Self-employed women have been let down – no wonder they’re leaving

In the 2010s, self-employment boomed. But the real story of this boom is that self-employment became a catalyst for change in the world of work. Record numbers of women struck out on their own and embraced the benefits of self-employment – a way of working that was once heavily male-dominated.

The numbers speak for themselves. Between 2008 and 2023, the population of self-employed women grew by approximately one million. That’s a 63% increase, and more than triple the number of men the sector gained in that time.

But more recently, we’re seeing worrying signs that this boom has run out of steam, and may even be reversing – and it’s happening because they’ve been taken for granted.

The combined impact of the pandemic, lockdowns, and damaging reforms to IR35 tax rules hit the self-employed hard, prompting hundreds of thousands to close their businesses in 2020 and 2021. It’s only in recent months that we’ve seen signs of a consistent uptick in the number of people taking on freelancing and self-employment. 

But new stats published earlier this week by the Office for National Statistics (ONS) have thrown the recovery into doubt. The data for November 2024 tells us that, year-on-year, the self-employed population unexpectedly fell by 30,000, bucking an apparent summer surge. But the real shock is that this was driven by a dramatic 76,000 decline in self-employed women.

Though surprising, this does bring the official data into line with IPSE’s own analysis. Our ‘self-employed landscape in 2024’ report found that the female self-employed population fell by 8%, as did the number of self-employed mothers.

And the number of freelance mothers – those working in the most highly skilled self-employed roles – declined by an even more drastic 14%.

After years of growth, these hefty declines are a sign of distress for female self-employment.

Already reeling from the effects of prolonged inflation and low growth, businesses were blindsided by Labour’s tax-raising October Budget. Planned increases to Employer National Insurance are already having an impact on business confidence and hiring intentions. This becomes a problem for freelancers when we remember that the businesses we’re talking about are also their clients.

It's fair to argue that higher employment costs will actually boost freelancers’ hiring appeal relative to permanent hires. But businesses with shaken confidence and a negative future outlook don’t make for great clients.

Freelance day rates will be being put under the microscope by clients, and research suggests that self-employed women face more pressure from clients to reduce their rates, and have a harder time increasing rates over time.

And we know that cash-conscious clients are more likely to extend their commercial payment terms and are more likely to pay late – a problem that’s more likely to affect women freelancers, IPSE research has shown.

Ultimately, budgets will be tightened, projects will be shelved and demand for freelancers will slump, the impacts of which are more likely to be felt by women.

Not all self-employed women are mothers, of course – but more than a third of them are, and they face specific challenges that must be looked at closely. 

More often than not, mothers take on a larger proportion of childcare responsibilities. But the flexibility of self-employment has enabled many mothers to balance childcare whilst continuing in their careers. But as the prohibitive cost of childcare continues to impact women’s participation in the workforce generally, it’s possible that self-employed mothers may also be concluding that running a business is just not worth the hassle.

And for new or expecting mothers, self-employment offers a worse deal than employment. Having already forfeited a potentially more generous employer-backed maternity leave policy, freelance mothers can only claim the maternity allowance. But unlike statutory maternity pay, the allowance inexplicably does not cover the crucial first six weeks after the birth of a baby. They’re also unable to benefit from their partner’s shared parental leave; and if their partner is a self-employed male, their partner receives zero support.

In short, self-employment may be losing its appeal as a career that makes work and motherhood manageable for as many people as it used to. It’s why IPSE has consistently campaigned for a better deal for self-employed mothers, including extending the maternity allowance and bringing self-employed mothers into shared parental leave – changes that can only be brought in by government.

Women have benefitted hugely from the 21^st century boom in self-employment. It helped drive higher rates of female employment in the UK, with most of them entering self-employment for overwhelmingly positive reasons like seeking greater control over working hours (63%), control over working location, and seeking a better work-life balance (55%). 

Whilst still facing challenges like those outlined above, that stats show that self-employment is a source of career stability and longevity for those who choose it, with previous data indicating that almost half of self-employed women had been working in that way for at least seven years.

We should be celebrating what self-employment has made possible for these individuals and the clients they work with, bringing more diverse talent, expertise and perspectives to projects up and down the country. But the sector has been let down by a yawning lack of supportive policymaking, of the kind that other sectors are deemed worthy of almost unquestioningly.

Instead of hobbling the sector with damaging tax reforms and burdensome reporting requirements, let’s lift it up with meaningful backing from the very top of government and supportive, ambitious policy initiatives.