Nearly one in four workers aged 50 and over are self-employed – twice the rate of younger people. Self-employment is also growing faster among older workers, especially those in their mid-60s and above. More than half of people aged 70 and over who are still working are self-employed.
Why are more and more workers moving into self-employment in later life? And is this a good thing?
As the population ages, more and more people are working longer. Paid work is important for people’s income now, and their savings for retirement. Good work can also provide people with a sense of structure and purpose, and help keep them active and socially connected.
Our research has found that autonomy and a good ‘fit’ between personal and organisational values are particularly important for workers in later life – and where these are lacking, higher skilled workers may opt for self-employment instead.
Flexibility is crucial for older workers
The peak age for caring is 55-64, and we know that people are also more likely to develop long-term health conditions as they age.
So flexibility is also critical to help people stay in work in later life – not just the number of hours worked, but also where, when and how we work.
For older people in professions such as accountancy, moving into part-time consultancy can allow them to take more control over their work, and flex their working patterns to fit around their changing lifestyles.
We’re also starting to see this in sectors which haven’t traditionally been associated with self-employment. Moving from full-time to supply teaching, for example, can allow teachers to get plenty of classroom time, without all the associated stresses, and at times of your choosing – and part-time self-employment is growing fast in the education sector.
For some older workers, then, self-employment offers a positive, flexible alternative to either full-time work or retiring.
However, most people still leave work altogether before they reach State Pension age. While this may be a positive choice for many, it’s estimated that there are a million people aged 50 to 64 who would like to be in work but are not.
The most common reasons that older people leave work involuntarily are ill health and caring responsibilities, followed by redundancy. Although people want to continue working, it becomes impossible to manage their health or caring role alongside a job. In other words, the nature and quality of work on offer matters.
Limited options for older workers
In our work in Greater Manchester, people over 50 who are out of work told us that they felt they had few options other than self-employment, zero-hours contracts or other kinds of precarious work.
For Janet, this was because of a lack of suitable part-time jobs that would allow her to care for her husband, who has early-onset dementia. Her husband has also had to leave his full-time teaching post, and now relies on irregular supply teaching – even for professionals, self-employment can sometimes be the least bad option, rather than a positive choice. Janet told us that for her, self-employment was lonely, unpredictable and stressful – the very opposite of fulfilling work.
For people with limited qualifications, who were previously employed in sectors or trades that are shrinking, or who are struggling to find a job after a long spell out of work, self-employment can end up seeming like the only option.
At any age, people in low-skilled self-employment are at greater risk of taking on additional debt, working fewer hours and earning on or below the minimum wage, and not being able to pay into a pension or to save sufficiently for a good quality of later life.
They are not currently eligible for pensions auto-enrolment or statutory sick pay. Older self-employed people face the same challenges, at a stage in their life where there is less time to recover or make up the difference.
So for some older workers, self-employment is a flexible and fulfilling alternative to either a job or retirement. But for others, moving into self-employment in later in life is a last resort, not a positive choice. The picture is complex, and greater understanding of the motivations, opportunities and risks for self-employed older workers is needed.
Matthew Taylor’s recent review of employment practices in the modern economy is particularly important in this context. Sadly, the review didn’t make much reference to the specific circumstances of older workers.
This is understandable, since the challenges facing older self-employed people are much less visible than those in the new ‘gig’ economy. However, they are no less important.
Recognise the shifts in the workforce
The review did champion better quality of work, the importance of pay and progression, workplace health and wellbeing, and helping self-employed people to save for their future - all key aspects of making work age-friendly.
The government should act on the review’s recommendations, to ensure that self-employed people of all ages have equal rights and access to the support they need, especially in relation to income, health and savings.
Beyond this, both government and employers need to recognise the shifts in the workforce, and make changes to ensure that older workers aren’t driven into self-employment as a last resort. This means tackling age discrimination in recruitment, in progression and in the wider workplace culture.
It means ensuring flexible employment for everyone who needs it, whether to care for a child, an adult parent or spouse, or to manage their own health circumstances.
And it means adapting working conditions and the workplace environment to prevent and manage long-term health conditions such as back or joint problems and enable every worker to contribute fully.
With the right action now, we will all be able to enjoy the opportunity of fulfilling work in later life, no matter how we are employed.