In-work Poverty and Enterprise: Self-employment and business ownership as contexts of poverty

Laura Galloway, Mike Danson, James Richards, Katherine Sang, Rebecca Jane Stirzaker

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Abstract

Popular rhetoric about private business enterprise is that it is positive and contributory to lives and to economies. Following a summary statistical overview of enterprise and self-employment in the UK and Scotland, this report provides evidence of a very different reality for some. The research includes testimony from specialist key informants in Scotland as they relate their perceptions of enterprise as a poverty context, and also includes case profiles of self-employed people and business owners who are living in poverty.
The purpose of the research was to determine if and how poverty and enterprise intersect. This research does not dispute the macro-level view that private enterprise is a net economic contributor. It does, however, highlight a hidden form of enterprise; one where self-employment is used as an alternative to unemployment, to mitigate or avoid benefits sanctions, and to address financial need as a crisis response. This type of entrepreneurship is related in the testimonies of our key informants and the experiences of our case studies as cynical and at times exploitative. There is clear evidence of work at rates of pay well below ‘minimum’ or ‘living’ wage values. The firms created under these
circumstances are low value and, in fact, are likely to have a net negative value in socio-economic terms and cause harm to health and wellbeing for individuals. More broadly, the research finds also perceptions amongst key informants of an increase in contractualisation of what were formerly ‘regular’ forms of employment, and experiences of this type of self-employment amongst the case studies. This is described as exploitative of individuals and workforces as organisations shift financial responsibilities and duties of care to individuals on low rates of pay and without contractual employee rights. We argue that this trend is bad for individuals, for organisations, for national innovation and competitiveness and for national economies.
The report concludes with various recommendations based on expertise gathered from the key informants. It also identifies a dearth of reliable statistical information about the scale of the enterprise and poverty agenda and argues that, until we know more about the rates of use of self-employment as an alternative and mitigator of long term unemployment, and the extent to which workforces are now contractualised as self-employed, we will be unable to address
Original languageEnglish
Place of PublicationEdinburgh
PublisherHeriot-Watt University
Number of pages32
Publication statusPublished - 1 Feb 2016

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