Should some self-employed people be legally entitled to the national minimum wage?
Conor D’Arcy, policy analyst at the Resolution Foundation, says YES.
Britain’s 4.8m self-employed workers are a diverse group. Builders and small business owners are still the backbone of this workforce, though recent growth has been concentrated in higher-paying sectors like advertising. But as court cases and column inches about the gig economy have highlighted, there’s another lower-paying side.
Half of self-employed people working full-time have low weekly earnings. For those who are independently self-employed but take work from firms or platforms that control the price they can charge customers, the firm should ensure they can earn at least the minimum wage. This would apply not only in the gig economy (where ongoing tribunals may decide many there should already be getting it) but also in sectors like hairdressing.
Firms with a business model based on exploitatively low pay have no place in a modern economy. This won’t solve concerns around self-employment – better enforcement and a more equal tax system are needed – but extending this basic right would be a good first step.
Alex Deane, a Conservative commentator, says NO.
When the state restricts the ability of businesses (in this case, the self-employed person’s business) to enter into contracts, on a macro scale it ensures in practice that there will be either fewer such contracts, or fewer such self-employed people, or both.
The Labour Force Survey and the Office for National Statistics provide evidence that the availability of easier routes into self-employment have led in recent times to rising workplace participation, especially for those who struggle most to find work; single parents, the disabled, the long term unemployed. The most important thing for self-esteem, social participation and advancement is having a job; this would make having one less likely.
Finally, especially if introduced abruptly, it would undermine the business model of the gig platforms. If they can’t pay people less at times when there’s no demand, they’ll either not pay them at all or go out of business – a rotten outcome both for innovation and for consumers who’ve benefited from their rise.