Over the same period, directly hired employees increased by 380,000 to 26.5m.

Gerwyn Davies, labour market adviser at the CIPD, the professional body for HR and people development, said: ‘A sharp quarterly rise of over 200,000 in the number of people in work, combined with another fall in joblessness against the backdrop of a slowing economy, is impressive. However, half of the employment increase comes from the self-employed, while the monthly figures suggest that growth may be slowing.’

Davies said the statistics suggested companies were some way from offering the 3% pay increases that were expected.

‘We know that a significant proportion of employers are reporting inflation and increases in employment costs as reasons why they are limiting pay rises. With more people in work, the wage bill is being stretched - looking ahead, these costs will only increase so businesses need to look at ways to boost productivity and innovation in order to support the swelling workforce,’ he said.

Lorence Nye, economist with the Association of Independent Professionals and the Self Employed (IPSE) said the figures indicated that ‘the self-employed are driving a structural evolution in the UK labour market, providing our economy with flexibility and an essential competitive edge’.

This week saw the Department for Business, Innovation and Skills (BIS) publish a review of self-employment, conducted by Julie Deane, CEO of the Cambridge Satchel Company, which called for changes to the taxation system, alongside more flexible financial solutions in areas such mortgages and pensions, and equal treatment for benefits like Maternity Allowance.

Nye said: ‘With so many people making the decision to be their own boss, it’s now important for the government to move ahead with implementing the review’s recommendations. The upcoming Budget represents a great opportunity to announce maternity and adoption pay for the self-employed on the same level as employees.

‘Working for yourself is a positive choice, with our research showing the vast majority (86%) are very satisfied with the way they work. It’s vital the government supports this growing part of our economy as they are here to stay.’

The National Enterprise Network, which also contributed to Deane’s review, said the government needs to do more to make sure the value of the self-employed to the economy is more fully felt, arguing they are often inadvertently undermined by government policies.

In a statement, the support group said: ‘We were pleased to see reference to the changing nature of the labour force, particularly in regard to the number of self-employed people who do not look to grow their businesses by creating additional jobs.

‘Based on the experiences of our members we have seen many more self-employed people who have no intention to create jobs, but who frequently come together with other self-employed people to take on bigger contracts and larger assignments – we believe government should find alternative methods to measure growth in order to respond to this changing way of working.’