Self-employment is not bad, says Bank of England
Self-employment has boomed in recent years because of changes in technology making it easier for people to set up on their own, a Bank of England analysis showed today.
Its report came as the National Institute for Economic and Social Research (NIESR) said GDP growth is growing at a strong and steady pace.
Self-employment accounts for one-third of the jobs created since 2008.
Some commentators had previously argued that the rise is a symptom of a long-term economic malaise, as workers were not being hired and so had to settle for less productive work by themselves.
But the Bank of England rejected this analysis.
“Overall, much of the rise in the number of self-employed workers since 2008 is likely to reflect trends that began before the recession,” said the report, written by Srdan Tatomir.
“Structural factors such as changes in the composition of the workforce and technological change may have, over a longer period of time, led people to choose to move into self-employment.”
“While the recession may have pushed workers into self-employment as an alternative to unemployment, there is little evidence to suggest this was a major factor in the rise of self-employment.”
The ageing of the population is also contributing. The Bank of England believes this is because older workers have the experience needed to start a business, or because they favour the more flexible hours that self-employment brings.
Meanwhile, NIESR said the economy grew by 0.6 per cent in the three months to February. This matches the growth seen in the three months to January, and is in line with the average quarterly expansion seen since the middle of 2014.
The economists predict GDP will grow by 2.9 per cent over the course of the year, up from 2.6 per cent across 2014.