Over 1.7 million self-employed workers may potentially earn less than the Government’s new National Living Wage (NLW) figure of £7.20 an hour, the Social Market Foundation (SMF) has warned.
The think-tank claims this number could reach 1.9 million by 2020.
Official statistics have revealed that one in seven workers consider themselves to be self-employed.
The NLW is due to come into force on 1 April, and will apply to those workers aged 25 and over. Initially set at £7.20, it is predicted to rise to over £9 an hour by 2020.
The National Minimum Wage (NMW) currently stands at £6.70 an hour.
The SMF also revealed that the introduction of the higher NLW rate may provide an ‘added incentive’ for businesses to contract out work to the self-employed, rather than employ them.
Nida Broughton, chief economist at the SMF, said: ‘Policies such as the NLW make it artificially more attractive for firms to engage contractors rather than employees, and ignore a large section of low paid workers’.
However, a Department for Business, Innovation and Skills (BIS) spokesperson stated: ‘This Government is committed to backing enterprising self-employed people through initiatives like start up loans, tax allowances and by cutting red tape by a further £10 billion.
‘Our new NLW will give a boost to over one million low paid workers when it takes effect.’