LONDON — The rapid rise in low-paid, insecure work in the UK is costing the government nearly £4 billion a year in lost tax receipts and costly benefits, according to research into the “gig economy” by Britain’s largest trade union group.
The Trades Union Congress (TUC), which represents nearly 6 million British workers, said that the growing number of low-paid, self-employed workers who work irregular hours earn significantly less than conventional employees and therefore pay less tax and national insurance.
Those losses amount to an estimated loss of over £75 million a week to the Treasury.
Mobile apps like Uber, Deliveroo, and Jinn are driving the expansion in Britain of a “gig economy” labour market characterised by short-term contracts and freelance work rather than fixed terms of employment and regular working weeks.
Over 3 million UK workers — 1 in 10 — are now employed in “insecure” work without fixed contracts, a number that has grown by a quarter over the past five years according to the TUC.
The TUC said those employed in the gig economy are also likely to earn significantly less than their counterparts, meaning they are more likely to depend on in-work benefits, including tax credits and housing benefit.
Take a look at the chart below for a full breakdown of the impact:
“The huge rise in insecure work isn’t just bad for workers. It’s punching a massive hole in the public finances too,” said TUC general secretary Frances O’Grady.
“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,” she added.
There are signs that employers within the gig economy may soon be forced to take a more conventional approach to workers’ rights.
Last week a London court ruled that a plumber was entitled to full employment rights despite being technically self-employed, in a case seen as a key test which could force employers to start offering irregular workers benefits including pensions and holiday pay.
O’Grady said: “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.”