Gig economy not working for workers – new report published by the Nuffield Foundation

In the decade since the financial crisis, the UK labour market experienced strong employment growth but the outlook on wages and job quality has been less encouraging. The number of jobs with unstable hours and pay such as zero-hours, agency work and false self-employment has increased. Covid-19 and the upcoming end of the Brexit transition may further increase instability and uncertainty.

The increase in pay instability brings no benefits to workers, according to a new study funded by the Nuffield Foundation and the Economic and Social Research Council through the ESRC Centre for Micro-Social Change (MiSoC) based at the University of Essex.

The research project, led by Dr Silvia Avram at the Institute for Social and Economic Research at the University of Essex, analysed data from Understanding Society, the UK Household Longitudinal Study to examine if unstable jobs with variable hours and pay helped unemployed workers transition into employment.

It also used experimental data collected through a custom built web platform to probe the responses of low income workers to uncertainty about work availability and pay in an experimental setting. The study found that:

• There is no evidence that jobs with variable hours and pay shorten unemployment spells or facilitate labour market reintegration; this is true both of men and women, as well as of vulnerable groups that face barriers to employment such as the long-term unemployed or workers with lower educational qualifications

• Experimental results compellingly showed that workers viewed work related uncertainty as a burden and sought to avoid it whenever possible. Participants who faced a 50 percent probability of work not being available were 15 to 30 percentage points less likely to choose to work compared to participants who faced no uncertainty.

• This was not only because variability in work availability reduced total expected pay but also because uncertainty itself was perceived as detrimental.

• Welfare policies can be used to encourage people to take up insecure/ flexible work. This can be done either by making sure benefits provide a source of income when work is unavailable or by threatening benefit sanctions. In both cases, the probability to choose work increased by around 11 to 15 percentage points.

The lack of employment effects together with the negative effects on workers both support the case for policy intervention, either through employment regulation or by mandating increased compensation when hours and pay vary significantly.

Dr Silvia Avram said:

“The UK labour market has seen a longer term trend towards increased hours and pay instability and insecurity. The economic impact of the COVID-19 pandemic and the end of the Brexit transition are expected to accelerate this trend. However, our results show that pay insecurity is really problematic from a worker’s perspective. Pay instability and insecurity clearly represent a burden for workers, while there is no evidence they benefit via increased employment.”

Alex Beer, Welfare Programme Head at the Nuffield Foundation said:
“This innovative research highlights the negative impacts of hours and pay insecurity on UK workers. It is particularly timely given the uncertainty of the labour market during the COVID-19 crisis and ongoing Brexit negotiations. This research provides important insights for policymakers on the role that regulation might play in protecting workers by sharing market risks between employers and employees. The report also highlights the role of the welfare system in providing crucial support for those in and out of work.”

Read the full report here.
Published papers:
Labour market flexibility and unemployment duration: evidence from the UK
& Zero-hours contracts: flexibility or insecurity? Experimental evidence from a low income population

Note to editors:
The Nuffield Foundation is an independent charitable trust with a mission to advance social well-being. It funds research that informs social policy, primarily in Education, Welfare, and Justice. It also funds student programmes that provide opportunities for young people to develop skills in quantitative and scientific methods. The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics and the Ada Lovelace Institute. The Foundation has funded this project, but the views expressed are those of the authors and not necessarily the Foundation. Visit


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