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1.7 Million Self-employed workers will miss out on the National living wage

Posted in 'Neighbourhood' by Paul Anderson Riley

22 March 2016

Research undertaken by the Social Market Foundation has revealed that more than 1.7 million self-employed workers will miss out on the National Living wage and they expect this to increase to around 1.9 million in 2020.

This warning comes as the National Living wage will be implemented in April with employees over the age of 25 expecting to earn £7.20 an hour. Over one million low paid workers are expected to be helped by this new government policy.

A spokesman from the Department for Business, Innovation and Skills says "This government is committed to backing enterprising self-employed people through initiatives like start up loans, tax allowances and by cutting red tape by a further £10 billion…our new National Living Wage will give a boost to over one million low paid workers when it takes effect next week."

The research also raised concern that companies will now contract out work to self-employed workers to avoid paying this higher National Living wage. Official statistics show that one in seven UK workers in the UK is currently self-employed and this could rise following the introduction of the National Living Wage.

Nida Broughton of the SMF says "Policies such as the National Living Wage make it artificially more attractive for firms to engage contractors rather than employees, and ignore a large section of low paid workers."

A self-employed worker typically earns less than an employed person doing the same job the SMF has revealed. They have used Family Resources Survey information as the basis of their findings. The research shows that 49% of self-employed people in the UK were low paid on an hourly basis, which is described as earning two thirds or less than employees, when compared with 22% of employed people.

The cost of the National living wage to UK businesses has been estimated by the Regulatory Policy Committee as more than £1 billion.

Paul Anderson Riley

Paul has a degree in Human Geography from Plymouth University and has a keen interest in both listening to and playing music, football and surfing.


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