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Self-employment not working for young people

Self-employment is not functioning as a route into the labour market for young people

This is according to research from Lancaster University’s The Work Foundation.The Going Solo report found that in 2014 the UK had 180,000 under-25s in self-employment, three times more than in Germany and nearly four times more than in France.

The UK accounts for 23% of all under-25s self-employed across the EU, but this is mostly because it has an exceptionally large youth labour market by European standards.

However, this does not translate into a high rate of self-employment among young people: just 5% of young people who are in work are self-employed, compared to 15% of the total working age population.

The Work Foundation warned that for some moves into self-employment are made not through choice but as a last resort, and may represent a form of ‘hidden unemployment’, with people forced to go it alone when traditional routes in the labour market appear closed.

Additionally the researchers found no clear association between the incidence of self-employment among young people and overall performance of youth labour markets across the EU. The report states that while self-employment can widen future employment options by building contacts with employers and providing the ‘soft’ skills businesses say they need, it can also lead to risky and precarious employment where financial returns are lower than in similar contracted jobs and may offer little improvement in the position of some disadvantaged groups.

Lizzie Crowley, senior researcher and head of youth unemployment at Lancaster University’s Work Foundation, and co-author of the report, said that the research shows it is clear that supporting more people into self-employment shouldn’t be a priority.

“Young people will be better served by policies helping them get into traditional salaried employment, where they can learn the skills and make the connections to help them set up more sustainable, successful businesses later in life,” she said. “Realistically, policies that focus on getting young people into self-employment can only make a small contribution to reducing youth unemployment.

“On the whole, emphasis and resource to support the young unemployed should be focused on supporting young people to get into work. Those with strong business ideas should be encouraged to develop plans and set up while in education and develop their business on the side, once in work.”