Are we all ready for self-employment?
The self-employed workforce is defining the UK’s economy as never before. But while it’s easy to romanticise a life of independence and internet cafes, ArciMedia Director Antony Reeve-Crook urges a cautious introspection before making the leap
The number of people opting for self-employment is soaring. According to the Office of National Statistics (ONS) there were 4.7 million self-employed workers in the UK in the first quarter of 2016, the latest period for which we have data. This section of the national workforce has been acknowledged by the government as instrumental to our current global standing, their performance one of the ‘defining characteristics’ of the UK's economic recovery, according to the ONS.
In this period we have also seen the arrival of what labour commentators refer to as the gig economy, a reference coined in 2009 at the height of the financial crisis, which saw the newly unemployed make ends meet by working several part-time jobs – or gigging. A typical example here would be Uber, or Deliveroo.
It is also a period in which we saw a backlash against the so-called zero hours contract, loosely defined as employment in which the employer makes no commitment to providing a minimum number of hours of paid labour from the employee. More than 910,000 people were employed on zero hours contracts in May this year, according to the Resolution Foundation's analysis of the latest ONS Labour Force Survey.
These soaring self employment figures are evidently as much a result of a new definition of employment as of hyper-connectivity, globalisation and enabling technologies.
But are these people making the right decision? Is the start-up life for everyone? It's an issue to which I've been giving a lot of thought, having witnessed many budding entrepreneurs enter – and leave – the communal workspace at which I began my business.
It may take guts to put it all on the line and sever ties with an employer, but it also presents an – often fictional – alternative for those who simply fell out of favour with the traditional nine to five. For every one of us with a sterling idea for business and the nous to make it happen, there are others who do it reactively, without a clear plan or the disposition to succeed.
"The performance of the self-employed is one of the ‘defining characteristics’ of the UK's economic recovery, according to the ONS."
For example, one of the most common reasons I hear for people setting up on their own is also one of the saddest indictments of the modern office; specifically that they are tired of collaborating with people who they didn’t ask to be a regular part of their lives. Resentment can build when we spend more of our waking hours with these people than individuals we elected to share our lives with.
But here's the kicker; by going it alone they often redirect this resentment at themselves. That lack of attention to fine detail, consistent tardiness or poor quality control that you saw in former colleagues becomes blindingly apparent in yourself when there are no others to divert your attention.
Worse still, that boss you despised because (you believed) their apparent lack of qualification and management skills is the reason you’re working late on a Friday? Well – surprise – they have now become you. And while nobody calls themselves into a closed room for a dressing down, the resentment that accompanies poor task management is unshakeable.
And we don't only redirect it at ourselves. In many instances the self-employed shift that blame onto someone else, their nearest and dearest; husband, wife, children or parents even. Imagine that: fuming because you've been told to go to your room aged 35, only this time it’s not in their house, there’s a workstation not a bed, you get paid for your homework and your notepad may be tax-deductable.
Left to our own devices, cut adrift from the commute, enforced hours and a boss, we are swiftly exposed to our own shortcomings, no longer diluted by able colleagues.
The self-employed must become CEO, CFO, CTO, CMO, C-everything-O of their nascent empires and this takes a great deal of acquired learning and understanding. The upshot of course, is that in becoming au-fait with them, and once the discipline comes in (typically on the back of the very routine we sought to escape), we enrich our businesses and ourselves. It can be a hugely empowering experience, but it most certainly doesn’t happen overnight.
And for many, sadly, it is unlikely to happen at all.
According to the Mental Health Foundation, mental health problems are the leading cause of sickness absence in the UK. A staggering 70 million work days are lost each year due to mental health problems in Britain, costing employers approximately £2.4 billion per year.
The London-based campaign Thrive LDN, which sets out to improve mental health, claims two million people suffer from mental health problems every year in the capital alone. To paint this in terms familiar to Londoners, that is 13 people on every bus, 100 on every tube train. And 90 per cent of these sufferers classify the problems as debilitating; it gets in the way of business.
The south, incidentally, has the greatest number of self employed, which at 17 per cent is two per cent above the national average. A subset of these are the so-called London burnout; workers pushed beyond the brink by a work environment they qualify for in paper only. And when they leave, now singly responsible for making their lives into something greater than themselves, some begin to feel like it is all a great big waste of time. They may have escaped the rat race, but at least a race provides common purpose and direction.
In the September 2014 paper Self-Employment and Mental Health, which analyses the role of mental health in self-employment decisions, authors Vicki L Bogan and David R Just (Cornell University) and Angela R Fertig (Medica Research Institute) used panel data to find evidence of a causal relationship between mental health problems and self-employment.
While the relationship depends on the type of self-employment and severity of mental health issues, the findings show that for men, having moderate psychological distress increases the probability of pursuing self-employment in an unincorporated business between one and three per cent. The figure for women is between one and two per cent.
In addition, their results suggest that individual difficulty in the wage-and-salary employment market is the likely mechanism for this connection between mental health and self-employment.
The wannabe self-employed individuals need to be cautious. They might feel starting up alone is the answer, but perhaps not to the questions they actually need to ask.
Generalisations made here, the type commonplace in every 'Happiness is Freelancing' or other such 'The Key to...' article on LinkedIn Pulse, are of course flawed from the outset. No two cases are the same. People take or leave employment for just as many reasons as they would any relationship. Some have developed the tools to cope with going it alone, a support group in place to lighten their load perhaps, an innate gift of diligence guided by self-discipline. Others have not.
But based on my observations I believe the issues I've raised will strike a chord with the majority, rather than the minority, of the self-employed.
"Left to our own devices, cut adrift from the commute, enforced hours and a boss, we are swiftly exposed to our own shortcomings, no longer diluted by able colleagues."
Further distinction must also be made between those taking self-employment under the auspices of an incorporated company, and outside of one. Leaving your firm to become a bolt-on consultant to a former or newfound client, a developer on a rolling contract with a multinational for example, is not the same as taking bar shifts while teaching yourself how to construct wicker chairs for sale at county fairs. There is no archetypal self-employed individual, and I've seen plenty of them come and go.
So should people be afraid of making the leap? No. Self-employment can be emancipating; a true departure from the ties that we’d rather didn’t bind us, and while your nerves may fray, it can be hugely, hugely rewarding. But people must make the leap mindfully, and before they do they should bear in mind the fact that organisations exist to enable their new lifestyles.
Shared office space is a good place to start as it ensures the time spent burdening these new stresses alone is kept to a minimum. Social enterprises such as London’s Work.Life, The Dock or WeWork, as well as larger operations outside the capital such as Wenta (which has several bases in Beds, Herts and Bucks) provide useful business support. In some cases they also provide start-up advice, mentoring and training, meeting rooms and virtual offices. Every little helps, as one-time start-up Tesco keeps telling us.
And of course sound your idea out with those who will give you an honest answer. Tell people your idea in advance, but perhaps don’t lay claim to it initially. As Rob Fitzpatrick’s book The Mom Test makes clear, friends and family often tell you only what you want to hear; be sure you’ve got as clear a path prescribed as possible before making the leap.
It helps to know you’re headed the right way when you land.
(Photo: Boris Johnson, as London Mayor, opening the 2009 edition of Reed's World Travel Market)