The Uber smartphone app in action Oli Scarff/Getty Images

Few subjects generate as much confusion as the so-called 'gig' economy. Yet the fog of misinformation surrounding casual work is useful to the employers, who encourage the myth that flexibility is the sworn enemy of workers' rights. If you want to 'be your own boss', as the empowering message spread by companies like Uber and Deliveroo has it, then you must wave goodbye to hard-won entitlements like the minimum wage and annual leave.

There may be an attempt in the 21st century to rebrand exploitation as something kitsch and empowering, but beneath the pseudo-progressive verbiage is a familiar ruse: to extract as much profit as possible from the labour force.

Bogus self-employment is rife because it is profitable to falsely categorise people as self-employed. It has been estimated that gig economy employers are able to reduce their direct operating costs by as much as 25% by classifying their drivers and riders as 'independent contractors', rather than workers or employees.

More than a million people now work in the gig economy in Britain, and rather than summoning up images of rock stardom and insouciant swagger, the reality is grim and onerous. Since the crash of 2008, the British economy has become 'bottom heavy', with many new jobs being created in precarious, low-paid work. Dan, a 33-year-old bicycle courier I recently spoke to, told me that some weeks he would take home less than the minimum wage, and that after suffering an injury at work he had to sign up for Employment Support Allowance to get by.

The government's long-awaited Taylor Review into modern employment practices was supposed to tilt the balance back toward workers. As Frances O'Grady of the TUC put it, the Taylor Review has been the government's "get out of jail card free" whenever it has been pressed on workers' rights.

There are some positives in the report, which was published today (11 July). There is a call to end the 'cash-in hand' economy, which currently costs the taxpayer billions of pounds every year. There is also overdue recognition that many people "are not having their rights fully respected".

Yet that is about it, and in some areas workers' rights are at risk of being set back further if the report's recommendations are adopted.

One reason workers are 'not having their rights fully respected', as the report rightly says, is due to the costs imposed by the previous government for taking a bad employer to court, which can leave an aggrieved worker with a bill of up to £1,200. The review recommends giving those in casual work what it calls a 'right to request' guaranteed hours. Yet considering it would cost someone an exorbitant sum of money to take a boss to court to enforce it, and on the basis that the government has no intention of abolishing tribunal fees, such moralising is as empty as a courier's bicycle tyre.

Worst of all, however, is a call in the report for those currently classified as 'workers' – a mid-category falling between self-employment and full employee status – to be re-labelled as 'dependent contractors'. Under this change those currently classed as 'workers' would lose their guaranteed right to a minimum wage.

This could impact millions of people in the gig economy. Existing laws could do with more clarity, but they are being applied, albeit slowly. Uber, CitySprint and Pimlico Plumbers have all recently been involved in cases where contractors have been recategorised as 'workers' by judges. Once the appeals are over and the companies are prevented from dragging the process out any further, workers at those companies will likely be entitled to the minimum wage, as well as annual leave.

While the Taylor Review calls for dependent contractors to receive sick pay together with annual leave, it potentially introduces a fresh hurdle by proposing to take away the right to a guaranteed minimum wage. Gig employers should "compensate workers based on their output", the report says, as long as workers satisfy the vague criteria that "an average individual, working averagely hard, successfully clears the National Minimum Wage with a 20% margin of error". It adds that "no individual should be expecting to be paid for all the time that he or she has the app open", and that "If an individual knowingly chooses to work through a platform at times of low demand, then he or she should take some responsibility for this decision".

Yet the judge in a recent employment tribunal case against Uber quoted the 17th century polemicist John Milton to challenge this precise point. "They also serve who only stand and wait," the judge said in his withering assessment of the ride-sharing app.

The point of this segue into poetry was to draw attention to the fact that Uber's fleet of 'self-employed contractors' were paying out themselves to fund Uber's ability to offer instant rides at the click of a button. By sidestepping minimum wage legislation, Uber enjoys the positive network effect of having a fleet of drivers on call at all times without having to pay for it. It is the driver who takes on that risk. Yet an Uber driver with the app switched on – even if not carrying someone in the car – is a fundamental reason the service works, as the judge's nod to Milton recognised.

The Taylor report draws the opposite conclusion, and says that gig employers should be free to offload risk onto people who are, in some instances, desperate for work. Uber's own data suggests that around a third of its drivers in London come from neighbourhoods with unemployment rates of greater than 10%. As to why Uber drivers and Deliveroo couriers do not simply 'do something else', as every free market ideologue never tires of asking, Aman, an Eritrean Uber driver I recently interviewed, told me that many of his friends put up with exploitative gig conditions because they "don't really have any options". "[They're] immigrants...it's like they've accepted it because they immigrants, you know."

It is to prevent this sort of exploitation for which minimum wage legislation was first created. There is always someone poor and desperate enough to do the job at a lower rate.

Rather than acknowledge this, the Taylor Review gives an approving nod to a dangerous race to the bottom, green-lighting the army of surplus labour which increasingly circles the streets of London waiting for the hopeful ping of a smartphone. Today it is the cab driver, whereas soon it could be the person cocooned in the back of the cab whose job is rebranded as a 'gig' – with all the ruinous consequences for pay and conditions.