Shoppers and workers of the world go digital

Shoppers and workers of the world go digital

Tom Purvis on how online platforms have created new opportunities for the self-employed

Online platforms have changed the way we shop and work. Digital platforms are creating self-employment opportunities for many, and it is time the government took note and supported them.

Self-employment has been growing substantially in the last few years and is now changing the face of the UK labour market. There are currently 4.8 million self-employe prople in the country, and it is expected there will soon be more people working for themselves than working in the entire public sector.

Why? Because people want flexibility in their work, and e-commerce provides it. Platforms like Etsy and Shopify have changed the way we shop and work by providing a clear and simple way to become your own boss.

E-commerce has grown sharply in the last few years. In the UK, sales rose from £503 billion to £511 billion between 2015 and 2016 alone. And this only is expected to continue as more and more people move off the high street and into the online world.

What we are seeing is a clear shift towards the online world and self-employment. That is why it is so important for the government to work to create a supportive business environment for the self-employed.

According to research by IPSE, there has been an increase of 46.5 per cent in freelancers over 50. Currently, 72 per cent of all self-employed people are aged 50 or above. Typically, it is also the over-50s who vote in the greatest numbers, so supporting the self-employed makes sound electoral sense too.

There has been a particular increase in the number of women going self-employed. In fact, the number of self-employed women has grown by a staggering 75 per cent in the last 15 years. One of the key reasons for this is that more and more new and expecting mothers are using the flexibility of self-employment to stay part of the workforce and keep earning money. Self-employment is the perfect way for people to fit work around other commitments in their lives.

People with disabilities are also benefiting greatly from the flexibility of self-employment. Of the 4.8 million self-employed people in the UK, 750,000 have a disability. And, according to the Resolution Foundation, people with disabilities make up a greater proportion of the self-employed than of the employed population. 

Through platforms such as Etsy and Shopify, as well as specially designed disability support software, disabled people can now work how they like. They are able to flourish in self-employment – for the most part free from concerns about additional requirements and discrimination.

The important thing now is to support the increasing numbers of people who are turning to digital work. And, for people trying to work through platforms like Etsy and Shopify, broadband is currently one of the biggest barriers.

Right now, only 5.8 per cent of businesses with fewer than 10 employees have access to superfast broadband.

And since most Etsy and Shopify start-ups have under 10 employees, this should be an urgent priority for the government. And in terms of the countryside, the government’s £600 million deal with Openreach to deliver superfast broadband to rural areas will be vital if the many self-employed people in these regions are to flourish. Rural areas generally have worse infrastructure than the rest of the country, and with construction figures showing that infrastructure output is down, this deal is now more important than ever for rural self-employment. 

There has been some debate about the different levels of tax for online stores and stores with traditional shopfronts. It would be a great shame if online businesses were held back by higher taxes because of the elevated taxes on high street shops. Instead of raising taxes for digital stores, the government should look at ways of bringing them down for brick and mortar shops.

More could also be done to support newly self-employed people by improving Universal Credit. Under the current system, after the first 12 months, self-employed people are expected to earn an average of £1,047 a month according to the current Minimum Income Floor. Actually, however, in their second year of self-employment, people earn an average of just £665 a month.

In their early stages of development, businesses should be encouraged to invest in new machinery and marketing material to help them continue to grow. They should not have to – as now – spend time and money on monthly accounting and deferring investment to show that they made a profit of £1,047 in any given month.

Cash flow can often be a problem for people starting out in self-employment. In fact, of the £511 billion of e-commerce sales, £274 billion were business-to-business – and this may have contributed to the cash flow problems faced by many early-career self-employed people. 

Payment terms often favour larger business over the self-employed people they engage. Small and one-person companies regularly suffer as a result – like when Marks and Spencer changed its payment terms to 75 days for some suppliers.

E-commerce has grown exponentially in the last few years, and this is only expected to continue. Today, digital working is giving people many new opportunities to make money, but there are still major barriers that need to be addressed. With more people than ever before taking up opportunities in self-employment, there has never been a better time to support and celebrate our flexible labour market.