The surge in self-employment over the last decade has led to the UK being named the “self-employment capital of western Europe” in a report published today by the Institute for Public Policy Research, a progressive think tank which explores economic, social and political sciences.

Levels of self-employment in the UK have increased by around 50% in the last 13 years, topping 4.5 million earlier this year. The latest figures released by the Office for National Statistics showed a total of 4.58 million self-employed people. Updated employment figures are due to be released tomorrow and are expected to show another sharp rise in the freelancing and contracting population.

Not only are levels of self-employment increasing, they are growing far faster than levels of permanent employment. Several months of ONS stats showed that self-employment gains reduced overall unemployment even though those in full-time positions actually shrank.

IPPR’s Senior Economic Analyst Spencer Thompson said in a blog post accompanying the report:

“The UK had internationally low levels of self-employment for many years but has caught up with the EU average and, if current growth continues, the UK will look more like southern and eastern European countries, which tend to have much larger shares of self-employed workers.

“Looking forward, what is key is whether recent trends in the labour market are a blip or something deeper. It could be the case that we are just working through some post-recession quirks in the jobs market, and the structure of employment will return to normal in due course.

“If, on the other hand, technological and cultural changes are making it easier than ever before to run your own business, then policymakers and other actors will need to accommodate this shift. The USA, for instance, has seen the creation of a freelancers union, which offers members many of the benefits that are traditionally associated with regular employment.

“Whether they are a growing underclass or a sign of the UK economy’s bright future, the self-employed definitely warrant our attention.”

The report notes that self-employment in the UK grew at the fastest pace in western Europe between 2013 and 2014 – around 8% – while levels in the other western European economies remained stagnant.

Sceptics of the burgeoning self-employed movement have noted that independent professionals have average lower earnings that full-time employees, while supporters have pointed out that the majority choose the freelance lifestyle to enjoy better work-life balance. For better or worse, the UK’s self-employed community is now a sizeable minority in the overall employment landscape. In an attempt to better understand how the UK’s self-starters contribute to the wider economy Labour’s Shadow Welfare Secretary Rachel Reeves has written to the UK Statistics Authority requesting that self-employed earnings are factored into average salary figures.

Image by Giampaolo Squarcina