The UK social security system for self-employed people

In: Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Arbeit, Sozialstruktur und Sozialstaat, Abteilung Arbeitsmarktpolitik und Beschäftigung, Band 2005-104

Abstract

"The UK system for social insurance has evolved over the past sixty years in response to both changes in government policy and changing social circumstances. The current system has moved away somewhat from the old Welfare State principles. The current social insurance system in the UK is targeted at supporting people in work to make 'work pay', is largely non-universal, emphasises personal provision (especially in areas such as old age pensions) and is means-tested. Self-employed people form a significant part of the UK labour force, perhaps largely as a result of government policy that has encouraged such a restructuring of the labour market. Self-employed people in the UK are an extremely heterogeneous group and also exhibit important differences in characteristics compared with employees. Self-employed people are more likely to be less well off financially and to be older than employees. For the most part, these self-employed workers receive very similar or identical state provisions to their employee counterparts. One major operational difficulty encountered with self-employed people is how to measure their income properly in order to subject them to means-testing. Moreover, the differences in the nature of their work and their different demographic characteristics compared to employees may mean that the social insurance outcomes for self-employed workers may be very different. It may be that social insurance for self-employed people needs to be designed with outcomes in mind rather than inputs." (author's abstract)