Self-help and mutual aid: re-thinking microfinance

The sole trader sector is and always has been the very glue of local economies. Through their heterogeneous skill base and flexible ways of working, the self-employed contribute to the stability and rich diversity of local communities that is so treasured. Self-employment now in fact provides more jobs than British manufacturing. More than one in five (6.4 million workers) in the British workforce are either self-employed or supported by a self-employed person. Among many ethnic groups and in some rural areas, self-employment is double the average UK rate.

Low-income sole traders and community-based entrepreneurs face difficulties in both accessing and affording appropriate services to support their business activities. Many self-employed people work exceptionally long hours and have no holiday-pay entitlement. In Britain, the self-employed endure the longest working week as well as contributing additional unpaid work from family members to the economy. The average median earnings in the UK for self-employed people is 20 per cent below the median for waged workers. Despite their growing importance, they are not well catered-for by the welfare state. They do not benefit from statutory sickness benefits and they cannot access the state second pension. Seven in ten self-employed people have no employees, but as workers, they have few statutory rights and far less social protection compared to those in conventional jobs.

The research confirms that a grass roots approach is most likely to appeal to the lower-income self-employed market and to succeed in addressing their very diverse business and personal needs.