By Srđan Tatomir of the Bank’s Structural Economic Analysis Division.
Self-employment has become an important feature of the UK labour market, accounting for around a third of the growth in employment since 2010. Developments in self-employment — and the reasons behind them — can provide information on the overall degree of spare capacity in the labour market which, in turn, can influence wages and inflation. While cyclical factors have played a role, much of the recent increase in self-employment reflects longer term trends — such as an ageing workforce — that began before the recession and are, therefore, unlikely to reflect additional slack above what is already captured by staff estimates.
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