Research shows self-employed affected most by COVID-19 lockdown

New research has highlighted how the lockdown measures brought in as a result of the COVID-19 pandemic could increase social inequality in employment in Britain.

The findings show that within the sectors most at risk, self-employed people will be most affected with women affected more than men.

The Enterprise Research Centre (ERC) Insight Paper by Professor Andrew Henley from Cardiff Business School and Dr Darja Reuschke from the School of Geography and Environmental Science at the University of Southampton identifies groups of workers that are most likely to be hit by the current business closures and social distancing measures.

The study advances previous predictions on the effects of the lockdown on employment by including the self-employed and looking at the regional variations in the effect of the crisis.

Sectors ‘at risk’

The Institute for Fiscal Studies has recently reported that sectors directly affected by the lockdown are customer-oriented personal and domestic services including non-food, non-pharmaceutical retail; accommodation and food; childcare and much of the arts and leisure sector.

Self-employed people are most likely to work in these ‘at risk’ sectors. Using the UK Quarterly Labour Force Survey - the most recently available employment data for the UK - this new study shows:

  • Just over one million of the country's self-employed workers (22%) are at risk of being affected by the shutdown.
  • Almost one-third of self-employed women are at risk and particularly concerning is the high-risk rate among young women between 16-29 of age and those between 30-44 of age who are likely to have families and mortgages.
  • In the workforce as a whole, young people (16-29 years old) are more likely to work in 'at risk' sectors than older workers.
  • The self-employed, however, are in all age groups (between 16-64 years old) more likely to be affected by the crisis.

The researchers also found significance based on education levels, with those having a degree being least affected. The protection from employment risk for degree holders is significantly increased compared to other education qualifications and the gap is huge compared to those with low or no qualification who are affected the most. Having a degree is associated with high-skilled work that also allows people to work from home.

Spatial inequalities

Furthermore, the study shows regional differences in the severity of the crisis on employment, with London and Scotland being significantly more at risk than other regions. Employees in London are specifically affected compared to other regions.

However, for the self-employed the regional pattern is different. The self-employed are likely to be hardest hit in the North East - and significantly less so in London and the South East. Spatial inequalities in entrepreneurial potential are therefore likely to be reinforced.

Dr Reuschke said: “This study highlights the protection having the facility to work from home gives to employees. The findings should encourage employers to take further steps after the crisis to promote this flexible working arrangement in the future as they cannot always rely on Government support if their employees are unable to carry out their roles from home”.

“Young workers and the self-employed need particular attention from policy makers in this current crisis. It will be particularly important to give young people employment and career support. The Higher Education sector and the opening-up of opportunities for acquiring higher skills will play a key role in preparing for future crises.”

Professor Henley added: “These estimates of who, amongst the self-employed, are most at risk in the current crisis do not make for comfortable reading. They suggest that the female self-employed and those with lower levels of educational attainment are at significant higher risk of losing their livelihoods”.

“Overall the numbers of self-employed at most risk is just over 1 million in total, almost exactly corresponding to the growth in self-employment that we have seen across the UK over the past decade. If the COVID-19 public health crisis results in the permanent closure of the small and sole-trader businesses that these people own, then this would represent a significant drop in entrepreneurial activity.”

“A rapid and effective roll-out of the Government’s Self-Employment Income Support Scheme is essential to protect entrepreneurial activity across the economy.”

The Insight paper, entitled COVID-19 and self-employment in the UK was published by the ERC on 21 April 2020.

By Professor Andrew Henley, Director of Research Engagement and Impact, Cardiff Business School, Cardiff University, and Dr Darja Reuschke, School of Geography and Environmental Science at the University of Southampton