Self-employment rise in Wales 'double that of staff'

More and more people in Wales are working for themselves, claims study

The number of new self-employed people in Wales over the last five years grew at twice the pace of those taken on by an employer, claims a think-tank.

The Resolution Foundation said between 2008-2013 self employment grew by 17,000.

At the same time, employee numbers grew by just 8,000.

The organisation said its research pointed to a "worrying picture of the security and vulnerability" of self-employed people since the downturn.

But the Federation of Small Businesses in Wales (FSB) said the change was welcome if it led to vibrant new firms capable of taking on staff rather than a shift to "low-level service employees".

The Resolution Foundation, which promotes policy ideas aimed at helping people on low and middle incomes, said the rise in self-employed people was seen by some as "one of the stories of the recovery".

But the growth posed risks to some equivalent to zero-hours contracts, with little security and few employment rights, it said.

The report's authors warned that:

• Self-employed weekly earnings were 20% lower than in 2006-2007 - while those in paid jobs only saw a 6% drop

• For those in the 35-50 age group, the earnings drop increased to 26%

• Typically, a self-employed person now earns 40% less than a traditionally employed person.

• Only 30% of self-employed are contributing to a pension, compared to 51% in staff posts.

Building business

FSB Wales spokesman Iestyn Davies said the growth in self-employment could be partly explained by the restructuring of Wales' economy.

He said: "Where we have been used to seeing people employed by large employers, it is quite a shock to how things will be going.

"What we would want to see is that these are genuine entrepreneurial activities giving rise to new companies that are sustainable, that employ the owner and other people.

"If all it were to end with is fairly low-level service employees, casual work and quite vulnerable prospects and opportunities, then that's not the kind of paradigm shift we would want to see."

"Both the Welsh government and the UK government need to ensure funding schemes and benefits in such a way as to aid this transition rather than leaving industries vulnerable."

In February, Office for National Statistics (ONS) said the proportion of self-employed in the workforce in Wales is 13%, slightly below the UK average of 14%.