The Scottish Government must harness the potential of the self-employed
The Scottish Government missed a massive opportunity to support its nearly 300,000 self-employed workers last week. Despite First Minister Nicola Sturgeon’s past words of support for the self-employed, in the 43 pages of Scotland's Labour Market Strategy, this group are mentioned just once:
"Similarly, while we are encouraged by figures that show increasing self-employment we need to understand if the drivers for this are increased innovation and entrepreneurialism or a sign of fewer job opportunities."
To answer their question directly, IPSE research shows that nine out of ten of our members are driven by a desire, not a compulsion, to be their own boss. They love what they do, citing independence, flexibility and work/life balance as the best parts of running a solo business. The rewards of pursuing entrepreneurialism are a clear driver of the increasing numbers of people branching out to do this.
Of the Strategy's five key priorities, two stand out as particularly important to the self-employed. Firstly, "fostering innovation including workplace innovation which will help spur job creation". The flexibility of the self-employed allows businesses to manage peaks and troughs in demand and reduce risk when trialling such innovation, and should be considered essential to this strategy. This is perhaps no more relevant than in the oil and gas sector, considering the huge recent fluctuations in oil prices and Scotland’s reliance on contractors to invest in new projects in boom times.
Innovation also boosts productivity. So-called “Personal Service Companies” (PSCs) for example, a term used to describe one-person limited companies, make an average direct contribution to GDP 30 per cent higher than the UK average contribution per worker. It is imperative that, if the Scottish Government is to achieve its aim of fostering innovation and creating jobs, the self-employed are properly recognised, supported and actively considered in future policy.
Education & skills
Secondly, the strategy of "supporting employability and skills, so that all of our people can participate successfully in the labour market" speaks to self-employment as an increasingly attractive career choice for young people. From 2008-2015 there was a 51 per cent increase in the number of freelancers aged 16-29 across the UK to 213,501, and a significant proportion work in Scotland. IPSE calls on the Scottish Government to act on the UK Government-commissioned Deane review of self-employment, which recommended ensuring a better education for young people in real-life business management. Finance, cash flow, bookkeeping and taxation skills are all essential to running a business and will prepare young people for the possibility of self-employment. This can also help improve labour market participation in the Scottish economy.
The bottom line
This report signals a missed opportunity from a Scottish Government that has recognised the vital importance of the self-employed in the past. By supporting the self-employed they can help make their Strategy a success - which they partly define as creating a "skilled, productive and engaged workforce capable of meeting the needs of employers" - and build and economy for the future.