The Resolution Foundation think tank has found that workers on zero-hours contracts typically earn £1,000 a year less than permanent employees and face a “precarious pay penalty” of 6.6%, or 93p an hour. For those who earn the least, the size of the gap is even greater, at 9.5%.
The Foundation said: “Understanding the reasons behind this pay penalty will be crucial in order to tackle some of the challenges raised by new forms of employment, without jeopardising the success of the UK’s flexible jobs market.”
Laura Gardiner, senior policy analyst at the Foundation added that the “pay penalty” of zero-hours contracts was “a big price to pay for work that too often lacks the security workers desire”.
She said: “Zero-hours contracts have hit the headlines in recent months for their widespread use in Sports Direct and JD Sports. But concern about the use and abuse of zero-hours contracts goes far wider than a few notorious firms. There is mounting evidence that their use is associated with a holding down of wages.
“As new ways of working continue to grow – from [zero-hours contracts] and agency work to the gig economy and wider self-employment – we need a better understanding of how they help or hinder people’s earnings and career prospects. Policymakers must also tread a careful path between getting to grips with the living standards challenges thrown up by new and often insecure forms of employment, without jeopardising Britain’s recent job-creating success.”
Mathew Taylor, chief executive of the Royal Society for the Arts, has been appointed to lead a government review into how the ‘gig’ economy is affecting workers’ rights. It will look at how new technology, combined with new business models, has led to a rise in workers doing short-term, casual work.