Self-employment growth in UK outpaces Western Europe

Tuesday 12 August 2014

Self-employment growth in the UK is outpacing the rest of Western Europe, according to new research.

A study from think tank IPPR showed that Britain is becoming the 'self-employment capital', with the number of those choosing to go it alone increasing at the fastest pace of all Western European countries over the last year. Indeed, the proportion of workers who are now self-employed has increased by a whole percentage point.

Spencer Thompson, IPPR senior economic analyst, said: "Around 2,000 people a month are moving off benefits into their own business. The government’s response to the rise in self-employment has been to praise the UK’s entrepreneurial zeal, while increasingly promoting self-employment as an option to job-seekers."

Contractors, limited companies and sole traders each know the benefits of working in a more flexible way.

The self-employed are highly valued in the UK labour market and play an important role in ensuring companies can access the flexible labour they need to grow.

While Britain has historically had low levels of self-employment compared to other countries internationally, it has caught up to up the EU average in recent years.

This means the labour market in the UK is more closely resembling those in Western Europe, where self-employment is more prevalent.

According to IPPR, self-employment has also helped to drive job creation. In fact, working-age employment has now reached historically high levels.

However, the need for older workers to stay in the labour force longer may have a bearing on the recent figures.

"Many older self-employed workers are simply working longer, due to a combination of rises in the pension age and recession-induced falls in the value of wealth stored up for retirement," Mr Thompson said.

During the first quarters of 2013 and 2014, the number of self-employed persons in the UK increased by eight per cent. This is the fastest rate recorded in any other Western European country and is only smaller than a handful of Southern and Eastern European nations.

IPPR suggests that this change in the way we work is creating a more diverse environment. "The self-employed come in many shapes and sizes. Some are entrepreneurs, driven by high-growth ambitions, innovation and disruptive business models, but many are sole-traders bands simply looking to get by or small businesses happy to stay at their current level. The UK is just as much a nation of shopkeepers as a vanguard of cutting-edge capitalism," Mr Thompson concluded.

By Victoria McDonnell

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