The minimum wage problem
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Thousands of self-employed people in Weston will be left ‘largely invisible’ by the new national living wage, it has been claimed.
Using the most recent statistics, about 6,000 people in the town are self-employed, but more than half earn less than the £14,000 national living wage introduced for paid employees across the country last week.
The average salary for self-employed people in the town is just £10,500, the equivalent of £5.40 an hour, one of the lowest in the region and almost £300 less than the newly-introduced minimum wage, which will only cover people employed by others.
The Social Market Foundation (SMF) has estimated around half of all self-employed people are not earning the equivalent of the national living wage, and can already lose out by having no entitlement to things like sick or holiday pay.
Terry Gilbert, from the North Somerset Enterprise Agency, said some self-employed people ‘robbed themselves for their business’ but that it was far from the full picture of self-employment.
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He told the Mercury: “There’s a serious difference in what people give themselves, some literally starve themselves for the benefit of their business, they could give themselves more but prioritise their firms instead.
“That said, there are plenty who don’t do that. I don’t think there’s a norm across the board by any means, and there’s a huge variation in the way people work.
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“You might find someone doing 80 hours a week who pays themselves about five pounds an hour, or someone who does far less.”
Nida Broughton, chief economist at the SMF, said those in self-employment were already some of the worst paid in the UK – with Weston’s average wage among the worst nationally – who would be left even further behind by the new wage.
She said: “While the advent of the national living wage is set to reduce the proportion of low-paid employees to its lowest level since 1985,the same is not true of the self-employed, who are not covered by the national minimum wage or the national living wage.
“These self-employed workers are missing from the Government’s strategy to move from ‘a low wage, high tax, high welfare economy’ to a ‘higher wage, lower tax, lower welfare economy’.
“Effectively, with the national living wage acting as a floor for employees, there is a risk that low pay continues to exist, but is largely invisible, through self-employment.”