Workers on zero-hours contracts typically earn £1,000 a year less than permanent employees, said the Resolution Foundation think tank iStock

Workers on zero-hours contracts typically earn £1,000 a year less than permanent employees, according to the Resolution Foundation think tank.

The body said these workers earned 6.6% less, or 93p an hour, than other staff doing similar jobs.

It said for a typical zero-hours contract worker, working 21 hours a week, this "precarious pay penalty" amounts to £1,000 a year.

Zero-hours contracts do not guarantee work, leaving employers complete discretion over the hours offered.

The number of people on these contracts jumped 20% in 12 months hitting a record high of 900,000 this year, just under 3% of the workforce.

Zero-hours contracts are widely used by retailers such as Sports Direct and JD Sports, restaurants, leisure companies, the care home sector, and increasingly in the health service.

These types of contracts offer flexibility, but are also used to depress wages, said the Resolution Foundation.

Laura Gardiner, senior policy analyst at the Resolution Foundation, said: "Concern about the use and abuse of zero hours contracts goes far wider than a few notorious firms. There is mounting evidence that their use is associated with a holding down of wages."

Gardiner added: "As new ways of working continue to grow – from zero-hours contract and agency work to the gig economy and wider self-employment – we need a better understanding of how they help or hinder people's earnings and career prospects."

Double whammy

The government has commissioned Mathew Taylor, chief executive of the Royal Society for the Arts and a advisor to former Prime Minister Tony Blair, to lead a review into how "modern working practices" such as the gig economy affect workers' rights.

TUC General Secretary Frances O'Grady said: "Zero-hours workers suffer the double whammy of lower pay and fewer rights at work.

"That's why the Taylor review must drag employment law into the 21st century. Far too many workers have no power to stand up to bad bosses."