Covid-19 and the self-employed - A two year update

The fifth LSE-CEP survey of the self-employed was as undertaken in May 2022, following the previous four surveys of May 2020, September 2020, February 2021 and September 2021. • The prior surveys reported that the self-employed have been hit particularly hard throughout the pandemic. The results of this fifth survey show that this remains the case, two years on, as the drop in incomes and profits suffered by the self-employed over the previous two years are proving to be highly persistent. • This report also finds an on-going impact on the number of self-employed. While in the last two years the number of employees working in the UK has grown above pre-pandemic levels, self-employment has not recovered to pre-2020 levels. • A third of self-employed report experiencing financial difficulties, dealing with basic expenses. This has not improved since August 2020. • During the last months inflation has exacerbated the challenges the self-employed have to encounter. They reported the rising cost of energy as the greatest challenge facing their business. • The value the self-employed place on extra support in times of hardships has remained virtually unchanged in the last two years. However, high income, male self-employed are less likely to report needing government support. • Overall, the analysis shows a relative increase in the attractiveness of employee jobs vis-àvis self-employment as an employment option. As the economy has picked up, many wouldbe self-employed have moved into employee jobs. • Although the self-employed have historically shown resilience to environmental uncertainty, whether they are able to absorb repeated shocks within a short space of time remains to be seen. Following the challenges associated with Covid-19 over that past two years, they have low levels of resources to cope with any renewed financial hardship and their immediate future remains vulnerable