Zero-hour workers hit by £1,000 "precarious pay penalty"

Rebecca Smith
The think tank's study used controls for gender, age as well as qualifications and industry
The think tank's study used controls for gender, age as well as qualifications and industry (Source: Getty)

Workers on zero-hours contracts battle an average £1,000 "precarious pay penalty", compared to those with traditional employment terms.

According to the Resolution Foundation think tank, there is a notable pay penalty associated with such contracts. It said while zero-hours workers earn less than permanent employees; 38 per cent less on average, many people put this down to the jobs being concentrated in low-paying sectors and among the younger, less experienced staff.

So the think tank compiled a like-for-like analysis comparing workers on zero-hours contracts with those doing similar jobs but as conventional staff, and found the standard zero-hours employee suffered a "precarious pay penalty" of 6.6 per cent associated with zero-hours work itself, amounting to £1,000 a year. Those in the very lowest paying jobs received 9.5 per cent less.

Read more: Nearly three per cent of UK workers are now on zero-hours contracts

Zero-hours contracts don't guarantee work, which some argue gives workers flexibility, though others say it leaves individuals too vulnerable, with employers holding the control over hours offered.

Around 2.9 per cent of workers are on these contracts, though they're becoming a more common feature in Britain's employment scene.

Laura Gardiner, senior policy analyst at the Resolution Foundation, 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.”

Read more: Protesters to target Sports Direct AGM over zero-hours

She said that as shifts in the labour market continue and trends change, “we need a better understanding” of how everything from zero-hours contracts to the gig economy and wider self-employment "help or hinder people’s earnings and career prospects".

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