Self Employed Workers Pay Less Than in 1995

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Self Employed Workers Pay
Self Employed Workers Pay

Self Employed Workers Pay

According to new figures, self employed workers pay is less than it was 20 years ago.

Indeed average income for self employed workers is actually lower than it was in 1996. That’s before the dotcom boom and Y2K.

Contractors have been saying this for years and now the figures bear out what they have been saying.

Lower Rates for Contractors

Contractors now are getting less, in real terms, than their counterparts were 20 years ago.

The self employed workfoce has grown by 45% since 2002. There are now almost 5 million of them. That’s around one in seven of all workers.

The Resolution Foundation blamed the financial crisis, which had reduced pay rates.

However, in the IT industry there is also offshore outsourcing and the number of IT working visas given to non-UK IT workers.

There is also the impact of IR35 on take home pay.

Lower Earnings

Adam Corlett, economic analyst at the Resolution Foundation, said:

“But while the self-employed workforce is getting bigger, typical earnings are actually lower than they were 20 years ago”.

Indeed, according to the research, self employed workers pay is actually down 20% since 1995.

Add 25% to your current income to find out what you would have been earning in real terms as an IT Contractor 20 years ago.

Financial Crash

The Resolution Foundation say that the effect of the financial crash of 2006-7 had cut income in real terms by around 30%.

“Many workers are still feeling the painful effects of the financial crisis,” Mr Corlett said.

TUC general secretary Frances O’Grady said: “Britain’s new generation of self-employed workers are not all the budding entrepreneurs ministers like to talk about.

Building an Economy for Everyone

A Department for Business spokesperson said the government was “committed to building an economy that works for everyone”.

This sounds like just a slogan.

He continued, “That is why Theresa May has asked Matthew Taylor to lead a review of how changing employment practices affect job security, workplace rights and opportunities for progression.”

IT Contractor Comment

Whatever changes that the Government make, as regards contractors, they are never good for us.

Many experience contractors have been saying for years that self employed workers pay is way lower than it used to be. They say that the contracting profession isn’t what it used to be in terms of income.

Average daily rates for contractors isaround £420 a day currently. I was making around that in 1995 and that’s without taking inflation into account.

Brexit Effect on Contractors

Perhas Brexit will mean that there is less competition for jobs and so higher rates.

I wouldn’t bank on it though. There are more UK IT contractors working in the EU than there are EU IT contractos working in the UK. They earn higer rates too normally.

If they all have to come home after Brexit that will mean more competition for contract jobs and so lower rates.

The main competition for UK IT contractors jobs comes from outside the EU from places like India and that is not going to change.

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