Earnings of UK's self-employed now below 1994-95 levels

The earnings of UK's self-employed workers averaged less than their earnings in 1994-95, according researchers.

According to the Resolution Foundation, while the UK's self-employed workforce had grown by 45 per cent since 2001-02, their weekly earnings were down by £60.

"Typical earnings fell by £100 a week between 2006-07 and 2013-14 – a far more dramatic fall than the pay squeeze that employees experienced," the Foundation said in a post.

The foundation pointed to the increase in lower paid jobs and the financial crisis, which had hit pay rates. The report comes in the backdrop of an expected ruling in a closely followed case on pay for self-employed drivers for Uber.

According to Adam Corlett, economic analyst at the Resolution Foundation, a think tank that aimed to improve pay, almost 5 million UK workers were self-employed which worked out to one in seven workers, a record high.

"Today's labour market is a rapidly shifting one, and our default assumption of what a self-employed person looks like today may be very different five years down the road. The challenge for policymakers is to respond to that in a flexible but meaningful way," it added in the smae post.

The self-employed workforce included construction workers, hairdressers, taxi drivers, tutors and IT consultants, Corlett said.

"But while the self-employed workforce is getting bigger, typical earnings are actually lower than they were 20 years ago," Corlett said.

The research revealed that average self-employed wages were £240 a week in the 2014-15 financial year, the most recent period for which data was available, down from about £300 a week in 1994-95.

The Resolution Foundation, said the changing nature of the self-employed workforce was partly to blame for the state of affairs.

Meanwhile, the Social Market Foundation said many of those working for less than the minimum wage in a sector that included construction site workers and  drivers for Deliveroo and Uber, would lose out when the government's new universal credit replaced existing benefits.

The government is launching an investigation led by Matthew Taylor, the former head of Tony Blair's No 10 policy unit, into the pay and conditions of the one-in-seven workers who are self-employed.

Cortlett said, ''Prior to the financial crisis, this stagnation was as much about the changing nature of self-employed work, rather than individual rewards. But since the crisis the returns to self-employment have fallen sharply, even when measured on a like-for-like basis.''