In order to prevent certain self-employed workers from suffering low pay, the Resolution Foundation has led calls to introduce a minimum wage for them.
The Resolution Foundation is a thinktank that focuses on creating new policies to help those on low incomes. They said that legislation should be extended to cover minicab drivers and others among the 4.8 million self-employed people in the UK.
They also said that the government should think about introducing more controls in the gig economy to protect workers from being exploited.
They have revealed in their report that one in five employees were considered low paid or earning less than two thirds of the typical weekly wage of £500. For the self-employed, around half are thought to be earning less than this threshold of £310.
The Resolution Foundation pointed out that while the introduction of the national living wage has reduced low pay for many employees, the self-employed have missed out.
“The UK’s labour market has been very successful at creating jobs in recent years. However, far too many of those jobs offer very low pay and precious little security,” said Conor D’Arcy, a policy analyst at the thinktank.
“This is especially true of the growing army of the self-employed. While many are higher earners who benefit from significant flexibility, around half fall below the low pay earnings threshold of just £310 a week. The government can start by extending minimum wage protections to those self-employed people whose prices are set by a firm. This would mean that self-employed people in the gig economy would be given protection against extreme low pay for the first time ever.”
Are gig economy workers really self-employed?
The Resolution Foundation are concerned that companies may be inclined to class their workers as self-employed to get out of paying the minimum wage or other employee benefits. They say that more needs to be done to protect these people.
They said: “Many of those in the gig economy as it currently stands are likely to be ‘workers’, an employment status with greater rights than the self-employed, meaning they should already receive at least the minimum wage. Greater enforcement is needed to ensure these workers get the rights to which they are entitled.”
D’Arcy said: “Stronger enforcement to clamp down on bogus self-employment is a prerequisite. But moving to narrow rights, benefits and tax gaps between the self-employed and employees would at last create a level playing field in the labour market. This would help to ensure that people’s employment status was based on the job that they do, rather than on a firm’s willingness to pay the minimum wage or the wish to avoid paying a fair share of tax.”
They suggest that a test should be introduced, based on employment law to see whether a person working an average amount of hours could end up earning at least the minimum wage doing the job they do.
Who could benefit from a new extend policy?
The Resolution Foundation are aware that this law couldn’t cover everyone who is self-employed and instead think it should be targeted to people who work at a fee fixed by the company. Often in the gig economy, the worker has no control over their fee as it’s all decided by the company who hires them.
The thinktank said that if the minimum wage was extended to people in the gig economy, this could help 170,000 taxi drivers and 40,000 courier service workers. Others thought to benefit from this could be up to 150,000 hairdressers and 80,000 cleaners.
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