People aged 50 and over account for more than four-fifths of the sharp rise in the self-employed seen since 2008, a report by the Office for National Statistics has found.

The number of self-employed workers soared by 367,000 to 4.2m in the four years to April-June 2012, with the bulk of the rise happening since 2011.

The self-employed represented 14 per cent of the 29.4m people in employment, the ONS said. By contrast, employees fell by 434,000.

The increase took place in all parts of the UK except Northern Ireland. London had the highest proportion of self-employed workers (18 per cent), while northeast England had the lowest (11 per cent).

Self-employed workers tended to be older and were more likely to be male. The most common occupations were taxi drivers, construction workers, carpenters and farmers.

Some economists believe the rise in self-employment could be one reason behind the productivity puzzle, whereby employment has been growing while output is flat. These workers may be producing goods and services worth less than those they produced as employees, though the ONS study offers little evidence either way.

Many analysts believe the rise is the result of people scraping together whatever freelance work they can. Frances O’Grady, general secretary of the Trades Union Congress, said it would be “naive to think that all these workers are really budding entrepreneurs”.

But Xenios Thrasyvoulou, founder of PeoplePerHour, the online freelancer marketplace, said: “With unemployment steadily falling, the continued growth in self-employment is likely to be increasingly down to lifestyle choices, rather than desperation.”

The ONS found that self-employed people work longer hours – on average 38 hours a week compared with 36 for employees. Just 5 per cent of workers aged 16-24 are self-employed compared with 37 per cent of those aged 65 and older.

Older workers may find it easier to set up as self-employed than younger ones after gaining experience and contacts working for someone else, the ONS said. They may also find it easier to finance start-up costs through redundancy payments or savings.

Also, older workers may be more likely to carry on working if they are self-employed as they become attached to the business and do not have an employee’s pension.

The TUC, in a report, says the recent fall in productivity could become permanent unless there is a significant boost to demand.

It blames the productivity puzzle mainly on weak demand and falling real wages, which it says have encouraged hiring in low-productivity sectors. It says an economic stimulus would encourage businesses to invest, adding to potential output.

It adds that banking reform and an industrial strategy are needed to tackle low investment, skill shortages and a lack of lending to businesses.

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