The UK Business Population – the story so far …

Adam Hardy November 2015

2

My role• Analyst in Enterprise Directorate of BIS• Focus on evidence relating to small businesses

and enterprise – compile statistics and undertake research to understand business environment and key issues for small firms

• Support policy makers in making evidenced based decisions and evaluate impact of existing and potential policy options

3

Overview• Why Small Businesses are important• What’s happened to the Business Population

since the recession• Self Employment – Recent trends and their

characteristics• The Future?

4

Small firms contribution to economy...Share of businesses in the UK private sector and their associated employment and turnover, by size of business, start of 2015.

99.3%

0.6% 0.1%

48.0%

12.3%

39.7%32.8%

14.5%

52.7%

0%

20%

40%

60%

80%

100%

0-49 employees 50-249 employees 250 and over employees

Businesses

Employment

Turnover

Source: BIS Population Estimates for the UK and Regions 2015

5

Number of SMEs by employee size-band, 2012

• Over 4 million private sector businesses have no employees.• 1.07 million have 1-9 employees • 204,000 have 10-49 employees, and • 33,000 have 50-249 employees.

…but most small businesses do not employ anybody…

4.08

1.07

0.200.03

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0 1-9 10-49 50-249

Mill

ions

Employee size-band

Source: BIS Population Estimates for the UK and Regions 2015

6

Despite a large fall in GDP, the business population has continued to grow both during and since the recession….Change in GDP and UK private sector business population Q1 2008 – Q3 2015

106.4

125.8

85.0

90.0

95.0

100.0

105.0

110.0

115.0

120.0

125.0

130.0

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Q3 12

Q4 12

Q1 13

Q2 13

Q3 13

Q4 13

Q1 14

Q2 14

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Inde

x (Q

1 20

08 =

100

)

.

GDPUK private sector businesses (Q1 2008 = 100)

Source: BIS Business Population Estimates 2015 and ONS GDP ABMI Q3 2015

RECESSION

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The recent increase is part of a longer term trend...

Number of private sector businesses in the UK, start of 2000 – start of 2015

3.5 3.5 3.6 3.73.9 3.9

4.1 4.3 4.3 4.4 4.5 4.64.8 4.9

5.2 5.4

0.0

1.0

2.0

3.0

4.0

5.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

mill

ions

Source: BIS Business Population Estimates for the UK and Regions 2015

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...but growth not experienced amongst businesses of all sizes...

Change in number of private sector businesses in the UK by employee size band, indexed

173

118

97

70

80

90

100

110

120

130

140

150

160

170

180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bas

e ye

ar 2

000=

100

Zero employee businesses 1-249 (SME employers) 250+ (large) *

Source: BIS Business Population Estimates for the UK and Regions 2015

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Self Employment - Overall trends • Self-employment increasing in long term – up by over 1.3m

since start of 2000• Strong growth since recession – increase of 675k since

start of 2008• Now stands at 4.6m • Self-employed now represent about 15% of all employment• Strong driver of recent employment growth – accounting

for nearly half of the rise in total employment since the recession.

• Recent high growth mainly a result of fewer people leaving self employment.

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Self employment in the UK has been going up since 2000…

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,00019

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

14

Thou

sand

s

Source: ONS Labour Force Survey, four quarter average

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…particularly amongst the longer term self-employed

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

2008 2009 2010 2011 2012 2013 2014

Inde

x (2

008

= 1)

5 or more years

Total

less than 1 year

1 to < 5 years

Source: BIS ED analysis of non-seasonally adjusted ONS Labour Force Survey, average four quarter data

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Age • Self-employed workers tend to be older than employees• 43% of the self-employed are aged 50+ and just 11% aged

under 30– This compares with 27% of paid employees who are

aged 50+ and 26% who are under 30• The number of self-employed aged over 65 has gone up by

80% in last 5 years– Numbers of paid employees aged 65+ has also gone

up, but by a more modest third

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** Data from LFS 2014 Q2 using 2014 weights

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

16-19yrs 20-24yrs 25-29yrs 30-34yrs 35-39yrs 40-44yrs 45-49yrs 50-54yrs 55-59yrs 60-64yrs 65-69yrs 70 andover

Self-employed contribute proportionately more to employment in higher age brackets

% who are self-employed % who are employees Percentage of employment due to self-employed

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Gender • There are 1.45 million self-employed women - this is 32% of total self-employment• The number of self-employed women has increased faster - they account for half of

growth from 2009 to 2014

2008

2009

2010

2011

2012

2013

2014

0.8

1.0

1.2

1.4

1.6

Male Female

Inde

x (B

asis:

200

8 =

1)

Source: BIS ED analysis of ONS Labour Force Survey, March-May quarters

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Sectors, occupations and skills• Over a quarter of all people who are self-employed are in skilled trade

occupations• Nearly 60% of the rise during last 5 years has come in higher skilled

managerial, professional and associate professional jobs• But still a lot of builders - despite recent fall in share, 20% of self-

employed people are in construction. Lots of taxi drivers too. • Skills profile of self-employed not that different from employees

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The self-employed tend to work in higher-skilled occupations

0%

5%

10%

15%

20%

25%

30%

Managers andSenior Officials

Professionaloccupations

AssociateProfessional and

Technical

Administrativeand Secretarial

Skilled TradesOccupations

Caring, LeisureAnd Other

ServiceOccupations

Sales andCustomer Service

Occupations

Process, Plantand MachineOperatives

ElementaryOccupations

Occupations of employees and self-employed in 2014

% of employees % of self-employed

** Data from LFS Q2 2014 using 2014 weights

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Managers, Di-rectors And

Senior Officials

Professional Occupations

Associate Pro-fessional And Technical Oc-

cupations

Administrative And Secretarial

Occupations

Skilled Trades Occupations

Caring, Leisure And Other

Service Occu-pations

Sales And Cus-tomer Service Occupations

Process, Plant And Machine

Operatives

Elementary Occupations

0

5

10

15

20

25

30

35Share of total amount of change in self-employment between 2009

and 2014 by type of occupation

Source: ONS, Self-employed workers in the UK, 2014; Published in August 2014

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Self-employed and employees show similar proportions of qualifications and years of schooling

** Data from LFS Q2 2014 using 2014 weights

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Are people content with being self-employed?

• Only 5% of self-employed are looking for a different or additional job – compared to 8% of employees

• 4.5% of part-time self employed want to work full time – similar to employees (5%)

• A bigger share of the self-employed work longer hours than employees, but also a bigger share work shorter hours

• Self-employed females tend to work shorter hours than self-employed males

• RSA research suggested that people choose self-employment for a variety of reasons, including greater freedom, and more meaning and control in their work

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2006 2008 2010 2012 20140%

1%

2%

3%

4%

5%

6%

7%

8%

9%

UK employees look for jobs at higher rates than the self-employed

Self-employed Employees

% o

f em

ploy

ees

and

self-

empl

oyed

look

ing

for a

job

**Data from LFS Q2 using 2014 weights

Proportion of employees/self employed looking for work – new or additional job

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People choose self-employment to have more freedom

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Geography

• The spread of self-employment around the country is not wholly in proportion to the working population

– Self-employment accounts for a substantially higher proportion of employment in London (19%) and this pulls up the average

– South-East, South-West and Eastern regions are also above average

– But other English regions are below average, with the North East the lowest at 11%

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Some variation in self-employment rates around the country

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Back to the future? • What is likely to happen? - More of the same – people enter self employment because they want to and are happy to remain

• What we know less about- Earnings, Pensions and Maternity (Deane Review)- What we are doing to bridge gaps

• Any Questions?