Covid crisis makes self-employment less attractive, warn firms

Press Releases 8 Apr 2021

- Scottish Government must look at new safety net for freelancers

Three fifths of business owners in Scotland say that the covid crisis has made self-employment less attractive, according to a new study of Scotland’s business community.

The research, conducted by Diffley Partnership for the Federation of Small Businesses (FSB), also found that only a fifth of their sample of almost 700 business owners thought that the last Scottish Government valued their contribution.

Andrew McRae, the Federation of Small Businesses (FSB) Scotland policy chair, said: “The coronavirus crisis has hit Scotland’s self-employed and small business community for six. While governments in Edinburgh and London argue they’ve done everything in their power to mitigate the impact of this crisis, there’s no doubt the pandemic will have an enduring impact on this group who will be vital to the recovery.

“There are twice as many self-employed people in Scotland than NHS workers. But our representatives at Holyrood haven’t spent enough time discussing how to support and protect these 330,000 workers.”

FSB wants the next administration at Holyrood to pilot so-called bread funds which offer a collective insurance approach for self-employed individuals who could not otherwise access sick pay. In addition, they want policymakers in Edinburgh to provide maternity, paternity and adoption payments to the self-employed via Social Security Scotland.

The local and independent business membership body also wants the next Scottish Government to deliver a Small Business Recovery Act. These new laws would be designed to ensure smaller firms win a fair share of public contracts. It would also establish a new small business team at the heart of government.

The first major study of Scotland’s small business community since the pandemic also looks at firms’ attitudes to expansion and recovery. Asked to identify the biggest barriers to growth 52 per cent of Scottish businesses highlighted the state of the economy, 50 per cent pointed to the pandemic, and 30 per cent said Brexit.

While more than half of Scottish business owners are very or fairly optimistic about their own enterprise (57%), a larger proportion are pessimistic about the overall prospects for the Scottish economy (62%).

Around half of the respondents (51%) said that policymakers should keep overheads (e.g. rent and rates) as low as possible to boost the recovery. Other priorities for business owners include action to support jobs (36%), moves to tackle empty units on high streets (32%), and policies to improve digital skills and infrastructure (26%).

Mark Diffley, director of Diffley Partnership who conducted the research, said: “This in-depth research clearly shows that the covid crisis has had a substantial impact on Scotland’s small business and self-employed community.

“Firms are worried about the overall condition of Scotland’s economy, and fear that setting up on your own is now less appealing. On the other hand, when business owners were asked about their own enterprise there’s a surprising amount of optimism among local firms. 

“Prospective MSPs looking to rebuild local economies and understand the priorities of local businesses should dig deep into this research that the Diffley team were proud to produce.”

Meet the author

Stuart Mackinnon

Stuart Mackinnon

Head of Communications and Public Affairs, Scotland