They also tend to have more volatile earnings, and a larger share of the income-poor have a financial buffer in the form of accumulated wealth. For this reason, the analysis uses an indicator of “income and wealth poverty” in addition to the more common low-income measures. This is defined as having low wealth in combination with persistent low income over a three-year period.
In this report, the term self-employed is broadly defined, following the criteria of the tax legislation, as anyone with any amount of business income or loss during the income year. Persons under 18 and students are excluded. The self-employed are further divided into those whose main income comes from business activity, and those whose main income comes from wages, benefits, or pensions. These groups are compared with all individuals who have any amount of wage income, possibly in combination with other income, but no business income in the income year 2023. In the report, these three groups are collectively referred to as the “economically active”.
Among the 107,900 self-employed individuals whose main income came from business activity in 2023, 12.4 percent had an annual low income, and 5.9 percent were in income and wealth poverty as defined here. The corresponding shares for the 216,300 self-employed whose main income came from wages, benefits, or pensions were 6.2 and 2.8 percent, respectively, while for the roughly 2.8 million wage earners, the shares were 6.3 and 3.9 percent. For the population as a whole, the shares were 10.9 and 6.2 percent, respectively. Self-employed with their main income from business activity are therefore somewhat overrepresented among those with annual low income, while at the same time those with low income have a larger share with substantial financial resources in the form of wealth compared to other economically active groups. This is reflected in the fact that more than half of those with annual low income among the self-employed fall outside the indicator for income and wealth poverty.
When comparing those in income and wealth poverty with their respective groups as a whole—both among the self-employed and among wage earners—we find that young persons living alone, immigrants, people with low education, and single parents are clearly overrepresented. In contrast, older individuals, homeowners, and trade union members are underrepresented.
Since the report broadly includes everyone with some form of earned income during the income year, a separate distinction is also made for strong labour market attachment. This is defined as having earned income exceeding twice the National Insurance basic amount and higher than the combined total of benefits and pensions. Just under half of the income- and wealth-poor among the economically active had such strong attachment, compared to 74 and 80 percent among the self-employed and wage earners in total, respectively. This suggests a concentration of low earnings or low and unstable labour market participation within the income- and wealth-poor group.
Among the 107,900 self-employed with main income from business activity, certain industries (SIC 2007 classification) stand out with particularly high rates of income and wealth poverty compared to the group as a whole. The highest shares are observed in “other postal and courier activities”, “cleaning of buildings”, “painting”, and “other personal service activities”, ranging from 14 to 21 percent. Self-employed performing musicians and dramatic artists, visual artists, and hairdressers also have relatively high shares in income and wealth poverty. In the most vulnerable industries, the highlighted characteristics appear more frequently - for example, low education (62 percent in courier services), share of immigrants (85 percent in cleaning), share under 35 years of age (57 percent in performing dramatic arts), and low trade union membership (12 percent in hairdressing).