Why everything you think you know about the gig economy might be wrong
The rise of the so-called gig economy characterised by new technology platforms such as Uber and Deliveroo has sent the number of self-employed workers soaring in recent years… or so says conventional thinking.
But, a new report suggests it is, in fact, higher earners in high-skilled jobs who are driving the growth of the self-employed to top five million, thanks to favourable tax breaks rather than the development of new technology.
Some 60 per cent of growth in the number of self-employed in the UK since 2009 comes from so-called privileged sectors including advertising, public administration and even banking, the three sectors found to be the fastest growing.
Read more: A gig economy inquiry by MPs hears a tale of two Uber drivers
While those in "precarious" self-employed work still account for the largest share of the self-employed, the majority are in traditional industries such as retail, construction and plumbing.
The fresh report from the Resolution Foundation comes amid growing scrutiny of the gig economy and the new world of work, while legal action against Uber and more recently Pimlico Plumbers has gone in favour of the self-employed, who should be considered workers.
The number of self-employed in the taxi sector grew just seven per cent, compared to a rise of 22 per cent across industries and a doubling in the advertising sector.
Read more: What the experts think the Pimlico Plumbers case means for the gig economy
And those who are more highly paid are more likely to benefit from becoming self-employed, largely from an exemption from employer national insurance: someone earning £100,000 salary would enjoy a tax break of more than £7,000, but those on £10,000 would benefit by just £200.
The think tank is calling for the government's review of employment law to consider addressing such incentives, which are expected to cost the Treasury £6bn a year by 2020, in addition to the lack of workers rights which has been a high-profile focus.
“Rising self-employment has been the biggest jobs story of the last decade, accounting for almost half of all employment growth since the financial crisis. This growth has been controversial at times, with several companies finding themselves in court as workers try to address the insecurity that often comes with self-employment," said Resolution Foundation's economic analyst Adam Corlett.
“But behind the headlines the real recent growth area for the self-employed has been in lucrative sectors such as advertising and banking. This rise is driven in part by a very favourable tax treatment worth thousands of pounds a year to higher earners – just one element of which is set to cost the Treasury £6bn a year by the end of the parliament.
“With the number of self-employed workers approaching five million, we need to start addressing some of the challenges it brings. This should include more security for workers at the bottom end of the market, but reforms should also reduce the unfair tax advantages that the wealthy self-employed particularly benefit from.”