Covid-19 and self-employment in the UK

ERC Insight Paper.

Associated Themes
  • COVID-19
  • Entrepreneurship

In this short paper, we provide a preliminary assessment of the likely impact of the Covid-19 crisis on the self-employed, and in particular, using the most recently available UK Quarterly Labour Force Survey data, we provide an analysis of which groups and where the self-employed are most at risk of significant income loss and therefore household distress.
Because of time-lags in the publication of official labour force and business statistical data, it is still too early for us to assess with any degree of precision the impact of the crisis on the self-employment. Nevertheless, the sudden closure of businesses and tight social distancing restrictions on the movement of people in the attempt to slow down the spread of Covid-19 is having unprecedented effects on employment and businesses activity. Employment and self-employment in non-food personal and domestic services is directly affected since customers are required to stay at home except for essential shopping for food and medical supplies, and where possible work from home, and so no longer permitted to use these services.
The Institute for Fiscal Studies identifies sectors that are directly affected by the lockdown: non-food, non-pharmaceutical retail; passenger transport; accommodation and food; travel; childcare; arts and leisure; personal care and domestic services (Joyce and Hu, 2020). The sector-specific employment risk coincides with specific job and worker characteristics with young people and women being predicted to be hit hardest by the lockdown. Age and gender effects are further associated with low income jobs and part-time workers. Hence, the employment effect of Covid-19 is associated with a stark level of social inequality.
However, predictions about which workers are hardest hit by the crisis (Joyce and Hu, 2020; Kitsos, 2020), included only those in paid employment.
We provide here a corresponding analysis for the self-employed.