The rise in insecure work is costing the Exchequer £4bn a year, warns the TUC
The sharp rise in insecure work across the UK is costing the government – to the tune of nearly £4bn a year in lost tax income and benefit pay-outs.
That's according to the Trades Union Congress (TUC), which says that total represents nearly a quarter of the social care budget spent in England.
Its new study claims that generally lower incomes for the self-employed and those on zero-hours contracts mean less tax is collected.
The rise in low paid self-employment accounts for just over half – £2.1bn – of the bill, as the government picks up considerably less in the way of income tax and national insurance. Meanwhile, the increase in zero-hours contracts has left a £1.9bn hole in the public finances, according to the TUC.
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Its report, conducted by Landman Economics, uses tax and benefit modelling to show the impact of the growth in insecure work since 2006.
Official figures show the number of self-employed people in the UK has grown 45 per cent since the turn of the millennium to 4.8m. The TUC says the number of self-employed who are low-paid has increased by more than a fifth during that time.
A flurry of recent cases has turned the spotlight on the gig economy and split opinions on how workers should be regarded. Just last week Pimlico Plumbers lost its appeal over the employment status of one of its workers, with the Court of Appeal ruling the individual in question was a worker and entitled to basic workers' rights.
Uber and CitySprint have been embroiled in similar situations, though Uber has said it will appeal the ruling, while Deliveroo riders are preparing to take legal action over their employment status.
Some say the gig economy provides more flexible work opportunities and others say there's not enough job security and workers can be exploited.
TUC general secretary Frances O'Grady said: "The huge rise in insecure work isn't just bad for workers. It's punching a massive hole in the public finances too.
“Zero-hours contracts and low-paid self-employment are costing the economy billions every year in lost tax revenues," she added.
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O'Grady added that companies using zero-hours contracts and claiming self-employment when really workers should be deemed employed needed to fix up, so workers actually qualified for the likes of holiday pay and the national living wage.
"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," she said.