There seems to be an entrepreneurial spirit sweeping the world nowadays. What is making people abandon their 9 to 5 jobs to start their own businesses? What are the rewards and the risks of becoming self-employed?
The RSA, is one organization supporting and researching the self employment movement in the UK.
RSA stands for Royal Society for the encouragement of Arts, Manufacturers and Commerce. It was founded in 1756 with the belief that anyone should be able to have the liberty and power to be able to transform ideas into reality, or as they put it, the “Power to Create”. The organisation sports a 27,000 Fellowship and carries out research with a view to developing a society where creative power is distributed, where concentrations of power are confronted and where creative values are nurtured. Aside from solid research it also uses practical experimentation to realise its targets.
The RSA has been conducting a lot of research about the self employed. The organizations thinks that this group of people is entrepreneurial and able to shape their ideas into reality: “and in doing so, become the authors of their own lives”, they state. The RSA is so passionate about the self employed movement, and have been researching it throughly.
They published recently a “Charter for the self-employed”, that resulted from the findings of a research supported by the Joseph Rowntree Foundation and by Etsy. The charter suggests that when people work for themselves there is a greater likelihood of happiness, wealth and good health. This is partly because people feel that they have a greater choice in determining their own fate, but also based on the fact that there is lots of evidence that self employed people are happier. This is attributed to greater chances for creativity, autonomy and meaning in lives. No wonder that, according to their research, the number of people working for themselves, as grown by 40 percent, since the year 2000.
To accompany the launch of the Charter, we also created a short animation showing the enduring (and often hidden) importance of privilege in the world of entrepreneurship.
However, while the workforce is explained to have moved to a situation where one in seven of us work for ourselves, many of these people struggle. This is because they do not have protection that they might get when working for others. There are believed to be four main challenges. One is welfare – self employed people do not get sick pay or maternity pay. They also do not get training, in many cases. Pensions are a challenge, and figures show that only one third of people that are self employed actually contribute to a pension.
Meanwhile, earnings may also be considerably lower than those for employed people. All of this is said to lead to a situation where would-be self employed people are not really encouraged to work for themselves. Many business owners give up early on, at least a third during the very first year.
This has led to a situation where the RSA is now calling on the government to address the problem, and to try to get more people to be self employed. For the government this is beneficial as it is seen to increase productivity. The RSA argues that certain principles should be adhered to in going about this. One is pragmatism, or helping to introduce cost-neutral interventions to help self employed people out. The second is getting self employed people themselves involved in devising policies. A third is inclusivity, and the idea behind this is that anyone should be able to go into business for themselves regardless of background. The fourth is equality, and the self employed should have the same protections that employed people have. The final principle is responsibility, with the idea being that self employed should help to finance extra protection, and the most affluent should pay the most towards this.
Eight Ideas to Help the Self-Employed
The self employed clearly face disadvantages that others do not. The RSA has accordingly come up with eight ideas that can help with dealing with the problems they face. One is helping the self employed with automated savings schemes. The idea behind this is that banks would help people to put a percentage of each invoice directly into a savings account. Another suggestion is having a “Right to Request” option for mortgages. The idea behind this would help to deal with the instability that self employed people have with regard to their income.
The right to request would allow self employed workers to request more flexible mortgage terms, to help them get by. A third is a suggestion to rework the idea of Universal Credit. It is suggested that this would really help the low income self employed, for example through having an extended start up period. Under this, claimants would experience more generous treatment during a period of up to two years. Another idea is to help self employed people to be better ready for retirement by encouraging them in a “compulsory” way to join a pension scheme or a government backed ISA.
Other suggestions include the idea of a cash pooling service. This would help to deal with late payment problems that self employed people often experience. The idea would be to pool the finances of self employed people to provide a pot of money for them to draw on if payments are late. It is suggested that this would be a social enterprise. There would be an extension of the Fit to Work service as well, with a view to including the self employed. This would help address the problem of occupational health for self employed people, helping them to get back to work after a period of illness.
It is argued that the New Enterprise Allowance also needs to be reworked to cut back on the value of the payment over time, rather than stopping it suddenly. Finally, it is suggested that there should be equal treatment under the Work Programme. This would be organised in such a way that it would assist more low income people to become self employed.