The document provides an overview and analysis of trends in small businesses and self-employment in the UK. It finds that while GDP declined during the recession, the number of businesses continued to grow. Self-employment has also increased significantly in recent years, especially among older, higher skilled workers. Rates of self-employment vary geographically, and most self-employed report being content with their work situation and choosing it for flexibility and control. The future trends are uncertain but self-employment is likely to remain an option for those wanting more freedom and independence in their work.

1. The UK Business Population – the
story so far …
Adam Hardy
November 2015

2. My role
• Analyst in Enterprise Directorate of BIS
• Focus on evidence relating to small businesses
and enterprise – compile statistics and undertake
research to understand business environment and
key issues for small firms
• Support policy makers in making evidenced based
decisions and evaluate impact of existing and
potential policy options
2

3. 3
Overview
• Why Small Businesses are important
• What’s happened to the Business Population
since the recession
• Self Employment – Recent trends and their
characteristics
• The Future?

4. 4
Small firms contribution to economy...
Share of businesses in the UK private sector and their associated employment and turnover,
by size of business, start of 2015.
99.3%
0.6% 0.1%
48.0%
12.3%
39.7%
32.8%
14.5%
52.7%
0%
20%
40%
60%
80%
100%
0-49 employees 50-249 employees 250 and over employees
Businesses
Employment
Turnover
Source: BIS Population Estimates for the UK and Regions 2015

5. 5
Number of SMEs by employee size-band, 2012
• Over 4 million private sector businesses have no employees.
• 1.07 million have 1-9 employees
• 204,000 have 10-49 employees, and
• 33,000 have 50-249 employees.
…but most small businesses do not employ anybody…
4.08
1.07
0.20
0.03
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0 1-9 10-49 50-249
Millions
Employee size-band
Source: BIS Population Estimates for the UK and Regions 2015

6. 6
Despite a large fall in GDP, the business population has
continued to grow both during and since the recession….
Change in GDP and UK private sector business population Q1 2008 – Q3 2015
106.4
125.8
85.0
90.0
95.0
100.0
105.0
110.0
115.0
120.0
125.0
130.0
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Index(Q12008=100).
GDP
UK private sector businesses (Q1 2008 = 100)
Source: BIS Business Population Estimates 2015 and ONS GDP ABMI Q3 2015
RECESSION

7. 7
The recent increase is part of a longer
term trend...
Number of private sector businesses in the UK, start of 2000 – start of 2015
3.5 3.5 3.6 3.7
3.9 3.9
4.1
4.3 4.3 4.4 4.5 4.6
4.8 4.9
5.2
5.4
0.0
1.0
2.0
3.0
4.0
5.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
millions
Source: BIS Business Population Estimates for the UK and Regions 2015

8. 8
...but growth not experienced amongst
businesses of all sizes...
Change in number of private sector businesses in the UK by employee size band, indexed
173
118
97
70
80
90
100
110
120
130
140
150
160
170
180
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Baseyear2000=100
Zero employee businesses 1-249 (SME employers) 250+ (large) *
Source: BIS Business Population Estimates for the UK and Regions 2015

9. Self Employment - Overall trends
• Self-employment increasing in long term – up by over 1.3m
since start of 2000
• Strong growth since recession – increase of 675k since
start of 2008
• Now stands at 4.6m
• Self-employed now represent about 15% of all employment
• Strong driver of recent employment growth – accounting
for nearly half of the rise in total employment since the
recession.
• Recent high growth mainly a result of fewer people leaving
self employment.
9

10. Self employment in the UK has been going up since 2000…
10
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Thousands
Source: ONS Labour Force Survey, four quarter average

11. 11
…particularly amongst the longer term self-employed
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
2008 2009 2010 2011 2012 2013 2014
Index(2008=1)
5 or more years
Total
less than 1 year
1 to < 5 years
Source: BIS ED analysis of non-seasonally adjusted ONS Labour Force Survey, average four quarter data

12. Age
• Self-employed workers tend to be older than employees
• 43% of the self-employed are aged 50+ and just 11% aged
under 30
– This compares with 27% of paid employees who are
aged 50+ and 26% who are under 30
• The number of self-employed aged over 65 has gone up by
80% in last 5 years
– Numbers of paid employees aged 65+ has also gone
up, but by a more modest third
12

13. 13
** Data from LFS 2014 Q2 using 2014
weights
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
16-19yrs 20-24yrs 25-29yrs 30-34yrs 35-39yrs 40-44yrs 45-49yrs 50-54yrs 55-59yrs 60-64yrs 65-69yrs 70 and
over
Self-employed contribute proportionately more to
employment in higher age brackets
% who are self-employed % who are employees Percentage of employment due to self-employed

14. Gender
• There are 1.45 million self-employed women - this is 32% of total self-employment
• The number of self-employed women has increased faster - they account for half of
growth from 2009 to 2014
14
0.8
1.0
1.2
1.4
1.6
2008
2009
2010
2011
2012
2013
2014
Index(Basis:2008=1)
Male Female
Source: BIS ED analysis of ONS Labour Force Survey, March-May quarters

15. Sectors, occupations and skills
• Over a quarter of all people who are self-employed are in skilled trade
occupations
• Nearly 60% of the rise during last 5 years has come in higher skilled
managerial, professional and associate professional jobs
• But still a lot of builders - despite recent fall in share, 20% of self-
employed people are in construction. Lots of taxi drivers too.
• Skills profile of self-employed not that different from employees
15

16. 16
The self-employed tend to work in higher-skilled occupations
0%
5%
10%
15%
20%
25%
30%
Managers and
Senior Officials
Professional
occupations
Associate
Professional and
Technical
Administrative
and Secretarial
Skilled Trades
Occupations
Caring, Leisure
And Other
Service
Occupations
Sales and
Customer Service
Occupations
Process, Plant
and Machine
Operatives
Elementary
Occupations
Occupations of employees and self-employed in 2014
% of employees % of self-employed
** Data from LFS Q2 2014 using 2014 weights

17. 17
0
5
10
15
20
25
30
35
Managers,
Directors And
Senior Officials
Professional
Occupations
Associate
Professional
And Technical
Occupations
Administrative
And Secretarial
Occupations
Skilled Trades
Occupations
Caring, Leisure
And Other
Service
Occupations
Sales And
Customer
Service
Occupations
Process, Plant
And Machine
Operatives
Elementary
Occupations
Share of total amount of change in self-employment between 2009
and 2014 by type of occupation
Source: ONS, Self-employed workers in the UK, 2014; Published in

18. 18
Self-employed and employees show similar proportions of
qualifications and years of schooling
** Data from LFS Q2 2014 using 2014
weights

19. Are people content with being self-employed?
• Only 5% of self-employed are looking for a different or
additional job – compared to 8% of employees
• 4.5% of part-time self employed want to work full time –
similar to employees (5%)
• A bigger share of the self-employed work longer hours than
employees, but also a bigger share work shorter hours
• Self-employed females tend to work shorter hours than self-
employed males
• RSA research suggested that people choose self-employment
for a variety of reasons, including greater freedom, and more
meaning and control in their work
19

20. 20
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2006 2008 2010 2012 2014
%ofemployeesandself-employedlookingforajob
UK employees look for jobs at higher rates than the self-
employed
Self-employed Employees
**Data from LFS Q2 using 2014
Proportion of employees/self employed looking for work – new or additional job

21. 21
People choose self-employment to have more freedom

22. Geography
• The spread of self-employment around the country is not
wholly in proportion to the working population
– Self-employment accounts for a substantially higher proportion
of employment in London (19%) and this pulls up the average
– South-East, South-West and Eastern regions are also above
average
– But other English regions are below average, with the North
East the lowest at 11%
22

23. Some variation in self-employment rates around the country
23

24. Back to the future?
• What is likely to happen?
- More of the same – people enter self employment
because they want to and are happy to remain
• What we know less about
- Earnings, Pensions and Maternity (Deane Review)
- What we are doing to bridge gaps
• Any Questions?
24