As with so many of the coalition's claims of economic recovery, the seemingly buoyant labour market is hiding a much more fragile picture, writes James Bloodworth.

As with so many of the coalition’s claims of economic recovery, the seemingly buoyant labour market hides a fragile picture, writes James Bloodworth

A new report by the Resolution Foundation delivers an absolutely devastating blow to the government’s employment claims.

The headline-grabbing line is that parts of Britain are now poorer than vast swaths of Eastern Europe.

That’s certainly damning enough. The devil, however, is in the detail relating to the employment figures, which the government has repeatedly cited in recent years to back up its claim that George Osborne’s economic plan is working. After all, even when GDP was flatlining the number of people in employment continued to grow.

And yet a new report by the Resolution Foundation paints a much more sober picture. The average self-employed worker now earns 40 per cent less than the typical employee. There has also been a catastrophic fall in the weekly earnings of the self-employed, which have dropped by 20 per cent since 2007. This matters because around half of the 1.2m jobs created since the coalition came to power are accounted for by self-employment, with the number of self-employed people rising by 650,000 to 4.5 million people (15 per cent of the workforce).

As the Guardian reports:

“The research reveals that the total number of employed jobs fell in nine of 12 regions between 2008 and 2013, ranging from a drop of 156,000 posts in Scotland, to a fall of 24,000 in the east Midlands. The numbers of employee jobs in the south-east (-1,000) and eastern region (+4,000) remained virtually static, while in London, uniquely, 285,000 were created.

“Any increase in the number in work in other regions over the 2008 baseline, after four years of recovery, was due to rising rates of self-employment, which was up everywhere except Northern Ireland.

“The number of self-employed jobs rose by 116,000 in the south-east, by 85,000 in London itself, by 67,000 in the east and by 61,000 in the west Midlands. The 58,000 additional self-employed posts in the south-west and 43,000 in the east Midlands were sufficient to offset the loss of employed jobs locally.”

What’s more, the report claims that rather than the growth in insecure self-employment being down to people making do during the recession, it’s likely become a fixture of the UK labour market, with a growing number of people claiming that they are self-employed due to a lack of other work alternatives. Recent TUC analysis also found that the number of people starting their own businesses had fallen in recent years – despite rising self-employment.

Indeed, rather than potential contestants of Dragon’s Den, many of those working for themselves would rather be in a steady job working for someone else. Only one in three of the self-employed (34 per cent) described themselves as ‘entrepreneurs’, while 28 per cent of those who had moved into self-employment in the past five years said they would rather be someone’s employee.

So what does this all tell us? It shows that we are becoming a nation of freelancers and odd jobbers, rather than an entrepreneurial society. And it matters because self-employed workers lack sick pay, maternity or paternity leave, holiday or redundancy pay. Self-employed workers are also just as likely to have debt problems as unemployed people, according to the TUC. And as today’s report points out, the typical self-employed worker earns 40 per cent less than the typical employee.

As with so many of the coalition’s claims of economic recovery, the seemingly buoyant labour market is hiding a much more fragile picture.