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Millions of self-employed to miss out on National Living Wage

1.73 million self-employed workers will continue to be paid below the national living wage (NLW) when it comes into effect from April 2016, according to research by the Social Market Foundation (SMF).

49% of self-employed workers are in low pay on an hourly basis, compared to 22% of full-time employees. On a monthly basis, this rises to 55% of self-employed workers and 29% of employees.

Self-employment has grown by a quarter since 2000, now accounting for over 1 in 7 workers in the UK.

SMF also found:

  • 64% of low paid self-employed workers have no income from savings, investments or pensions, compared to 36% of low paid employees
  • 77% of low paid self-employed workers in London have no other sources of income aside from employment earnings
  • 28% of low paid workers are likely to live in low income households, compared to 19% of low paid employees.

The NLW will come into force from April 2016, setting a wage of £7.20 an hour for paid workers aged 25 and over.

SMF chief economist Nida Broughton, said:

“The government has focussed its efforts on tackling low pay among employees. But in doing so, it is further sharpening the divide between employee and self-employed.”

Mubin Haq, director of policy & grants at Trust for London, added:

“Stronger measures are needed to tackle this including specific sector support and examining the role of contractors in increasing the wage floor.”

Talk to us today to discuss the NLW.