Self employment on the up

Self-employment in the UK has increased markedly in recent years, and between mid-2002 and the end of 2003 was growing faster than at any time since the late 1980s, says an article in October's Labour Market Trends, published by the Office for National Statistics.

The present study follows on from an earlier article in the December issue that reported on the increase. This article looks at some of the possible causes behind the increase, which has continued since the first article was written.

Changes to tax system

The article points out that there have been a number of changes to the tax system aimed at supporting small businesses, and it has been suggested that this might have contributed to the rise in self-employment.

However, it claims that an analysis of the data strongly suggests that tax changes cannot explain the rise in self-employment.

The study also looked to see if the increase in the estimates of self-employment could be the result of factors linked to the design of the research itself. However, it was concluded that neither a recent data processing change nor sample rotation effects could explain it.

The article therefore concluded that there was a real rise in the number of the self-employed.

As identified in the earlier article, banking, finance and insurance appeared to be the main industry driving the growth in self-employment - it accounted for 120,000 of the 282,000 increase in the year to September 2003.

It says that this is consistent with media reports at that time of people being made redundant in the City moving into self-employment. Construction was the second major driver.

The article concluded that the rise in self-employment during 2002 and 2003 was consistent with other features of the economy during that period.

Labour Market Trends Volume 112 No 103, downloadable free at: