Ian Duncan Smith is up in arms about the BBC at the moment.
No surprise there then. For as long as I can remember Conservative ministers
have continually moaned about our state broadcaster, and how they believe it
constantly highlights bad news and downplays more positive stories,
particularly when the party in power has a bluish tinge.
The current spat revolves around the number of people out of
work. In spite of falling GDP, double dip recession and government cuts,
unemployment has not gone through the roof. The employment statistics are
surprisingly robust. Jobs are being created faster than they are being lost.
For the government this is seen as good news and evidence
that the economy is in better shape than is realised. Others maintain that the current
impact of joblessness is being hidden by a myriad of seasonal and one off
benefits as well as the significant increase in part time jobs and
self-employment. It was the latter argument that the BBC latched onto, thus
incurring the wrath of the Secretary of State for Work and Pensions.
I have long thought that one of the features that has set
this recession apart from previous ones is that of under-employment rather than
unemployment. In previous downturns it was rather like the hokey-cokey. You
were either in or out or work. There were no shades of grey, let alone the 50
(ho ho? Oh well never mind…) or so that we seem to have at present.
Freelancing, contracting, self-employment, however you want to term it, is one
area in particular that is clouding our previous certainties as regards
unemployment.
For some freelancers there is no choice. The changing jobs
market and the lack of conventional employment opportunities mean that self-employment
is the only option they have to earn money. For many others it is a lifestyle
choice, providing a flexible working environment and the work-life balance
necessary to cope with family commitments or indulge in other activities.
For SMEs and entrepreneurial companies freelancers and
contractors make sense. Why go through the hassle of engaging full time
employees that you don’t actually need full time when you can get what you need
when you want it, and only pay for what you know you can use and which will add
value?
For HMRC it is a headache, as it reduces its ability to
efficiently collect tax through PAYE and leaves them reliant on the vagaries of
self-assessment and corporate tax returns. Hence their ongoing efforts to get
as many freelancers as possible classified as employees. Providers of loans and
credit are also finding the increase in “non employment” a challenge, which may
be another reason for the current lack of finance in the economy.
Nobody pretends that a life of self-employment is easy. It
is risky, insecure and hard work, and I am sure that a fair proportion of self-employed
people would go back to being employees tomorrow if the right opportunity
arose. However in a world where flexibility is becoming the norm such
opportunities are likely to remain scarce, and thus self-employment in its
various guises will continue to grow.
The current situation seems to be then that HMRC want to
treat freelancers as disguised employees. Others want to view them as
unemployed people in disguise. SMEs and entrepreneurs meanwhile have an
undisguised need for the right people at the right time for the right price. Perhaps
rather than indulge in petty squabbling, the government and the BBC should work
together to promote a sensible debate about the issue. If something good can
emerge from all of this I for one may not be able to disguise my feelings of
joy….
