Contractor market set to continue to thrive, Bank of England report finds

A new report from the Bank of England, entitled ‘Self-employment: what can we learn from recent developments?’, has concluded that recent growth in the contracting sector is part of a structural change to the labour market that’s set to continue accelerating.

While short-term cyclical factors – including changes to prevailing immediate economic conditions – may cause contractor numbers to fluctuate, a number of wider structural factors mean that the future looks bright for contractors, the report concludes. Importantly, the report states that contractors are moving into the flexible working market through choice, rather than being pushed into it via so-called ‘hidden unemployment’.

The report’s confirmation of the importance and value of the flexible workforce, to both workers and businesses, is particularly timely as the Government announces that it will be formally consulting on its plans to restrict travel and subsistence reliefs for contractor workers this summer.

The findings also reinforce the importance of flexible working to enabling highly skilled individuals to work on a contract basis beyond the traditional retirement age and share their in-demand skills. Indeed, the latest Bank of England Labour Force Survey has confirmed that the over-65s age group is the fastest growing segment in the contractor freelancer workforce. It found that individuals aged 65 and over accounted for half of the total increase in the flexible workforce since 2004.

Miles Lloyd, CEO of Outsauce, comments: “With an army of 4.6 million individual professionals now providing critical flexibility and in-demand skills to the UK economy, it’s reassuring to see that the Bank of England has recognised the importance and vibrancy of the contractor sector.

“What the report confirms is that the UK’s flexible workforce is made up of skilled individuals who have proactivity chosen to work as contractors and who have been pivotal in helping the country move out of recession. In particular, the Bank of England research highlights how contracting working has opened up new avenues for the most experienced individuals in our workforce to carry on working on a flexible basis, rather than retiring completely, to share much needed skills and expertise across the economy.

“Rather than making it harder for skilled professionals to be able to work more flexibly, the findings suggest that the contractor workforce should be recognised and celebrated by the Government for its important role in helping the UK economy to grow and thrive.”

To read the report in full, please click here

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