The self-employed enjoy higher levels of wellbeing and happiness, but work still needed

Policymakers and business leaders must work to improve wellbeing among the self-employed, a new report by the Centre for Research on Self-Employment (CRSE), has said. Instead of exploring self-employed wellbeing through the conventional prism of economic success, the report, The Way to Wellbeing, adopts a new approach. It considers people’s overall life satisfaction, based on their subjective assessments of various aspects of their lives – including jobs, income, health, family life and leisure. The report found that wellbeing was higher among self-employed people by using subjective assessments of different aspects of their lives. This is the first time a major report of its kind has taken a holistic view of wellbeing – looking at jobs, health, family life and leisure – to build an overall picture of life satisfaction, rather than just using a narrow measure of economic success.

The report also focused on the need for policymakers to understand and tailor policies to the full diversity of self-employment. Building on this, it found a significant divergence in the life satisfaction levels of different self-employed groups. It also made a number of targeted recommendations to improve wellbeing and life satisfaction in certain self-employed groups.

Its key policy recommendations to improve self-employed wellbeing include:

• Abolish the New Enterprise Allowance (NEA) or improve its extremely low uptake by offering accompanying training and mentoring – particularly confidence-building measures for people who are self-employed because of a lack of other employment opportunities.
• Create a more appreciative culture where business failures are seen as a normal part of entrepreneurial life, not as personal failures of the self-employed. This can be done by reforming bankruptcy regulation to allow for good faith business failures.
• Ensure better and faster access to mentoring when starting out and during business crisis periods to reduce stress and improve confidence in crucial times. This can be done by embedding mentoring in job centres.
• Increase confidence by improving access to skills-development resources tailored to the self-employed. The Treasury could also make skills development more cost-effective by extending tax allowances to cover new skills and by granting self-employed people training vouchers.
• Improve the long-term financial sustainability of the self-employed. The DWP and pension providers should introduce financial products and information about saving for later life that are specifically tailored to the self-employed. In particular, the ‘default’ or ‘sidecar’ model, where a portion of monthly earnings is automatically ‘defaulted’ to an accessible savings account.
• Create more co-working spaces to combat the sense of isolation the self-employed often experience, allowing them to work together and also share insurances, childcare and other business-related services. This is something that can be achieved by Government, co-operatives and professional organisations working together to incentivise the creation of more spaces.
• Prioritise solutions that help reduce the stress caused by irregular cash flows. The banking industry should introduce self-employment-friendly banking services, as well as informational campaigns and online resources to promote existing funding and emergency credit initiatives.

Martin Binder, Professor of Economics at Bard College Berlin and the report’s author, commented: “Looking only at income or job creation when it comes to the self-employed experience is too narrow and can be misleading. Putting the overall life satisfaction of the self-employed centre stage gives us a much more comprehensive picture of how they are doing – beyond just their income. What, after all, is the point in encouraging more self-employment if people just end up more anxious, stressed-out and miserable?”

Suneeta Johal, Director of the Centre for Research on Self Employment said: “With self-employment on the rise across the UK, it’s more important than ever to understand the impact it’s having not just on our economy, but on the lives of real people. It’s clear from this report that at the moment it’s a distinctly mixed picture, and it’s time for policymakers and business leaders to step up and do more to improve the life satisfaction of the self-employed. Not with broad-brush, heavy-handed policies, but with targeted, effective policies – like the ones recommended in this report – that work for all different self-employed groups.

“Because actually, when you improve the subjective wellbeing of the self-employed, it’s not just them who benefit – it’s businesses across the country and our whole economy. Government and other policymakers must take heed of this report’s recommendations and make sure self-employment stays a positive way of working for all.”