Written evidence from Professor Melanie Jones (SGE0021)
Professor Melanie Jones, Cardiff University (JonesM116@cardiff.ac.uk)
http://business.cardiff.ac.uk/people/staff/melanie-jones
Professor Victoria Wass, Cardiff Business School (Wass@cardiff.ac.uk)
http://business.cardiff.ac.uk/people/staff/victoria-wass
This submission is made in a professional capacity and draws on our past and current academic research in the area of disability which includes analysis of self-employment. It addresses the theme on labour market participation within the call for evidence and more specifically How can self-employment contribute to achieving full employment for disabled people?
Executive Summary
- Existing research shows a relative concentration of disabled workers in self-employment. This may be the outcome of both negative ‘push’ and, more positive, ‘pull’ factors. There is evidence of both factors, with self-employment used by disabled people as a mechanism through which to accommodate their disability at work. In this respect, self-employment is potentially important to addressing the disability employment gap and achieving full-employment among disabled people. Establishing whether push or pull factors are more important is, however, critical for policymakers deciding on the extent to which to encourage self-employment among disabled people.
- There is limited evidence relating to differences in the nature and quality of, and extent of success in, self-employment between disabled and non-disabled people. This type of evidence is critical in order to establish the extent to which self-employment is a mechanism through which the overall quality of life and wellbeing of disabled people can be improved. Further, there is limited large scale nationally representative evidence on the specific barriers to success in self-employment among disabled people which is vital in the design of effective policy so that self-employment to contributes to achieving sustainable full-employment.
- We recommend new and additional specialised data collection in order to address the gaps in evidence relating to (1) and (2) and inform policy decisions in relation to the extent to which policy support to achieve full-employment for disabled people should be focused on encouraging self-employment and forms that such support should take.
Introduction
This submission draws primarily on quantitative academic research to establish trends in disability and labour market outcomes, including in relation to self-employment. This is enhanced by the inclusion of additional qualitative data collected as part of the All Party Parliamentary Group (Disability) (APPG(D)) Inquiry 2016, which incorporates evidence provided by disabled entrepreneurs, disabled people’s user led organisations, academics and practitioners. We are two of five authors of the report to this inquiry.
Disability and Self-employment
1. A key theme within the literature on disability and the labour market is the reasons for, and extent and persistence of, the disability employment gap. This is measured as the percentage point gap in employment rates between non-disabled and disabled people. The gap at more than 30 percentage points is substantial and long-lasting (see, for example, Baumberg, Jones, and Wass, 2015). There is a Government commitment to halve the disability employment gap and this has been the subject of several parliamentary inquiries.
2. The rise in self-employment over the last decade has prompted increasing interest in the role of self-employment as a mechanism through which to address the disability employment gap (see APPG, 2016) and thereby move the economy towards full-employment. This case has been reinforced by evidence of a relative concentration of disabled workers in self-employment.
3. Data from the Labour Force Survey (LFS), the largest household survey in the UK, shows that relative to non-disabled individuals disabled workers are over-represented in self-employment relative to paid employment (Jones and Latreille, 2011). This is true for both males and females, although rates of self-employment are higher among men than women. This is a long-term feature which has been stable over time (Jones and Latreille, 2011) and is illustrated for 2015 in the figure below. Further, this pattern is not specific to the UK: it is consistent with evidence from other European countries (Pagan, 2009).
Source: LFS 2015
4. Importantly, this over-representation in self-employment remains after accounting for other factors which are correlated with disability. Controlling for a range of personal and household characteristics including age and education, Jones and Latreille (2011) find that these account for half of the relative concentration of male disabled workers in self-employment. The remaining gap (disabled workers are about 2 percentage points more likely to be in self-employment than their non-disabled counterparts) is attributed to disability.
5. The impact of self-employment on full employment depends on the extent to which self-employed individuals would be outside the labour market in the absence of self-employment. Therefore, if self-employment disproportionately facilitates access to work for disabled people it has a narrowing influence on the disability employment gap and moves the economy towards full employment.
Push versus Pull
6. Academic evidence distinguishes between what are known as ‘push’ and ‘pull’ factors to explain entry into self-employment. The former, typically negative factors, encourage self-employment because of a lack of opportunities within paid employment. In contrast ‘pull’ factors are typically positive features of self-employment that attract individuals and could include motivations for independence, perceived business opportunities and job flexibility. The nature and balance of push and pull factors may be different for disabled people, particularly given their low employment rate. The distinction has important policy implications since it affects the extent to which self-employment can be viewed as a genuine and positive choice for disabled people.
7. Jones and Latreille (2011) seek to distinguish between ‘push’ and ‘pull’ factors to explain entry into self-employment among disabled people. They argue that there may be particular pull factors for disabled people, including the flexibility to select hours, duties and work location/arrangements. However, they also highlight restricted opportunities in paid employment such as those arising from marginalisation of disabled people by employers as a potentially important push factor. Their work attributes the higher rate of self-employment among disabled people in the UK to its role in accommodating disability at work.
8. One mechanism through which this operates appears to be through barriers to travel to work. Jones and Latreille (2011) report that disabled people in self-employment are relatively more likely to work from home and within their local authority of residence. This is consistent with evidence submitted to the APPG(D) Inquiry that “those with mobility problems can manage whole projects from the comfort of their own living room and never have to deal with issues related to their problems with moving around physically.” (Independent Professionals and the Self-employed (IPSE), written submission, APPG(D) para. 2.8).
9. Insights from individual testimony submitted to the APPG(D) Inquiry further support the role of self-employment in accommodating disability at work: “Self-employed disabled people are able to adapt their businesses and work/life to draw on their strengths, focussing upon their abilities and their assets, based upon their lived experiences.” (Thurrock Coalition written submission APPG(D) par 2.6).
10. However, evidence of push factors was also apparent at the APPG(D) Inquiry:
“For a disabled person, self-employment may be the only opportunity to find work and be a part of and contribute to the wider labour market.” (IPSE, written submission, APPG(D) para. 2.9) and “the option of being self-employed is far more attractive than not being employed at all.” (Achievability, written submission APPG(D) para. 2.3). Moreover, much of testimony focused on barriers within paid employment, including in terms of inadequate provision for adjustment to accommodate disability in the employed sector as a driver towards self-employment:
“There are no good jobs with the right support and flexibility for disabled people. There are often attitude barriers for disabled people at work. Often managers don’t understand disabled people’s access needs and how their impairment affects their work. It is therefore easier to work for yourself so you will not get discriminated against. Also there are often not good policies in place to stop disabled people getting discriminated against.” (People First, written submission, APPG(D) para. 2.4)
“For me self-employment is the only practical solution allowing me to work. I am more productive and can manage my health problems better than I could when I was employed. I have tried working for an employer but have never received the correct level of support that I need to do my job. (Philip Barton, written submission, APPG(D) para. 2.5)
“There are a lot of hurdles. I have ended up 15 years in the same job because I am dyslexic. I can’t get the qualifications to get another job that is better, bigger so I have become an entrepreneur.” (Paul Milton, written submission, APPG(D) para. 2.5).
11. The challenge for policy makers in promoting self-employment to disabled people is summarised in the following: “a disabled person should not feel forced into self-employment. Government must fully implement disability awareness among employers, so self-employment isn’t a last resort, but a positive choice” (IPSE, written submission, APPG(D) para. 2.9).
Job Quality
12. There is general recognition that outcomes in self-employment are highly polarised. Further, there is a growing consensus that self-employment outcomes in relation to pay and job satisfaction have deteriorated since the recession (D’Arcy and Gardiner, 2014; Baumberg and Meager, 2015). This suggests that disproportionate expansion in self-employment has taken place in the lower tail of the job quality distribution. The implication is that while self-employment might facilitate an increase in total employment, this might come at the expense of deterioration in job quality.
13. The deterioration in average earnings among self-employed workers has been linked to rapid and disproportionate growth in part-time self-employment (D’Arcy and Gardiner, 2014). While part-time employment offers benefits for disabled people in terms of accommodation (see Jones, 2007) it is important to recognise that the over-representation of disabled workers in part-time employment means the disability employment gap is an underestimate of the total difference in work quantity. This has similar implications in terms of measuring full-employment.
14. Meager (2016: 36) contrasts the positive view of self-employment as ‘dynamic entrepreneurs creating satisfying work for themselves (and others) in growing high value-added sectors’ with a negative view in which increasing numbers of freelancers struggle ‘for a toehold in a slack labour market via precarious, low-skilled, poorly remunerated work’. The implication is that while self-employment has facilitated an apparent increase in employment, it may be the result of a changing boundary between employment and self-employment (as illustrated at Uber and CitySprint by recent Employment Tribunal decisions[1]) and may have come at the cost of deterioration in employment protection.
15. Using the limited information available in the LFS, Jones and Latreille (2011) report that disabled people are significantly more likely to report themselves as ‘working for self’ and that self-employed disabled men are more likely to report that they have no employees (see Jones and Latreille, 2011, Table 1). An earlier study by Boylan and Burchardt (2002) finds evidence of a disability earnings penalty for self-employed men.
16. There is, however, more widespread evidence that disabled employees have lower job quality and a less positive experience of work on average with gaps in pay and job satisfaction evident after controlling for personal and employment related characteristics (see Jones et al., 2006 and Jones 2016). Since there is a risk that disabled self-employed people may be particularly vulnerable to low quality employment it is vital that gaps in evidence relating to job quality among disabled self-employed workers are addressed.
Evidence Gaps and New Data Collection
17. The necessary empirical work which compares self-employment with employment and outcomes for disabled and non-disabled people is scarce. Both self-employment and disability are low prevalence characteristics in the working-age population and capturing the two together in nationally representative sample surveys is difficult. This is exacerbated by the focus of more detailed questions to employees in existing large scale surveys since they form the majority of those in work. The growth in self-employment and apparent increasing polarisation makes additional data collection essential and timely for policymaking.
18. In the context of disability there are many unanswered questions, particularly in relation to differences in choices (between employment, self-employment and non-employment) and the nature of self-employment, such as in terms of industry, skill-requirements, hours and patterns of work, and working conditions. While there are well-established difficulties in measuring and comparing earnings between employees and self-employed workers efforts to address this can be complemented with data collection in relation to wellbeing at work (see Pagan, 2009).
19. In the context of disability, future research also needs to address questions relating to the extent to which self-employment is ‘successful’ including in helping individuals shape their work to enable them to more effectively utilise their skills and abilities and whether self-employment therefore increases the chance of disabled people achieving their aspirations and potential within the labour market. Such information is likely to require specialised and additional data collection.
20. The evidence submitted to the APPG(D) Inquiry also suggested important barriers to self-employment, particularly in relation to access to financial support (business development grants), welfare benefits and other forms of support (Access to Work) and support services (business networks). The complexity of the nexus of benefits, taxation and government financial support for disabled people in self-employment was repeatedly highlighted as was the lack of information to support people find their way through it, “information from the government on available support for disabled self-employed people is scarce.” (written submission, APPG(D) para. 2.15). Information on barriers and supports is absent in large scale nationally representative data collection but is vital in the design of effective policy to support entry into and success in self-employment among disabled people.
21. Access to Work (AtW) needs to be kinder, clearer and better promoted (Jane Cordell, oral evidence, APPG(D) para. 2.19) including to self-employed people where evidence indicates that it is more difficult to obtain. This appears to combine with a lack of specialist knowledge and information on AtW for self-employed people (many Business Advisors “do not know what to do or how to do it” (Association of Disabled Professionals, written submission, APPG(D) para. 2.14) and this can result in inappropriate or insensitive responses to a disabled person as well as delays in implementing reasonable adjustments (op cit).
22. Additional exclusions were regarded as frustrating and unfair for disabled people pursuing self-employment including issues around the interaction of Employment Support Allowance (ESA) and AtW, access to tax exemptions under the Fit for Work programme and liability for the ‘bedroom tax’ (see APPG(D) para. 2.18).
23. Business Networks were seen as providing vital sources of advice, support and contacts but were experienced as failing disabled entrepreneurs through their lack of awareness of disability. While this included lack of ability to provide specialist support which was often needed it extended to exclusion from events, meetings and premises. A written submission to the APPG(D) recounts repeated instances of exclusion from events, such as those organised by the local Chambers of Commerce “because the venues chosen are inaccessible to wheelchair-users.” (Philip Barton, written submission APPG(D), para. 2.21).
Conclusion
As the economy gets closer to full employment, there will be increasing emphasis on improving the employment rates among low employment groups, such as disabled people. In line with evidence on the benefit of work and the need to close the disability employment gap this attention is to be welcomed.
The key question for policy-makers in relation to achieving full employment is whether self-employment facilitates access to work for disabled people who would otherwise be unable to do so. Disabled people are over-represented in self-employment and given the existence of significant ‘pull’ factors among disabled people, particularly in terms of work-related flexibility, it appears to be a mechanism through which the disability employment gap could be narrowed. However, before promoting or supporting self-employment over paid employment it is important to know far more about the motivations for self-employment among disabled people and the quality of their self-employment, particularly the extent to which self-employment is associated with low job quality among disabled people. The nature, quality and probability of success in self-employment will determine the extent to which self-employment offers disabled people an opportunity to integrate into the labour market and improve their financial and social wellbeing. Evidence is not yet available on which to properly assess the role of self-employment in achieving sustainable full-employment for disabled people.
We argue new research and additional data collection is required. The latter could partly be addressed by strengthening the focus on self-employment within existing government surveys such as the Labour Force Survey but will also require additional specialised data collection targeted at disabled self-employed people. The latter will also provide an opportunity to better understand the barriers and supports in self-employment among disabled people to guide effective policy support in the future.
References
All Party Parliamentary Group (Disability) (2016) Ahead of the Arc: A Contribution Towards Halving the Disability Employment Gap. http://www.disabilityatwork.co.uk/wp-content/uploads/2016/11/All-Party-Parliamentary-Group-on-Disability-Ahead-of-the-Arc-Report.pdf.
Baumberg, B., Jones, M. and Wass, V. (2015). Disability and disability-related employment gaps in the UK 1998-2012: different trends in different surveys? Social Science and Medicine 141, 72-81. (http://www.sciencedirect.com/science/article/pii/S0277953615300289)
Baumberg, B. and Meager, N. (2015) Job quality and the self-employed: is it still better to work for yourself? in Felstead A, Gallie D, and Green F (eds.) Unequal Britain at Work: The Evolution and Distribution of Intrinsic Job Quality. Oxford University Press.
Boylan, A. and Burchardt, T. (2002) Barriers to self-employment for disabled people, Report for the Small Business Service, October 2002.
D’Arcy, C. and Gardiner, L. (2014) Just the Job – or a Working Compromise: The changing Nature of Self-employment in Britain, Resolution Foundation.
Jones, M. (2007) Does part-time employment provide a way of accommodating a disability? The Manchester School, 75(6): 695-716.
Jones, M. (2016) Disability and perceptions of work and management, British Journal of Industrial Relations, 54(1), p. 83-113.
Jones, M. and Latreille, P. (2011) Disability and self-employment: evidence from the UK LFS, Applied Economics, 43(27), 4161-4178.
Jones, M., Latreille, P. and Sloane, P. (2006) Disability, gender and the British labour market, Oxford Economic Papers, 58(3), p407-459.
Meager, N. (2016) Job quality and self-employment: Is it (Still) Better to work for yourself? International Review of Entrepreneurship , 13(1), pp. 35-46.
Pagan, R. (2009) Self-employment among people with disabilities: evidence for Europe, Disability and Society, 24(2), pp. 217-229.