The proportion of new first-degree UK graduates entering self-employment is far smaller than that of the UK workforce in general, but the latest data shows that more are choosing this option than last year - reversing a previous downward trend
In 2017, 15.1% of the general British workforce were self-employed or owned their own business, up from 15% in 2014 and 12% in 2001.1
Among new graduates, the share is much smaller. Only 4.03% of 2016/17 first-degree graduates went into self-employment or started their own business (or 10,265 out of a cohort of 254,495) according to HESA's Destinations of Leavers from Higher Education (DLHE) survey.
The percentage of first-degree graduates choosing these options was higher four years ago, in 2012/13, at 4.28%. That figure was maintained the following year but declined to 4.03% in 2014/15 and then 3.04% in 2015/16.
The most recent statistics therefore indicate an increase, and a return to 2014/15 levels of self-employment among new graduates.
Why do graduates choose self-employment?
Unfortunately, DLHE data cannot explain why self-employment among first-degree graduates recently increased in popularity. It will be interesting to see what future datasets reveal - will the general trajectory of decline be further challenged or re-established?
Nevertheless, the vast majority of first-degree graduates still view employment or further study far more favourably, and the percentage embarking on self-employment remains substantially lower than that of the UK workforce in general.
It is possible that the recent focus on 'value for money' with regards to university study2 and the tendency to measure a degree's worth by the subsequent salary earned have discouraged graduates from going down the often financially uncertain route of self-employment.3
Where graduates do, this tends to be a planned choice. In the latest DLHE data, the most common reason given by first-degree graduates for entering self-employment was that it fitted their career plans (53%). Only 2% had no other options due to a lack of job offers.
It appears, then, that graduates opt for self-employment when it is advantageous - perhaps as a route into a particular industry - and not as a last resort because there are no jobs available. This suggests that the UK's graduate labour market is thriving, with enough employment opportunities for those who want them - disproving the myth that there aren't enough jobs for graduates.
Which subjects most often lead to self-employment?
Graduates with a specific business idea, and those hoping to work in industries where freelancing is commonly required to 'break into' the sector, will logically be more motivated to become self-employed than others.
The creative sector is known for being one such industry and self-employed graduates are more likely to both hold creative first degrees and work in creative industries.
| Subject | Percentage of first-degree self-employed graduates |
|---|---|
| Music | 4.3% |
| Acting | 3.1% |
| Sport & exercise science | 2.9% |
| Photography | 2.7% |
| Fine art | 2.7% |
The story is slightly different for graduates with business start-ups who, unsurprisingly, tend to hold business-related degrees.
| Subject | Percentage of first-degree self-employed graduates |
|---|---|
| Business studies | 6.6% |
| Computer science | 3.5% |
| Management studies | 3.2% |
| Clothing/fashion design | 3.1% |
| Sport & exercise science | 2.6% |
However, creative subjects are also popular among these graduates, with photography, fine art and textile design being the sixth, seventh and eighth most common first degrees studied.
The most popular industries that self-employed graduates and those with business start-ups are located in are:
- performing arts
- artistic creation
- motion picture, video and television programme production activities.
In contrast, self-employed workers in the general UK labour force tend to be located in construction, financial and business services, and wholesale, retail and motor trade industries.4
While creative industries have developed a culture in which freelancing and self-employment are common, this is not the case elsewhere.
The experiences gained from long-term employment in an industry such as finance or construction would be highly advantageous - if not necessary - for individuals wanting to ultimately be their own boss and enter self-employment.
Consequently, although some graduates may have entrepreneurial aspirations, it is it is not always appropriate to enact these immediately on graduating from university. To some extent this explains the major differences in the industries that more experienced self-employed workers and self-employed graduates are located in. However, the purely quantitative nature of DLHE data means questions of 'why' and 'how' are relatively difficult to answer.
How can entrepreneurial students be supported?
Another reason that graduates with entrepreneurial aspirations might shy away from self-employment immediately after completing university is that they lack the personal contacts necessary to make such a venture feasible at that stage of their career.
The DLHE survey asks respondents how they found their current job. Self-employed graduates did not technically find a job, but created one for themselves - nevertheless, those who answered this question revealed 'personal contacts including family and friends' to be particularly important in the process.
In fact, one quarter of all first-degree graduates who became self-employed or started their own business within six months of graduating cited this as the method by which they secured their current job. In comparison, only 17% of all first degree graduates used personal contacts to find employment.
For those who lack personal contacts to offer support or advice, whether financial, emotional, or practical - for example, those from socio-economically disadvantaged backgrounds - self-employment is often simply not an option immediately after finishing university.
Careers services are perfectly placed to put students or recent graduates with entrepreneurial aspirations in contact with successful entrepreneurial alumni, providing this important support network to help less privileged individuals realise their potential.
Notes
- Trends in self-employment in the UK, ONS, 2018.
- What does 'value for money' mean for English higher education? Times Higher Education, 2018.
- A beginner's guide to Longitudinal Education Outcomes (LEO) data, Wonkhe, 2017.
- Trends in self-employment in the UK: 2001-2015, ONS, 2016.
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