The curious case of low unemployment

Benedict Cumberbatch as Sherlock Holmes
Image caption Why unemployment didn't rise notably in the last recession is a conundrum for investigation

One of the most puzzling things about the recent economic recession in the UK was to quote Sherlock Holmes: "The curious incident of the dog in the night time."

Normally in recession, unemployment rises notably. But last time it didn't - the dog didn't bark.

What was happening? One clue is the rise that did happen - in self-employment.

Figures show an increase of 600,000 in the number of micro-businesses in the UK since the recession began in 2008. One in seven people are now working on their own, for themselves.

The Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) has identified this as a substantial change in the way we think about work as a whole, and the way that governments think.

For decades, lifetime employment by big corporations was the way that most people regarded work. That blueprint may be fading.

If it is, then many things may need rethinking - taxes, training, planning permission for home workshops and offices, insurance, and pensions.

People who have embraced this self-employed way of life can be lyrical about the possibilities. Tom Hodgkinson, founder of the magazine The Idler, is one of them.

He says: "I would like to see a world where most of us work in small groups and for small companies.

"This is because I know from experience that it is the only responsible path, and that despite the downsides - poverty, long hours, attacks from the spiteful - self-employment can bring happiness and fulfilment.

"Small business offers the potential for creativity and autonomy."

Results of redundancy?

Emma Jones is another enthusiast - she founded Enterprise Nation in 2005 as a for-profit cheer leader, event organiser and consultancy.

She also talks about the huge new freedom of choice available to the self-employed person. How growing children can be fitted into working life. How costs shrink without the need for daily commuting and dressing up for the job. The extra hours available to the home worker.

Image copyright Thinkstock
Image caption Are lots of self-employed people doing it because they had not other choice after losing a job?

And an array of new tools have helped enormously. Internet telephony makes collaboration easy, even across continents. Internet selling gives small businesses the chance of a global marketplace from day one, if they learn the art of creating a viral buzz.

Selling sites such as Etsy provide an international shop window for crafts and antiques, with a low cost entry barrier of 20 US cents (12p).

And help is available from professionals in things like website design from services such as Freelancer, where freelance specialists quote for specified jobs almost as soon as the request is posted.

The response is international, enabling even a self-employed person to outsource from day one - right across the world.

Image copyright Thinkstock
Image caption Critics point out that most research is done by the largest companies

But it has to be said that there may be big drawbacks to this new way of life. The conference on the subject organised earlier this year in London by the RSA began with a glad confident morning of enthusiasm from people who had adopted the self-employed way of life. People like Tom Hodgkinson and Emma Jones.

Later in the day, though, things got grimmer. Panels of economic experts raised doubts about the process. They were concerned about the erosion in pay levels when people go self employed, and the uncertainty of it.

There were worries that many of the new self-employed were not volunteers seeking a better way of life, but people forced into self-employment by corporate employers finding ways of removing high-cost employees from their payrolls, their pensions, and their responsibilities.

Or they were a temporary phenomenon - white collar workers who had lost their company jobs in a recession, and had been forced into self-employed consultancy by sheer necessity.

'Lifestyle businesses'

The director of the publicly-funded innovation powerhouse Nesta, Geoff Mulgan, expressed fears that start-up businesses are not the hotbeds of innovation that many assume.

It is still the big companies where most research and development happens. Small start-ups find it very difficult to get the backing to grow and employ others, to become significant contributors to the UK economy as a whole.

Image copyright Thinkstock

According to Mr Mulgan one of the big deficits in the modern economy in Britain is the tendency for so many ambitious start-ups to wither on the vine as they attempt to grow fast early in their development.

The UK does not seem to have the financial support for this vital phase of growth, unlike the US. The UK doesn't have enough angels and venture capitalists willing to have a punt.

Government officials I've met in the past used to refer slightly sneeringly (I felt) to "lifestyle businesses", run more for self esteem that powering economic development.

That's a technocratic view. I still like the idea that it may be possible to break free of the uniformity of corporate employment through going it alone.

For most self-employed people the money may be worse than what they pay on the corporate ladder, but the freedom may be exhilarating.

Provided that self-employment is taken seriously by the people who frame the rules and regulations... and by the people who think about what our future society may look like.

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