Coronavirus and the self employed

Our CEO Mubin Haq said yesterday that although we will all be affected by Covid-19, we will not all be affected equally. Four in ten people have savings of less than £500, whilst over half of those on low-to-middle incomes have no savings at all Those who are most vulnerable in society are also most vulnerable to the economic effects of Covid-19.

One of the markers of society is how we treat our most vulnerable. How we pull together at times of crisis. What we do on a macroeconomic level is going to shape our society for many years to come.

Some of the policy announcements made by the Chancellor Rishi Sunak in the past week have meant many employees and businesses breathed a sigh of relief, ‘champagne’s on Rishi’ one of my small business-owning friends joked on Friday (although he’s terrified his business will not survive). Even so, the current support for self-employed people is more of a tap water situation.

The growth in the gig-economy and freelance workers over that past decade has left many people vulnerable. There are now over a million more sole-traders in the UK than there were in 2000, taking the total to over four million. Right now, there are two ways the self-employed need help: to cover them for sickness, and to provide support if their income stream dries up.

Self-employed people are still not eligible for Statutory Sick Pay, although the government has made adjustments so they can now more easily make a claim for Universal Credit or new style Employment and Support Allowance. However, to quote Resolution Foundation’s Torsten Bell, “[The] key issue here is that income shock we are facing is going to be about much more than sickness - so our response needs to go well beyond sick pay. Sick pay may only be needed for two weeks but unemployment is going to last much much longer.”

It is essential that the solution provided is as close as possible to that being offered for employees to avoid creating a two-tier solution. When we emerge from this crisis we need those workers to help rebuild the economy; they should not have to start from a lower place than those who were lucky enough to get protection just because they were employees.

There are some good solutions being suggested by a number of organisations. For example the TUC are calling for the government to:

  • guarantee incomes for self-employed people, extending the protection applied to employees to an additional five million workers
  • introduce paid parental leave for parents who need to take time off work to care for children who are not attending school
  • fix the sick pay system, by raising the level to the equivalent of 35 hours a week at the real living wage – just over £300 a week – and extending entitlement to an additional two million people.

Government has promised an announcement on how self-employed workers will be protected later this week. After the restrictions on movement brought in last night, it needs to come quickly. Many self-employed people will have gone into work this morning worried that they would not get paid if they followed government advice to stay home.