This article is more than 1 year old

This article is more than 1 year old

The TUC has called for a government crackdown on abuses of gig economy workers after revealing that almost half of self-employed adults aged 25 or over were earning less than the minimum wage.

In a new report, the TUC said that – despite Theresa May pledging to help struggling families – wages for those working for themselves were far lower than for employees and had actually fallen in the latest year.

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Of the four million adults over 25 classified as self-employed, 49% (1.96 million) were earning less than the current minimum wage, the TUC said.

Self-employment has risen from 12% to 15% of workers since 2001, with a particularly marked increase in the years after the financial crisis of a decade ago. Including the under 25s, the Office for National Statistics says the total stands at 4.8 million.

The TUC said the self-employed aged 25 and over earned £12,300 on average in 2016-17, down from £13,200 the previous year, and well below the average of £21,600 for employees and self-employed combined.

Ministers have lauded the 2.5m increase in jobs since 2010 and the decline in the unemployment rate to a 43-year-low of 40% as examples of Britain’s flexible labour market.

However, the TUC’s general secretary, Frances O’Grady, said: “Self-employment can be a great option but it’s clear that it’s not working for everyone, with millions of self-employed workers stuck on poverty pay.

“Too many workers have been forced into sham self-employment – like at Uber and Hermès. It’s not about helping workers.

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“Theresa May promised to change things for ‘just about managing’ families but she’s done nothing. She should be cracking down on businesses that use sham self-employment. She should ban zero-hours contracts. And she should give agency workers the right to equal pay to stop undercutting and encourage employers to create more permanent jobs.”

The TUC believes the growth in self-employment has been caused in part by an increase in sham forms of employment, where workers who would once have counted as part of a company’s payroll are treated as self-employed to reduce tax liability, duck the minimum wage and deny workers their rights.

It added that bogus self-employment included some gig economy workers and people who were contracted to a single employer through a personal service company, rather than being contracted as an employee.

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“The two million people in low-paid self-employment are part of at least 3.7 million people in insecure jobs. The other 1.7 million include agency workers, casual workers, seasonal workers and those whose main job is on a zero-hours contract,” the TUC said.

The government commissioned a report into modern employment practices from Matthew Taylor, the chief executive of the Royal Society of Arts, which was published a year ago.

The report called for gig economy workers to be given greater protection and benefits but the TUC said the government has failed to take action to tackle insecure employment.