The self employment dream: shattered by reality

The idea of being your own boss is beguiling. Never again will you have to put up with office politics, stressful colleagues, or pointless office hours. You will be able to work when it suits you, from wherever you like - and you'll be able to make far more cash into the bargain. There are only a couple of things wrong with this optimistic view of life in self-employment.

See also: The 'gig economy' will kill your nice, secure job

See also: We're all self-employed now - and it's very stressful

See also: Rise of the self-employed could cost UK £3.5bn a year

Freedom?

Ian Brinkley, acting chief economist at the CIPD says a lot of people are "choosing self employment out of a desire for greater independence and job satisfaction". However, if shorter hours are part of that independence, then there's a price to pay.

Part-time self-employed workers certainly do have a great deal of flexibility over how and when they work, but they are only paid for while they are working. It means they have to manage on far less money, so those with families and mortgages will soon pick up the pace.

For those who want to keep earnings at the same level as before, there's no picking and choosing over when they work, because according to the Office for National Statistics, they work longer hours than their employed counterparts. This is easy to understand, because they cannot afford to let their clients down.

Wealth?

Those who choose self-employment for higher earnings are in for a shock too, because many of the 4.6 million self-employed people in the UK are struggling to make ends meet. A study by The Resolution Foundation found that they're earning an average of £240 a week - well below their employed counterparts.

This is partly because they miss out on important rights, such as the National Living Wage, and statutory maternity pay and sick pay. They also have no protection against unfair dismissal.

Their pension is likely to be suffering horribly too - partly because they don't have the right to be automatically enrolled into a pension. Even if they have a private pension, they still face the fact that there's no employers' contribution available.

A study by Aegon found that 75% people who work for themselves are not putting money into a pension. Unsurprisingly, as a result, only 15% of them are confident they will be able to retire comfortably, and 10% believe they will never be able to retire.

Kate Smith, head of pensions at Aegon, comments: "The self-employed face unique challenges when it comes to saving for retirement. As well as missing out on a lifetime of employer contributions, a variable income means many don't have certainty of how much they'll earn from one month to the next, making saving difficult. Preparing for retirement requires a long-term do-it-yourself approach which is currently being overlooked by too many of the self-employed."

Growing problem

These figures are worrying enough in themselves for the many people who are employed, but are considering self-employment as a lifestyle choice. However, for those who have no other options, it's even more alarming. Adam Corlett, economic analyst at the Resolution Foundation, points out: "Rising self-employment has been the biggest jobs story of the last decade, accounting for almost half of all employment growth since the financial crisis".

As the economy increasingly favours self-employment, and this sector of the economy booms, more and more people risk facing disappointing earnings, non-existent safety-nets, and a horrible retirement. As Corlett points out: "With the number of self-employed workers approaching five million, we need to start addressing some of the challenges it brings."

But what do you think? Would you still like to work for yourself? Let us know in the comments.