Self-employment and ethnicity: an escape from poverty?

The Joseph Rowntree Foundation recently published a paper by Nida Broughton on self-employment and ethnicity, investigating the rise and fall of self-employment within different ethnic groups and the reasons behind this. The purpose of this research was to investigate the following question:

does self-employment act as a route to social mobility, or is it a reflection of being locked out of the labour market?

The report gives some convincing evidence to suggest that self-employment is not always a reflection of innovation and entrepreneurialism; in fact, there appears to be a strong link between poor labour market opportunities and self-employment.

The paper reminds us that there are ‘push factors’ and ‘pull factors’ that determine people’s employment choices and that “worklessness” statistics are not necessarily a testament to the bigger picture. By looking at things from the surface, we do not see an individual’s motivations for being self-employed. We do not see the journey they have gone through, the barriers they face in accessing the wider labour market, thediscrimination they have faced in wider society and the stability of their job. Their employment status does not inform us if they are passionate about running their own business, or were forced into self-employment for lack of other means to generate an income.

Statistics show that migrants tend to have much higher rates of self-employment than the rest of the population; the same is true across all ethnic groups (Clark and Drinkwater, 2010). Some people attribute this to cultural attitudes and experiences. Others say that migrants are more willing to take risks and accept the risks that come with being self-employed. At Ashley Community Housing we recognise thisentrepreneurial spirit in some of our tenants and are developing new ways to help it thrive and ensure it is not smothered by traditional employment.

However, in spite of encouraging self-employment where a desire is shown, we must not expect individuals to live up to stereotypes. The difference in self-employment between migrants and indigenous people can also be due to the barriers faced by migrants in general: for example, lack of English language skills, poor recognition of overseas qualifications among employers, and lack of social networks and labour market knowledge that helps to find better paid work (Li and Heath, 2014; Fisher and Nandi, 2015).

A wide range of evidence shows the importance of skills and training in helping individuals to access better work. Those in persistent poverty are much more likely to have difficulty speaking or reading English.

At Ashley Community Housing we provide specialist English teaching, pre-employability andemployability support, and a range of other training services, for exactly this reason. Everybody deserves to be on an equal footing with the rest of society, and many of our tenants are skilled and hold high-level qualifications that they cannot utilise until they have improved their English. Others need to boost their confidence and integrate into a city before they feel able to work.

So, it is neither that self-employment is inherently ‘good’ nor ‘bad’, but that we must not make presumptions. As the report summarises:

“Self-employment takes many forms, and people go into self-employment for many different reasons. Understanding this is key to the question of whether promoting self-employment is a potential tool to tackle poor employment outcomes and poverty.”

What we do know, is that research suggests people of certain ethnic groups are more likely to move into self-employment due to ‘push’ factors, such as the “Pakistani” group, who are paid on average almost £2 an hour less than the white majority group, whilst people of other ethnicities, such as “Black Africans”, appear to have unmet aspirations for entrepreneurship.

So, what does all of this have to do with being a housing association? I believe the lessons we can take from this research are:

• break down stereotypes
• know your tenants

At Ashley Community Housing, we regularly talk about the work we do for the ‘BME community’ and the ‘refugee community’ – because it’s true, we do work with these people and we are proud to be a specialist provider of housing and training for these groups. However, we also take a very individualised approach to support, and our staff offer regular one-to-one appointments with tenants tailored to their needs.

By placing too much emphasis on labels: ‘migrant’ or ‘indigenous’, ‘BME’ or ‘white’, ‘employed’ or ‘unemployed’, we risk reinforcing stereotypes and we are missing out on an excellent opportunity: to allow people to thrive as individuals, unlock their full potential and create successfully diverse cities.