TUC says government losing £4bn a year due to insecure jobs

The growth of insecure employment – those working without guaranteed hours or baseline employment rights – is costing the Exchequer an estimated £4bn a year, according to a TUC report.

The report uses tax and benefit modelling to show the impact of the growth in insecure work since 2006. It shows how the growth of low-paid self-employment and zero-hours contracts has led to a fall in government revenues because of lower tax take and higher spending on in-work benefits:

• Low-paid self-employed workers and those on zero-hours contracts earn significantly less than regular employees and therefore pay less tax and national insurance [the TUC estimates this amount at £2.1bn a year];
• This also makes them more likely to need to rely on in-work benefits such as tax credits and housing benefit [£1.9 bn, reckons the TUC];
• Even when the self-employed do earn as much as regular employees, the tax is structured so that they pay less it says.

The report says that the total being lost to the Treasury from the rise in precarious working is more than £75m a week. The report warns the problem could get worse in the future. The TUC estimates that insecure working has grown by more than a quarter over the past five years and now accounts for one in 10 (3.1 million) UK workers.

The number of self-employed workers who are low-paid has increased by more than a fifth (21%) over the past decade, says the TUC.

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. 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.”

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