Think tank calls for higher minimum wage for freelancers

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As the number of self-employed people continues to rise, Demos is calling for freelancers to receive a higher minimum wage

Freelancers and flexible workers should receive a higher minimum wage than those in standard employment, think tank Demos has said.

Its report, The Liquidity Trap: Financial experience and inclusion in the liquid workforce, financed by NatWest, said that a higher wage rate would protect these types of workers from some of the risks they face as a result of insecure earnings.

It also suggested that banks or trade unions could administer benefits such as holiday pay.

The report said that access to loans and mortgages was poorer for flexible workers.

Demos did not recommend an hourly figure, but said that the Low Pay Commission should investigate what it ought to be.

"Self-employed workers are not protected by the safety net that many of us take for granted, from sick pay to maternity cover," said Ben Glover, senior researcher at Demos and author of the report.

"This bargain is only fair if self-employed people earn enough to cover the additional risk they take on, but too often in Britain today this is simply not happening. That's why we are calling for a new, higher minimum wage for the self-employed."

Having another body rather than government oversee employment benefits would be similar to the so-called Ghent system, named after the Belgian city where the idea was piloted. Countries including Denmark have already adopted a similar plan.

"Workers in these countries voluntarily join unemployment schemes and, after having contributed to these schemes for a certain amount of time, are able to enjoy fairly generous unemployment insurance, amongst other benefits," the report said.

This comes as separate research from the Office for National Statistics (ONS) published this week revealed that many young people see freelance work as a route to more leisure time and increased pay. One in five (22%) 16-21-year-olds said they were likely to be self-employed in the future.

Of those who said they were likely to be self-employed, respondents cited having an interesting job (75%), security (59%) and time for family (45%) as the most important aspects of work.

However, the ONS emphasised that income from self-employment is often lower than expected. It found that earnings from self-employment have fluctuated since the recession. After adjusting for price changes, it remains below pre-downturn levels at an estimated £16,700 per year.

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