Are”something” in disguise…..?

Ian Duncan Smith is up in arms about the BBC at the moment. No surprise there then. For as long as I can remember Conservative ministers have continually moaned about our state broadcaster, and how they believe it constantly highlights bad news and downplays more positive stories, particularly when the party in power has a bluish tinge.

The current spat revolves around the number of people out of work. In spite of falling GDP, double dip recession and government cuts, unemployment has not gone through the roof. The employment statistics are surprisingly robust. Jobs are being created faster than they are being lost.

For the government this is seen as good news and evidence that the economy is in better shape than is realised. Others maintain that the current impact of joblessness is being hidden by a myriad of seasonal and one off benefits as well as the significant increase in part time jobs and self-employment. It was the latter argument that the BBC latched onto, thus incurring the wrath of the Secretary of State for Work and Pensions.

I have long thought that one of the features that has set this recession apart from previous ones is that of under-employment rather than unemployment. In previous downturns it was rather like the hokey-cokey. You were either in or out or work. There were no shades of grey, let alone the 50 (ho ho? Oh well never mind…) or so that we seem to have at present. Freelancing, contracting, self-employment, however you want to term it, is one area in particular that is clouding our previous certainties as regards unemployment.

For some freelancers there is no choice. The changing jobs market and the lack of conventional employment opportunities mean that self-employment is the only option they have to earn money. For many others it is a lifestyle choice, providing a flexible working environment and the work-life balance necessary to cope with family commitments or indulge in other activities.

For SMEs and entrepreneurial companies freelancers and contractors make sense. Why go through the hassle of engaging full time employees that you don’t actually need full time when you can get what you need when you want it, and only pay for what you know you can use and which will add value?

For HMRC it is a headache, as it reduces its ability to efficiently collect tax through PAYE and leaves them reliant on the vagaries of self-assessment and corporate tax returns. Hence their ongoing efforts to get as many freelancers as possible classified as employees. Providers of loans and credit are also finding the increase in “non employment” a challenge, which may be another reason for the current lack of finance in the economy.

Nobody pretends that a life of self-employment is easy. It is risky, insecure and hard work, and I am sure that a fair proportion of self-employed people would go back to being employees tomorrow if the right opportunity arose. However in a world where flexibility is becoming the norm such opportunities are likely to remain scarce, and thus self-employment in its various guises will continue to grow.

The current situation seems to be then that HMRC want to treat freelancers as disguised employees. Others want to view them as unemployed people in disguise. SMEs and entrepreneurs meanwhile have an undisguised need for the right people at the right time for the right price. Perhaps rather than indulge in petty squabbling, the government and the BBC should work together to promote a sensible debate about the issue. If something good can emerge from all of this I for one may not be able to disguise my feelings of joy….

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