"Self-employment" accounts for 80% of the increase in employment since the crash, warns business secretary Vince Cable

Chris and Fee cautiously celebrate the record employment figures...

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The business secretary, Vince Cable, expressed concern over the trend for self-employment. He said: "Self-employment accounts for 80% of the remarkable increase in employment since 2007.” He argued that there were now signs that the UK labour market had become "too flexible", leading to depressed wages and entrenched low productivity. His remarks, in a speech to the Resolution Foundation, are the most serious acknowledgement yet by a senior government figure that structural flaws in the UK labour market could be holding back living standards despite economic growth. Cable said: "The recession has brought to light problems that we need to resolve. We have to confront the possibility that labour markets may be becoming too flexible. Too much flexibility, and we undermine the incentive to be more productive… We do not want to reproduce the American experience, where, over a decade, wages have stagnated, even in a period of economic growth." He conceded that government policy had played a role in creating a flexible labour market, leading to a flood of labour with people willing to work for very low wages: "The combination of benefits reforms, our cutting taxes on labour through raising the threshold, and other reforms, like abolishing the default retirement age, means that the incentives to work, particularly in low-skilled jobs, have never been sharper. But when this coincides with firms not yet investing strongly, the outcome could be an entrenchment of low-productivity jobs."

SOURCE GUARDIAN: Self-employment surge across UK hides real story behind upbeat job figures

The labour market economist and former Bank of England rate-setter David Blanchflower, who has studied trends in self-employment for many years, said: "Particularly after a prolonged downturn, there is a well-documented pattern of people failing as jobseekers and then moving into self-employment status, often out of desperation rather than anything more positive." Hopes that burgeoning self-employment represents a genuine wave of entrepreneurialism are undermined by a second piece of work by the Resolution Foundation, also published on Tuesday. It finds that while weekly wages for employees have fallen 6% since 2007, typical self-employed pay has tumbled by 20% in the same time. This leaves the typical self-employed person now being paid 40% less than the average employee.

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