations affect their financial situation, and they are at greater risk from bullying, harassment and breaches of health and safety laws.
- Difficulty finding work: Procurement processes can unknowingly exclude self-employed workers.
- Finding adequate and affordable workspace: Most say that having an office or workspace is essential, but prices remain very high.
- Lack of support, development and training opportunities: Self-employed workers are responsible for their own development, but access to learning and general support is unequal.
1. Poor client practices
Self-employed people often complain that they experience working practices that would be unacceptable in an employer-employee relationship. These practices range from late payment and requiring significant overtime, to last-minute cancellations, bullying and sexual harassment.
Despite the popularity of platforms to find work and ensure prompt payment, freelancers speak of having to constantly chase payment of their invoices. IPSE, the association for the self-employed, found in one survey that freelancers spend on average 20 days a year chasing payments. 32
Focus group participants:
“I was once told by a client that they wouldn’t pay me a day’s work because I arrived a few minutes late.”
“You work that money into your monthly budget, and that can be £500 a week suddenly gone if they cancel.”
Generally, self-employed people have less power in the working relationship than their client, leaving them especially vulnerable to poor – and sometimes even exploitative – working practices.
Concern about these practices was mentioned by several members of our focus group, but opportunities for redress are limited. Self-employed workers are left responsible for challenging poor employment practices with their client directly, or through a small claims court, but many lack the funds to proceed down this route and have no way to enforce appropriate treatment themselves. And where rights and protections for contractors do exist on a par with employee rights – in the case of health and safety for example – they often lack enforcement. There is not a single enforcement body to uphold employment rights for employees or self-employed workers.
Trade unions can offer support in challenging poor client practices, but trade union membership is lower among self-employed people. About seven per cent of self-employed people nationally belong to a union, compared to 23 per cent of employees 33 34 – though union membership has seen a slight uptick in recent years, particularly in the creative industries and construction.
Quite often, however, the main barrier to accessing support is not knowing that it exists. For example, most attendees of our focus group were unaware of the support options available to them when presented with a list of examples (including mentoring, free courses and seed funding). We expect awareness of support options to vary widely across groups and sectors.
2. Finding work
One of the drawbacks of self-employment is that it can feel like you are “applying for work constantly”, as one of our focus group participants put it. Some procurement processes require a significant amount of “free work” to win bids, and this puts small businesses and freelancers at a disadvantage since they cannot afford to carry out large amounts of unpaid work.
According to surveys of freelancers by IPSE, finding work remains one of the main challenges of self-employment – and one-third of people under the age of 35 have been asked to submit an unpaid piece of work as a prerequisite to winning a contract. There is UK government guidance on improving market access for small businesses, but more needs to be done to increase take-up of good practice.
3. Finding adequate and affordable workspace
Not all self-employed workers need a dedicated workspace, though many regard it as an essential part of their professional identity. Yet adequate workspace in London is often unaffordable for many self-employed people.
The issue of finding workspace that is suitable and affordable came up strongly in our focus group and interviews:
Focus group participants:
“Clients base a lot of their decision on trust and having an office can really help establish that. Working from home does not appear so professional and doesn’t let you win those larger clients.”
“I often found myself with three hours between meetings and I needed somewhere quiet to work that wasn’t a coffee shop. A way to think about using that vacant space for co-working models would be really helpful.”
The issue of finding adequate and affordable workspace was particularly acute for those not engaged in office work, such as artists or makers. For example, according to research commissioned by the Greater London Authority, the number of artists’ workspaces has declined sharply over the last decade, while prices have increased. 35 57 sites (24 per cent of the total) are currently at risk of closure within the next five years. This is because so few occupiers own the freehold to sites (around 13 per cent) and are therefore vulnerable to changes of use or redevelopment should the landowner want to move the provider on. In 2014, 56 per cent of sites charged an average of £11+ per square foot for artists’ workspace: by 2017, this had risen to 79 per cent of sites.
“A studio is an integral part of an artist’s identity, a defined workspace that is just there for their creative pursuit”
– Affordable workspace provider
The COVID-19 crisis may be changing norms and expectations around workspace, and the resulting increase in central London commercial vacancy might provide an opportunity for meanwhile use. This may in turn bring office rents down to a level where more self-employed workers can afford them (though competition with residential uses may mean more commercial spaces are converted into homes). But ensuring a long-term supply of affordable workspace is essential.
4. Lack of support, development and training opportunities
Development and training
Unlike employees, self-employed workers have responsibility for their own professional development. But many miss out as courses are costly and time off work is difficult to take. 36 This is particularly the case among low-income self-employed workers. 37
Some self-employed workers can take part in training (or self-train) in their free time – but professional development is easier for workers in the knowledge economy than for occupations that require technical skills and qualifications. We have heard of occupations (for example in transport, construction and professional services) in which clients require industry-mandated certifications and updates to qualifications without offering to cover associated costs. Absence of formal training in such occupations risks undermining the progression into better-paid work.
“We are told constantly to pay for our own education to keep up with the new standards that come in. And on top of it, you’re taking time out of your day to do that work and to be assessed.”
– Focus group participant
One sector where technical skills are dominant is construction. Yet the CITB suggests that for financial reasons, self-employed workers in construction engage in less training than employees:
“Keeping their skills up-to-date beyond basic induction training is very challenging because if they are learning or training, they’re not earning.”
– Industry training provider
This is concerning for a sector with such a large share of self-employment in London (42 per cent). The lack of up-skilling in construction has been the subject of extensive reviews, which show that it has limited the take-up of new technologies in housebuilding. And crucially, workers who have less training may also be at greater risk of injury, since much training in construction is about how to work safely.
The UK’s weakness in lifelong learning for adults is well known. Adults generally receive little financial support to undertake continuous professional development (or switch career) independently of an employer – unless they lack essential qualifications, in which case they are eligible for a free course. The introduction of the apprenticeship levy in 2017 has widened their appeal to adults – but one must enter an employment contract to do an apprenticeship.
Of course, the skills required to be successfully self-employed don’t just involve having or upgrading a formal set of qualifications. Learning how to prospect for new work, pitch and then manage client relationships is key to the job, and “not underselling yourself” is essential to making a living. Yet peer-to-peer support and courses are limited.
Being self-employed can also be very solitary work. Besides not having a team to interact with and learn from, some self-employed workers are overworked and do not take time off, which negatively impacts both their wellbeing and their productivity. 38 Focus group participants:
Focus group participants:
“People do a job they love so they are willing to put up with longer hours. Love and passion for our jobs is to blame. If you’re self-employed and you are not part of a union (I am not part of one I think that’s fairly common) – you don’t have anyone overseeing and you self-sabotage, and one day it catches up with you.”
“I’ve been joining the self-employed section of a union, because I needed help with a tax form – I had made a costly mistake. But I learned other things from talking to others who are self-employed. You can be lucky enough to take on lot of work but it can also burn you out. Resisting that is very tough. Being confident, knowing what you’re worth and refusing to go below that is a really tough thing to do.”
To address issues of support and development, some member organisations have been expanding their offer to self-employed people, for example through support services or peer groups. Peer-to-peer support works better if both parties have an interest or background in common (or have faced similar challenges) – yet we were told that these specifics are quite often overlooked by mentoring schemes.