Philip Hammond’s recent embarrassing U-turn over NIC increases has highlighted two things: firstly, the growing confusion and divisions within the Conservative government; and secondly, the ever more precarious nature of work for millions within the UK economy. Bob Percy looks at the reality of self-employed work in Tory Britain.
In this year’s spring Budget, the Chancellor, Philip Hammond, announced an increase in National Insurance contributions (NICs) for self-employed people. Within a week he had to drop the increase in a humiliating climb down for the government. This has highlighted two things. Firstly, the growing confusion and divisions within the Conservative party; and secondly, the ever more precarious nature of work for millions within the UK economy.
The media and bourgeois establishment like to present self-employed people as entrepreneurs – “go getting individuals” – who are driving forward new businesses, with the potential to earn millions if they succeed. The reality for the vast majority of self-employed people is completely different to this myth. Many are in an insecure situation and are driven into self-employment by the growth of the gig economy, with companies increasingly “outsourcing” the costs of having a workforce onto workers themselves, saving themselves money in administration costs, taxation, and training, whilst also driving down wages.
By far the majority of self-employed people are sole traders or in “partnerships”: plumbers, electricians and others in the building trades; transport and delivery; hospitality workers; and increasingly people working in computing, who often work directly for customers or work as subcontractors for existing firms, often in jobs which were previously given employment status. Many workers find themselves having to become self-employed as more and more jobs are moved away from being on full time employed contracts to being either on zero-hour contracts or requiring self-employed status. Many newly self-employed people are now working in the so-called gig economy.
Insecurity and uncertainty
These precarious working conditions and declining wages are also part of the background to the recent “growth” of UK employment figures, which are matched only by the corresponding continuing stagnation and decline in actual wages. Self-employed people on average experienced a 22% fall in real pay since 2008-09, according to the office of national statistics (ONS). This decline in pay is continuing as the rate of self-employment increases.
According to the ONS, self-employment has risen from 3.8 million in 2008 to 4.6 million in 2015. Of the 1.1 million increase seen in the total number of workers in the UK between the first quarter of 2008 and the second quarter of 2014, 732,000 (or just over two-thirds) were self-employed.
The reality of being self-employed is that there is no sick pay or holiday pay, so if you’re sick you still have to work, or risk losing your income. In addition, if you can’t work or are unable to take a job due to sickness, you may be perceived by the employer as unreliable and may not get a chance to get that job in the future. Taking holiday means not only losing income for the days you are off, but also not being available to take on other much needed work. The result is that for many self-employed people, committing to taking a break with the family is a risk.
In addition, many self-employed people incur extra costs as they have to administer their own employment – filling in tax returns, writing invoices, etc., as well as covering the cost of buying their own equipment and tools and paying for any additional training they may need. Self-employed workers also find themselves facing a large amount of stress due to the uncertainty of their condition, and are unable to leave self-employment for fear of facing benefits sanctions if they do. In some cases, self-employed people may be earning less than if they were on benefits and are having to top up their household income through tax credits.
Employment rights such as holiday pay, sick pay, breaks in the working day etc. are all rights that have been won by workers through collective action and trade union struggle. So far, however, the trade unions have done little to challenge the growth of the gig economy and the rise of precarious self-employment – or as a friend of mine jokingly called it, “self-unemployment”.
Paying for their crisis
It is against this background that Philip Hammond has sought an increase in NICs for self-employed people.
Class 4 NICs, the rate paid by self-employed people, were due to rise from 9% to 10% next April, and 11% in 2019. This move was primarily made due to a drop in the government’s tax revenue, as more people are forced into self-employment.
The government though has had to do a U-turn, for now, due to the backlash from their own backbenchers, who understand the danger of angering the rising army of the low paid self-employed. These Tory MPs, however, are living in the past though if they think that these newly self-employed sections of the economy represent their natural constituency.
This is yet another example of the contradictions that capitalism creates: increasingly big business profits by transferring its costs onto workers, but in the process this creates ever greater social and political problems and antagonisms.
The capitalists are only making profits by squeezing more and more out of workers, including changing contracts and re-categorising more work as self-employment. Rather than investing in the work force, in training, in modern equipment, in providing stable employment, and in job security, the capitalists look to their short-term profits and pass these costs to the working class itself, regardless of the strain it puts on society. The state, meanwhile, is faced with the dilemma of cutting services or raising taxes for the working class (whilst of course giving tax cuts to the capitalist class). But there is a limit to how much of the tax burden can be placed onto workers’ shoulders; and the more services are cut, the more people will be faced with unemployment or precarious low-paid work.
The means by which the ruling class attempts to get out of capitalism’s crisis are increasingly being felt across all sections of society. Ultimately it is the working class that is being forced to pay for this crisis.
Only a fundamental transformation in society can provide people with genuine job security. The “job for life” available to the post-war generation is a pipe dream for the youth of today. We need to fight for decent working conditions, employment rights and a living wage for all – things that capitalism in an epoch of deep crisis can no longer offer. The demands for full employment, secure work, and decent pay can only be met by a socialist system – by a democratically planned system that abolishes the sham of so-called “self-employment” and offers dignity and fair access for all based on the vast resources that exist within society.