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Friday, October 23, 2015

Looks like the UK's 'gig economy' is driven by older self employed workers

This week's Economist has an article called 'Self-employment - the Uber conundrum'.

The number of self-employed workers in the UK is still 700,000 higher than in 2008. No other member of the G7 has behaved in quite the same way.

There appears to be a few different reasons. Two are connected with demographics.

In 2008-15 the labour-force participation rate of women aged 16-59 increased from 74% to 76%, a rise of about 600,000. Women entering the workforce from 2008 onwards were likely to be those who had found it particularly difficult to work as employees, because of family commitments, and chose self employment.

The other demographic factor is rise of older workers, who have the most experience, as well as savings to fall back on, are more likely to be lone rangers than the young.  Half of the increase in self-employment between 2004 and 2014 was linked to the ageing of the workforce, according to the Bank of England.

The proportion of over-65s who are self-employed has risen sharply, a fact that may be down to worries about financial security in retirement.  Britain has one of the lowest “replacement rates” in the OECD. On average its pensions replace only 40% of pre-retirement earnings. Saga reckons one in six over-50s said they had been forced to put off retirement indefinitely - because of lack of income.

So it looks like the 'gig economy' is not because of the entrepreneurial spirit of the young but the economic necessity of the old. Interesting. Dick Stroud


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