Doubts over enterprise resurgence

The resurgence of an enterprise culture hailed as an outcome of the recession was placed under question in a report yesterday.

Despite record levels of self-employment being announced in Autumn 2011, the latest Work Audit report, published by the Chartered Institute of Personnel and Development, queried the authenticity of such entrepreneurialism.

Although 14.2 per cent of those in employment are currently self-employed, the report highlighted that a large proportion of those who have turned to self-employment since the beginning of the recession in 2008 appear to be “more like an army of part-time ‘odd jobbers’ desperate to avoid unemployment”.

This is emphasised by the reduced working hours of the newly self-employed in comparison to those working for themselves prior to the recession.

Whereas more than two thirds of self-employed people work more than 30 hours per week, just over one out of ten newly self-employed people work more than this during a week.

The recent increase in self-employment had helped to dampen the rise in unemployment during and post recession; with the increase offsetting around 40 per cent of the loss of employee jobs.

The Work Audit report therefore highlights uncertainty as to whether these figures are a genuine reflection of the workforce’s response to the recession.

The report coincides with the latest employment figures released by the Office for National Statistics showing that unemployment in the UK now stands at 2.68 million, with an increase of 118,000 in the three months up to November 2011.

This compares with a slightly higher increase of 128,000 in the three months up to October 2011. Despite this, the number of unemployed people in the UK has not been as high since 1994.

The number of unemployed young people aged between 16 and 24 continued to rise in the three months up to November with an increase of 5.2 per cent.

With the increase in unemployment levels, a subsequent change in the demographics of those opting to start their own business can be noted.

This point is no more pertinent than when referring to gender; two thirds of self-employed people are male, whereas women have accounted for 60 per cent of those opting for self-employment since the beginning of the recession.

The chief economic adviser at the CIPD, Dr John Philpott, said: “Since the start of the recession the ranks of the self-employed have been swelled by people from a much wider array of backgrounds and occupations, including many ‘handy-men’ without skills, picking-up whatever bits and pieces of work are available.

“It’s good that these self-employed ‘odd jobbers’ are helping to keep the lid on unemployment in a very weak labour market but their emergence hardly suggests a surge in genuine entrepreneurial zeal.”

While Philpott says that some of the newly self-employed may make a long-term commitment to being their own boss, or at least gain the necessary experience to do so, it’s likely that most would take a job with an employer if only they could find one.

Linsey Humphries