New analysis of self-employed people in the UK, authored and published Centre for Economic Performance (CEP) at the London School of Economics and Political Science (LSE), and the University of Liverpool Management School, shows an exodus of those who are full-time or who employ others, while most who remain in self-employment have been suffering falling incomes and profits.
The report “From Covid-19 to collapse? The self-employed and the cost of living crisis”, reveals that the share of self-employed people who are having trouble paying for basic expenses has risen since April 2022. More than two in five say that energy bills are now a major challenge.
The research, which draws on a representative sample of 1,500 individuals in the self-employed population, also raises concerns about pension savings among the self-employed.
Almost three-quarters of the group do not make contributions to a personal pension scheme, with a lack of sufficient income being reported as the main reason.
The authors examine the views of the self-employed on a government-backed pension scheme. They find that the self-employed would be willing to contribute up to five per cent of their earnings, provided that there is a government bonus contribution of three per cent.
Professor Robert Blackburn, co-author of the report and Professor of Entrepreneurship at the Brett Centre for Entrepreneurship, University of Liverpool, said: “The cost of living crisis is hitting small businesses particularly hard, with the increase in energy prices and other input costs compounding the effects of the pandemic. Inflation has taken over as the most significant challenge that the self-employed have to overcome. Their incomes, like that of employees, are falling sharply in real terms, and this is inhibiting their entrepreneurial potential.”
The sixth LSE-CEP Survey of self-employment was carried out from 17 to 29 November 2022. The results are based on 1,500 responses. The responses are weighted to represent the population of self-employed workers.
The full report is available here: From Covid-19 to collapse? The self-employed and the cost of living crisis