SMF Workforce presentation.pdf
The UK’s changing labour market and the employment divide
@SMFthinktank | smf.co.uk
Policy context Taxation, regulation and broader policy are structured around ‘employment’ as the norm ▪ National Living Wage ▪ Auto-enrolment ▪ National Insurance regime ▪ Benefits and Universal Credit
Taylor review of employment practices Treasury policy on National Insurance Contributions
Changing shape of labour market Proportion of workforce, 2000-2016
Source: Resolution Foundation
Increase in self-employment Increase in self-employment by sector
Source: SMF
0 Mar-May 1992 Dec-Feb 1993 Sep-Nov 1993 Jun-Aug 1994 Mar-May 1995 Dec-Feb 1996 Sep-Nov 1996 Jun-Aug 1997 Mar-May 1998 Dec-Feb 1999 Sep-Nov 1999 Jun-Aug 2000 Mar-May 2001 Dec-Feb 2002 Sep-Nov 2002 Jun-Aug 2003 Mar-May 2004 Dec-Feb 2005 Sep-Nov 2005 Jun-Aug 2006 Mar-May 2007 Dec-Feb 2008 Sep-Nov 2008 Jun-Aug 2009 Mar-May 2010 Dec-Feb 2011 Sep-Nov 2011 Jun-Aug 2012 Mar-May 2013 Dec-Feb 2014 Sep-Nov 2014 Jun-Aug 2015 Mar-May 2016
Increase in part-time work
Number of UK workers in full-time and part-time employment (thousands)
25,000
20,000 Total people working fulltime
15,000
10,000
Total people working parttime
5,000
Source: ONS
Zooming in on the differences: employed versus self-employed Proportion of workers reporting that they have autonomy over job tasks
Proportion of workers reporting that they have autonomy over work hours
90%
80%
80%
70%
70%
60%
60%
Selfemployed
50%
Employees
40%
Selfemployed
50%
Employees
40% 30% 30% 20%
20% 10%
10%
0%
0%
A lot
Some A little None
A lot Some A little None Source: SMF analysis of Understanding Society dataset
At the same time the self-employed workforce is very diverse and includes many on low pay Proportion of workers across different sectors: employed vs self-employed 30%
25%
20%
15%
Selfemployed Employees
10%
5%
0%
Source: SMF analysis of Labour Force Survey
Almost half of the self-employed earn below the National Living Wage
Proportion of self-employed workers paid below the equivalent of the National Living Wage
Source: SMF analysis of Family Resources Survey
Problems with the status quo
▪ Uncertainty for workers and employers
▪ Differential treatment for self-employed versus employed creates perverse incentives
▪ Vulnerable segment of self-employed have weak bargaining position and limited workplace entitlements and rights
▪ Treasury potentially denied revenue that it should receive
What should we do? ▪ Long-term review
▪ Even out the tax and NI treatment across all workers
▪ Expand entitlements and benefits for the self-employed ▪ ▪ ▪ ▪
Pension saving Paternity and maternity pay Sickness pay / insurance Training opportunities
▪ Better representation for the self-employed
▪ Develop more predictable rules of thumb for determining employment status for tax and regulatory purposes
@SMFthinktank | smf.co.uk
Policy context Taxation, regulation and broader policy are structured around ‘employment’ as the norm ▪ National Living Wage ▪ Auto-enrolment ▪ National Insurance regime ▪ Benefits and Universal Credit
Taylor review of employment practices Treasury policy on National Insurance Contributions
Changing shape of labour market Proportion of workforce, 2000-2016
Source: Resolution Foundation
Increase in self-employment Increase in self-employment by sector
Source: SMF
0 Mar-May 1992 Dec-Feb 1993 Sep-Nov 1993 Jun-Aug 1994 Mar-May 1995 Dec-Feb 1996 Sep-Nov 1996 Jun-Aug 1997 Mar-May 1998 Dec-Feb 1999 Sep-Nov 1999 Jun-Aug 2000 Mar-May 2001 Dec-Feb 2002 Sep-Nov 2002 Jun-Aug 2003 Mar-May 2004 Dec-Feb 2005 Sep-Nov 2005 Jun-Aug 2006 Mar-May 2007 Dec-Feb 2008 Sep-Nov 2008 Jun-Aug 2009 Mar-May 2010 Dec-Feb 2011 Sep-Nov 2011 Jun-Aug 2012 Mar-May 2013 Dec-Feb 2014 Sep-Nov 2014 Jun-Aug 2015 Mar-May 2016
Increase in part-time work
Number of UK workers in full-time and part-time employment (thousands)
25,000
20,000 Total people working fulltime
15,000
10,000
Total people working parttime
5,000
Source: ONS
Zooming in on the differences: employed versus self-employed Proportion of workers reporting that they have autonomy over job tasks
Proportion of workers reporting that they have autonomy over work hours
90%
80%
80%
70%
70%
60%
60%
Selfemployed
50%
Employees
40%
Selfemployed
50%
Employees
40% 30% 30% 20%
20% 10%
10%
0%
0%
A lot
Some A little None
A lot Some A little None Source: SMF analysis of Understanding Society dataset
At the same time the self-employed workforce is very diverse and includes many on low pay Proportion of workers across different sectors: employed vs self-employed 30%
25%
20%
15%
Selfemployed Employees
10%
5%
0%
Source: SMF analysis of Labour Force Survey
Almost half of the self-employed earn below the National Living Wage
Proportion of self-employed workers paid below the equivalent of the National Living Wage
Source: SMF analysis of Family Resources Survey
Problems with the status quo
▪ Uncertainty for workers and employers
▪ Differential treatment for self-employed versus employed creates perverse incentives
▪ Vulnerable segment of self-employed have weak bargaining position and limited workplace entitlements and rights
▪ Treasury potentially denied revenue that it should receive
What should we do? ▪ Long-term review
▪ Even out the tax and NI treatment across all workers
▪ Expand entitlements and benefits for the self-employed ▪ ▪ ▪ ▪
Pension saving Paternity and maternity pay Sickness pay / insurance Training opportunities
▪ Better representation for the self-employed
▪ Develop more predictable rules of thumb for determining employment status for tax and regulatory purposes
