BoE: Self employment rise represents change

Friday 13 March 2015

The rise in people setting up a business or becoming contractors or sole traders is a sign that the UK's workforce is undergoing a structural change, so says a new report from the Bank of England (BoE).

This report was put together by the National Institute for Economic and Social Research, which said that GDP growth is happening at a strong and steady pace. What's more, of the jobs that have been created since 2008, one third of these are because of self employment.

Recently, a report from the Labour Party suggested that the rise of self employment was a result of growing insecurity in the labour market. This claim was criticised by self employment ambassador for the government David Morris, who said that the party had not recognised the importance of this way of working.

Among the things that have aided the rise in self employment, according to the BoE, is the change in composition of the workforce. Also, technological changes have made it easier for people to start up a business on their own or to work remotely, which could have led to the rise in self employment.

Another reason for the rise in self employment is down to the ageing workforce. The BoE says that older workers have gained the experience to enable them to start a business or they prefer the more flexible hours that often come in hand with self-employment.

The BoE admitted that many workers may have been pushed into self employment when the recession hit and the only alternative was unemployment. Yet it added that there is little evidence to suggest this accounts for the rise in self-employment.

The Association of Independent Professionals and the Self Employed (IPSE) felt that this report from the BoE was in line with its own view on the self employment landscape.

Director of policy and external affairs at IPSE Simon McVicker said: “We welcome the report from the Bank of England that confirms the boom in self-employment reflects a structural change to the economy and adds to the mounting evidence that the rise in self-employment is the continuation of a long term shift in the labour market.

“With the report categorically stating that the increase in those working for themselves has not happened out of economic necessity, it is hoped the report will sway those, most notably the Labour Party, still clinging to the belief that the rise of self-employment represents increased insecurity in the labour market."

Mr McVicker explained that the report from BoE is in line with IPSE's own findings that most of the 4.6 million people in the UK who work as independent professionals are choosing to turn to this method of employment rather than doing so out of enforced or hidden unemployment.

He also added that, at present, self employed workers constitute around 15 per cent of the workforce and have helped to spur on economic growth in the UK, helping towards the recovery.

By Victoria McDonnell

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