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Think tank calls for higher minimum wage for self-employed workers

Joanna Faith
Written By:
Joanna Faith

Self-employed workers should be paid a higher minimum wage than those in employment, a think tank has proposed.

Demos said the higher rate should be a legal obligation and would cover the additional risk lower paid freelancers and contractors bear as a result of their financial insecurity.

Ben Glover, senior researcher at Demos, said: “Self-employed workers are not protected by the safety net that many of us take for granted, from sick pay to maternity cover.

“This bargain is only fair if self-employed people earn enough to cover the additional risk they take on, but too often in Britain today this is simply not happening. That’s why we are calling for a new, higher minimum wage for the self-employed.”

Research by the think tank, financed by Natwest, found that ‘liquid’ workers, such as gig economy workers and the self-employed face greater barriers to financial inclusion compared to traditional workers.

They are less likely to hold financial products and are almost twice as likely (28%) to be turned down for financial products due to their employment history than traditional employees (15%).

It also found these workers are nearly twice as likely to turn to a payday lender than employees.

Demos recommends an auto-enrolment pension scheme for the solo self-employed with the government acting as their ‘de facto’ employer.

The self-employed now account for 15% of the labour workforce, with 4.96 million people working for themselves – 195,000 more than a year ago.

The national minimum wage is currently £8.21 an hour for workers aged 25 and over.

It is £7.70 for 21-24 year olds and £6.15 for 18-20 year olds.