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Surge in self-employment continues to build

Let’s be in no doubt – a self-employment revolution is underway, with a continuing surge in business start-up and self-employment that is changing the dynamics of the labour market.

Since 2008 – the year of the global financial crisis and a period of tumult for the economy - some 367,000 people in the UK have struck out on their own and opted for self-employment.

  Most of this business start-up has occurred in the past two years, and with more than 80 per cent of the surge accounted for by workers in the over 50- age group.

Professional people shaken out by their companies, or opting for early retirement, have chosen to set themselves up in a broad range of sectors from business consultancy to online trading and marketing.

The surge in self-employment has also been aided by massive changes in information technology over the past decade.

The rise of communications tools in social media – Facebook, Twitter and, LinkedIn – together with extensive geographical coverage of wi-fi, have made it possible for tens of thousands of workers to re-enter the economy, either on their own or in small business partnerships.

Many of these enterprises will fade and fold. But others will go on to exploit a profitable niche or team up with others to form viable small firms.

This change in the labour market is set to increase and to become a permanent feature of the labour market. It should also see a growth in “umbrella” agencies offering joint services and back office assistance for the new self-employed professionals.

The change also explains the growing presence of Emma Jones’s inspiring campaign group Start-Up Britain  and the popularity of business networking and get-together agencies across Scotland such as the burgeoning Power Lunch Club run by Gordon Dow, and Belinda Roberts of WeDoScotland.

Small business conferences such as those organised by banks are also proving a big draw. The Santander event last October in particular has been widely praised. 

The surge also explains the resilience of the 50 plus and over 65 segments of the UK labour market in the face of recession and stagnation. The numbers of those aged 65 plus in employment is already at a record level and set to hit one million this year (see graph).

The rise in self-employed, reflected in the resilience in business start-up numbers in Scotland, has frequently been dismissed by Left wing economists and trade unionists as  just another symptom of recession and insignificant as a force for economic recovery.

   But Xenios Thrasyvoulou, founder of the online freelancer marketplace offers a more positive perspective.

He told The Sunday Times at the weekend that he had seen an influx of older workers registering on the site.

“What began as a trickle of people starting to work for themselves has turned into a tide”, he said. “When the downturn first hit, many people who had lost their jobs became self-employed through necessity.

“But the surge of self- employed between 2011 and 2012 suggests that more of us are making the change out of preference rather than panic.”

And while the government still has much to do in promoting business and economic recovery, there are encouraging signs.

The latest Purchasing Managers Index report from the Bank of Scotland showed that growth of Scottish private sector activity gained momentum at the start of 2013, with both output and new work increasing at faster rates than in December.  January saw the Index rise to a seven-month high of 52.3, up from 51.2 in December, signalling a moderate and accelerated expansion of private sector business activity north of the border.

 Improved business conditions and added pressure on operating capacity led firms to create extra jobs over the month (see our story opposite on continuing recovery signs).

Scot-Buzz is dedicated to its mission to support business start-up and the SME sector. This is what it was set up to do and why you are receiving our website emails.

This week’s edition carries examples of entrepreneurial expansion and we are keen to hear of other stories.

 These are challenging times – but these are no times at all to be defeatist.