According to new research from the Association of Independent Professionals and the Self-Employed (IPSE), the number of self-employed workers in the UK has declined for the second year in a row, amid continuing pressure from issues such as COVID-19, Brexit and IR35.
In its annual Self-Employed Landscape report, the IPSE has revealed that the number of freelancers in the UK fell by five per cent last year, with 4.1 million self-employed workers in 2021, compared to 4.3 million in 2020. This means that the self-employed sector has declined for the second year running, with this drop coming after the workforce grew 40 per cent from 2008 to 2019.
Despite the overall drop, the report also found that the decline was geographically uneven, with significant increases in Wales and the North East and East of England. The largest decreases were reported in Northern Ireland and Scotland. The report also showed that, despite the freelance workforce continuing to be largely male and middle-aged, there was an eight per cent increase in the number of disabled freelancers and a one per cent increase in self-employed women.
However, even with these advances, the overall decline has led to warnings that the wider economy could suffer from falling freelancer numbers. According to the IPSE, the sector generates around £303 billion each year for the UK economy, with £147 billion coming from “highly-skilled” freelancers.
Commenting on the report’s findings, IPSE CEO Derek Cribb said: “It is worrying to see that the number of self-employed workers has fallen for a second year running, especially given the significant contribution the self-employed are known to make in periods of economic recovery.”
“While historically self-employment has been one of the most dynamic and resilient parts of the economy, it is clear that the pandemic and other issues like IR35 and Brexit have seriously impacted the sector and have sown seeds of doubt and uncertainty throughout the freelancing industry over the past two years.”
“While certain regions, demographic groups and occupations have thankfully defied expectations, the fact remains that these bright spots don’t make up for the mass exodus of self-employed workers during the pandemic.”
“The sad truth is that the sector has started 2022 in a highly fragile state and if it is going to recover its pre-pandemic growth after Omicron, then the Government needs to intervene and ensure that damaging and confusing legislation like IR35 is properly reviewed and that the conditions are right for recovery.”
