The country’s growing army of PAYE umbrella contractors and other freelancers has received warm praise from the REC in the light of recent employment data released by the Office of National Statistics.

Despite a shrinking economy, the most recent Labour Market Statistics released by the ONS showed a surprise growth in the number of people aged 16 and over who are in employment. The figure surged by 201,000 in the last quarter, which was the biggest hike in employment since Q2 2010.

According to the REC Chief Executive, Kevin Green, the rise is largely due to the influence of contractors working through umbrella companies or limited companies. He said: “The UK labour market continues to defy gravity as the private sector carries on creating jobs. This month’s increase in employment means we are only 96,000 off the pre-recession peak for people in work. The continued resilience of our jobs market is a testament to the benefit of this country having the most flexible labour market in Europe.”

He sounded a note of caution however: the course to recovery is unlikely to be plain sailing with storm clouds darkening over the eurozone and thousands of school leavers and new graduates entering the labour market over the summer. REC data suggests that the path to recovery will be a “zigzag” one, he added, and employment stats may well get worse before they improve again.

Mr Green also addressed some of his remarks to the government. Bouts of unemployment lasting more than six months, he said, can diminish prospects for future employability. He called for prevention as the best cure and urged the coalition to offer earlier support for young people in particular.

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