Self-employed working hours return to pre-Covid levels after five-year slump

The working hours and happiness of the self-employed are starting to recover – five years on from the downturn induced by the pandemic, new LSE research reveals.

Road to Recovery: Self-Employed on the Mend?, published by the Centre for Economic Performance at LSE, found that while some recovery is evident, a significant share of people would rather be in paid employment and that experiences differ across groups of self-employed workers.

The report, the eighth in the series, draws on a representative sample of 1,800 individuals in the self-employed population to highlight the experiences of the self-employed during and after the pandemic.

Approximately two-thirds of respondents say their income, profits and hours now match or exceed pre-pandemic levels, and there has been an improvement in wellbeing especially among younger people.

The share wanting to switch to employee jobs has also fallen since 2023. The latest survey shows that 29 per cent would be willing to move for the same salary – down from 41 per cent in the previous report. But certain groups within this overall figure seem less satisfied, with around half of those self-employed people who are currently looking for an employee job, saying they would be willing to take a pay cut to make that transition.

The authors also highlight official data showing that in contrast to the rapid increase in self-employment at the turn of the century, the number of people in self-employment fell by about 800,000 during Covid and has stayed broadly stable since then.

Stephen Machin, director of CEP and co-author of the report, said: “The overall picture is at last becoming more positive. Some self-employed workers feel they have regained – or exceeded – their pre-pandemic level of economic stability. The proportion of individuals reporting difficulties in meeting basic expenses over the past month has fallen to 21 per cent – the lowest level recorded across all eight waves of our survey. And mental health has improved, especially among the youngest in our survey. But not everyone has benefited – those working for app-based companies are more likely to report longer hours, but not necessarily more pay. And half of those who are currently looking to get out of self-employment would take a pay cut to do so.”

Robert Blackburn, co-author of the report and professor of entrepreneurship at the Brett Centre for Entrepreneurship, University of Liverpool, said: “The ups and downs in self-employment numbers over time seem to be driven by conditions in the labour market rather than any surge in entrepreneurship and opportunity-driven individuals. How this will be affected by the opportunities unleashed by AI and changes in the skills required in the working population is also worthy of further consideration.”

Maria Ventura, co-author and assistant professor at the University of Edinburgh, said: “Our analysis shows the magnitude of the current disaffection among the self-employed with the two major political parties, and a polarisation of voting intentions driven by longstanding economic discontent and a perception that the main parties have lost touch.”

The full report is available here: Road to recovery: Self-employed on the mend?

Notes to editors

• The Centre for Economic Performance (CEP) is an independent research centre based at the London School of Economics and Political Science. Its members are from the LSE and a wide range of universities within the UK and around the world.
• The Centre for Economic Performance is part-funded by the Economic and Social Research Council (https://esrc.ukri.org/), part of UK Research and Innovation (https://www.ukri.org/).
• The authors acknowledge the financial support of the Brett Centre for Entrepreneurship, University of Liverpool and the Creative Industries Policy and Evidence Centre, Newcastle University to undertake the survey.