Self-employed overtake wage workers
Wednesday October 25, 2006
By Errol Kiong

The self-employed are now earning more than their wage and salaried counterparts. Data from Statistics New Zealand yesterday showed the median pre-tax annual income for the self employed in 2005 was $30,350 - 3.7 per cent higher than wage and salary earners ($29,280). It does not take into account operating expenses.

Between 2000 and 2005, median annual earnings for the self-employed rose by 24.9 per cent, compared to a 14.0 per cent rise in wage and salary earners. The number of self-employed grew by only 2.2 per cent in that period, and wage and salary earners by 20.9 per cent.

In the last tax year, 377,670 people were listed as self-employed, but their numbers as a percentage of total employment has been steadily declining since the 2000 tax year.

Statistics NZ attributes the decreasing rate to the strong growth in the number of wage and salary earners, and falling numbers of self-employed in the agriculture, forestry and fishing industries.

The agency said the self-employed were an important source of jobs, as nearly half had at least one other employee.
Self-employed people who had between six and 19 employees over the five-year period had increased, while the self-employed without employees had fallen.

Heather Douglas, managing director of Home Business New Zealand, said the trend was towards self-employment.

"I think that while there is risk in being self-employed, there's also risk in working for somebody else in that there isn't any longer the longevity of tenure that there used to be," she said. "Working for yourself does have inherent risks, and they're not all financial. Stress levels can be very high. Everybody thinks it's a holiday, but it's not. There are a lot of self-employed people who are doing very nicely for themselves but there are also a good proportion who really battle ... Any new business takes, I believe, up to two years to reach some kind of maturity."

Paul Dunne, a tax partner at KPMG, said the argument was that the self employed take a "risk premium" for their earnings, while with wage and salary earners that risk was somewhat absorbed by their employers.

A heady round of parties, but no weekends off

Philip Sutton can't remember the last time he didn't work a weekend. He says seven-day weeks are common, and the latest figures, which reveal the self-employed earn on average more than their waged counterparts, doesn't put a value on "conscientiousness". "You can't put a value on never going on holiday."

The 38-year-old started his portable illuminated dance-floor hire company Propshop Productions in 1999 after a career involved in events, production, hospitality and management.

A client looking to throw a disco-themed party had approached him. A search for a hall with a disco floor proved fruitless, and his attempts to buy a portable dance floor, here and overseas, met with no success.

Undaunted, he dusted off his old technical drawing kit textbook from fifth form and created a detachable floor made from wood and acrylic panelling. From the prototype, he now has eight dance floors in Auckland, which do the rounds in the North Island, and another four in the South Island.

Two part-time employees - recent additions to the business - also help set up the floors during the weekends. The business has grown steadily, but Mr Sutton said there were moments when he questioned his decision to be self-employed, particularly when he looked at the outgoings his waged or salaried counterparts don't have to face. He plans to take his product overseas.