The Work Foundation’s UK Insecure Work Index shows that severe insecurity has been a persistent feature of the UK labour market over the last 20 years, with an estimated 6.2 million people in insecure work in 2022. This not only has implications for the wealth and wellbeing of affected workers; it also has implications for the health of the whole economy.

What is driving this insecurity, and how can it be addressed?

Whilst commentary tends to focus on ‘atypical’ work, such as zero-hours contracts and the gig economy, we risk overlooking a deeper inequality of power that cuts across the whole labour market: the discretionary power available to employers throughout the contemporary economy. Workers’ economic security is undermined wherever employers wield the capacity to demand, deny, or discontinue work completely, at will and with impunity.

Figure 1: Proportion of the workforce experiencing severely insecure work over time

This structural disadvantage is acknowledged in the UK Insecure Work Index, which highlights involuntary under-employment and a lack of control over pay, hours, and conditions as defining features of insecure work. The 2017 Taylor Review of Modern Working Practices also recognised this dynamic, recommending that additional protections are required to address the ‘unfair one-sided flexibility’ faced by certain ‘dependent contractors’ in the labour market. Frustratingly, this emphasis on alleviating workers’ dependence on discretionary employers was excluded from the Government’s own Good Work Plan, published in 2018.

Insecure work and dependent workers

To some extent, employees are always dependent on the discretionary decision-making of their employer. There is a fundamental asymmetry between an employer and the employees that rely on them for their livelihood.

For much of the last century in the UK, the discretionary power available to employers has been modulated by the introduction of various regulations, rights, and protections (including minimum wage legislation, limits on working hours, social insurance systems, etc.). Such interventions limit the range over which employers can exercise unchecked power, and provide greater security to workers from uncertain employment and unpredictable incomes.

However, over recent decades, multiple factors have combined to expand the discretionary power available to employers. These include:

• Deregulation: employment protection legislation has been scaled back, while access to unemployment benefits have been eroded, leaving workers more exposed to labour market risk.
• Globalisation: global economic integration and mobility of capital has made it easier for employers to access cheaper and more flexible labour markets abroad, undermining the bargaining position of domestic workers.
• Weaker unions: a combination of anti-union legislation and declining membership has impacted workers’ capacity to challenge the power of employers.
• New technologies: algorithmic management technologies have enabled more intense performance monitoring and efficiency maximisation, making it easier for employers to exercise power over employees.
• Economic context: global economic uncertainty in the years following the Global Financial Crisis has encouraged employers to adopt more flexible employment practices, shifting the burden of economic risk onto workers.

Such factors have led to an increasing bifurcation of the labour market between those who still enjoy a sufficient level of security, and those that do not. The latter includes workers on ‘atypical’ zero-hours or gig economy contracts, but increasingly also encapsulates workers in forms of standard employment that would have once been considered highly secure. We see this reflected in, for example, the 2022 P&O Ferries sacking of 800 staff, without notice and with limited repercussion from regulators; while ‘fire-and-rehire’ tactics have been increasingly utilised over recent years to undermine workers’ pay and conditions across a number of industries. These cases suggest that more expansive discretionary power is enabling more employers to disrupt employment and incomes unpredictably at any time.

Addressing insecurity therefore requires more than just tackling particular instances of insecure work; it requires us to address the underlying inequalities of power between workers and employers that have been allowed to widen over recent decades.

Rebalancing labour market power

Work Foundation research recognises that ‘over 20 years labour market policy appears to have made no marked improvement to the situations of the millions of workers subject to labour market insecurity’. A new approach is required.

By emphasising the underlying power dynamics that drive insecurity throughout the labour market, we can build the case for renewed checks and balances on the discretionary power of employers. This will require a combination of measures that both limit the range of discretionary power available to employers, and insulate workers from its potential consequences. Such measures may include:

• Constraining the discretionary power available to employers through enhanced regulation, building on existing legislation to introduce new rights to living wages and hours that guarantee a basis of security to all workers.
• Defusing the consequences of un- or under-employment by building an effective, meaningful and reliable social safety net, for example by widening eligibility and reducing the waiting time for Statutory Sick Pay.
• Controlling workplace pay and conditions more directly, by promoting trade union bargaining, economic democracy, and the shift towards cooperative ownership of firms. Evidence suggests worker cooperatives are associated with greater security, stability and productivity.

By addressing unequal power dynamics across the labour market in these ways, we can begin to build a fairer economy that is organised, not for the convenience of employers, but the long-term security of workers’ livelihoods.

Dr James Hickson, Research Associate, Heseltine Institute for Public Policy, Practice and Place (University of Liverpool).

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