The growth of insecure employment – those working without guaranteed hours or baseline employment rights – is costing the government an estimated £4 billion a year, a new report has revealed.
According to research by the Trade Union Congress (TUC), the rise in low-paid self-employment accounted for just over half of this bill, with the government collecting billions less in income tax and National Insurance contributions.
In addition, the surge in zero-hours working contracts left an additional £1.9 billion hole in the public finances.
The news comes after several businesses – including retailers like Sports Direct – in the past few months have come under fire over allegations of poor working conditions and employment contracts.
“The huge rise in insecure work isn’t just bad for workers, it’s punching a massive hole in the public finances too,” TUC general secretary Frances O’Grady said.
“Zero-hours contracts and low-paid self-employment are costing the economy billions every year in lost tax revenues. That’s money that could be spent on stopping the crisis in our schools and hospitals and making sure every elderly person gets decent care.
“Bosses who employ staff on shady contracts are cheating all of us. That’s why we desperately need more decent jobs that pay a fair wage.
“Getting more people into unions is key. Workers in unionised workplaces are twice as likely to be on better-paid secure contracts.”
The head of a government review into working practices has said that while the UK has been good at creating jobs and flexible work, it has been less successful in addressing the quality of work and security.
In an interview with Press Association, Royal Society for the encouragement of Arts Manufactures and Commerce chief executive Matthew Taylor also raised the question of firms avoiding paying tax due to the ambiguity over whether staff were workers or self-employed.
The review will take evidence from workers and businesses across the country before reporting to the government in June.