Is work in the UK becoming more insecure?

The increase in zero-hour contracts and the emergence of the gig economy over the past decade have raised concerns that working life is becoming less secure. Evidence suggests that while the share of workers experiencing insecure work has not gone up, some groups are more at risk.

In the past two decades, at least one in five (20-25%) workers will have experienced severely insecure work in any given year (The Work Foundation, 2022). Although this proportion appears relatively stable over time, the implications are that there is a significant proportion of the UK workforce in insecure work, regardless of whether the economy is stagnating or flourishing.

The broader evidence indicates that workers in insecure jobs are at greater risk of job loss. They may also face increased negative health, wellbeing and employment outcomes resulting from some insecure forms of work. This is particularly problematic for women, disabled workers and people from minority ethnic backgrounds, who are more likely to experience insecure work (The Work Foundation, 2022).

There is little expectation that significant policy interventions around the labour market will be brought forward before the end of this parliament. As a result, ensuring that workers’ existing rights are appropriately enforced remains important for protecting workers.

What does the evidence tell us about insecure work?

Traditionally, insecure work is understood as the kinds of work in which people have a higher risk of job loss. For example, it is easier to fire, or simply not to extend the contract of an insecurely employed worker, as opposed to making a permanent member of staff redundant.

During the Covid-19 pandemic, we saw that job losses were concentrated primarily among workers in low-paid and insecure jobs. But, beyond the risk of job loss, there are many other factors that can create insecurity in the labour market.

It is important to emphasise that there is no single agreed definition of insecure work. The concept is understood and measured in different ways, leading to different estimates of the extent of insecurity in the labour market.

The Trades Union Congress (TUC) estimates there were 3.6 million workers in insecure work in the UK in 2021. This estimate is based on the number of workers who were on zero-hour contracts, who were agency, casual and seasonal workers, and who were self-employed workers paid below the national minimum wage (TUC, 2021).

But there is very little evidence around how people’s experience of insecurity differs from others – for example, how different people are affected when they are subject to several forms of insecurity at the same time.

The Work Foundation looks at labour market insecurity through the lens of people’s contractual status, their financial situation and their access to employment rights and entitlements. This allows us to estimate not only how many people are in specific forms of insecure work, but also the ‘intensity’ of the experience of insecurity.

This includes jobs where a worker:

is not guaranteed future hours or future work;
has unpredictable pay or very low pay;
or has low, or no, access to employment rights, protections and entitlements.

This approach indicates that in 2021, over six million UK workers experienced ‘severely’ insecure work. This means that they faced multiple forms of insecurity simultaneously or forms of insecurity that are more correlated with other forms of insecurity, such as involuntary temporary work and involuntary part-time work.

This covers people who are in temporary or part-time work, not because they want to be but because they were unable to obtain permanent or full-time work (The Work Foundation, 2022).

Why does insecure work matter?

Insecure work speaks to broader inequalities in society. Evidence shows that specific groups are more likely to be in insecure work, due to barriers that they experience in seeking to obtain secure work.

This includes disabled workers – 25% of whom experienced severely insecure work in 2021 compared with 19% of non-disabled workers. People from minority ethnic backgrounds are also more likely to be affected: 24% experienced severely insecure work versus 19% of white Britons last year (The Work Foundation, 2022).

Additionally, insecure work tends to provide limited access to training and development, which also affects individuals’ routes into more secure work. For example, a teacher who teaches the same course every year can improve their materials and their delivery year on year. By contrast, a teacher on a temporary contract may have to develop their lesson plans and materials from scratch in every new role, resulting in a slower rate of professional development and potentially becoming less appealing to prospective employers (Lopes and Dewan, 2018).

Further, being in insecure work can affect people’s health. Some studies show that people in insecure jobs experience higher rates of physical or mental health problems (Lübke, 2021). For example, these individuals are more likely to report stress and strain, and to experience depression or anxiety. (For a review of the evidence on this, see De Witte et al, 2016.)

What remains uncertain is how experiencing multiple forms of insecurity simultaneously can affect workers’ health, wellbeing and employment over the longer term.

How has insecure work changed?

Over the past two decades, 20-25% of workers are estimated to have experienced severely insecure work in any given year. This equates to about one in four or five UK workers.

Insecure work has remained relatively stable over this period, although it was slightly higher in the early 2000s, following a spike in unemployment in the 1990s. There was also a relative increase during the global financial crisis of 2007-09.

Insecure work and economic crises appear to be related to some extent. The proportion of the UK workforce experiencing severe insecurity is modestly positively correlated with levels of unemployment. It is more strongly linked with economic inactivity, which refers to people who are out of work and not looking for work.

There are a few potential explanations underpinning this association. Over the past 20 years, we have seen economic crises, such as the global financial crisis, having a knock-on effect on the labour market, resulting in higher rates of unemployment and inactivity.

In such times, businesses are facing a challenging and uncertain landscape, and are more likely to hire a flexible labour force. Similarly, with higher levels of unemployment, people out of work face greater competition for jobs, which means that they may find it harder to negotiate their terms and conditions.

During the pandemic, we witnessed the opposite. Both unemployment and rates of severe insecurity fell to their lowest levels in many years. The latter can be explained to some extent by the fact that low-paid and insecure workers were more likely to lose their jobs during this time. This shifted proportions more strongly in favour of secure work.

At the same time, unemployment remained low, both as a result of the successful Coronavirus Job Retention Scheme (furlough) and because hundreds of thousands of workers left employment and stopped looking for work altogether – that is, they became economically inactive.

Figure 4: Change in the proportion of the UK workforce experiencing severely insecure work, 2000-21

Source: Work Foundation analysis of the Office for National Statistics (ONS) Labour Force Survey data, April-June 2000-2021

Note: The first pink shaded area highlights the global financial crisis. The second shaded pink area highlights the Covid-19 crisis.

The changing nature of insecurity

From the onset of the pandemic, there has been a huge outflow of self-employed workers, dropping from around five million at the start of 2020 to 4.2 million in the spring of 2022.

Recent analysis shows that the majority of this change has been driven by self-employed workers staying in the same role but reclassifying themselves as employees (ONS, 2022). Many self-employed workers who have set up their own companies pay themselves through the pay-as-you-earn (PAYE) system.

The furlough scheme was available to all those who are payroll employees, which may have also precipitated self-employed workers making themselves employees of their own companies to qualify for support.

In the UK, self-employed workers, which includes freelancers and people who work for themselves, among other things, cannot access maternity pay or sick pay and are not protected against dismissal. This is why particularly low-paid self-employed workers are often included in estimates of insecure work.

But the large-scale reclassification of freelancers as employees may mean that some who are officially categorised as ‘employees’ – which normally would be considered a more secure status than being self-employed – do not, in reality, benefit from full entitlement to employee protections and benefits.

This should prompt a re-evaluation of what we consider to be secure and insecure work, as well as what kind of safety nets should be in place for workers.

Gaps in our safety net need attention with many workers now struggling to pay for essentials

Evidence shows that labour market interventions – such as the furlough scheme – can be highly effective in protecting workers from economic shocks. Other policies, such as the national minimum wage, have been relatively successful at reducing in-work poverty.

This means that policy can offer solutions. The limited progress in reducing the prevalence of insecure work over the past 20 years is the result of social and political choices. In other words, there has been very little policy intervention to address it.

In 2016, Matthew Taylor conducted an independent review into job quality in the UK, and identified insecure work as a problem that should be urgently addressed. Since then, incremental changes have been made, such as the legal obligation to provide clearer terms and conditions for agency workers, but potentially larger policy levers have remained untouched.

Given the government’s stated intention neither to reform safety nets that particularly insecure workers tend to fall through (such as statutory sick pay), nor to change the current classification of employment status, the focus should be on enforcing people’s existing rights.

Making sure that existing labour market rules and regulations are followed is a well-known challenge, suffering from lack of coordination between different areas of enforcement and a shortage of inspectors. For now, the onus remains on individuals to identify wage underpayment themselves, or to challenge their employment status. Attention should turn to meaningful reforms that can strengthen the hand of workers attempting to secure their rights.