Workers employed on zero hours contracts are paid an average of £6 an hour less than those with set hours, according to a new study.
Research by the Resolution Foundation found a growing use of zero hours arrangements, under which workers are not guaranteed a certain numbers of hours.
The trend could explain the rising rates of under-employment since the start of the recession in 2008, with more people on zero hours wanting to work more, said the report.
More than 200,000 workers were on zero hours contracts in 2012, up from 134,000 in 2006, but the figure is likely to be an under-estimate, said the Resolution Foundation.
Matthew Pennycook, joint author of the report, said: "For many workers, zero hours contracts mean a life of permanent uncertainty. They leave staff fearful of turning down work, unable to plan and budget for life away from work and prone to having their employment rights undermined.
"Zero hours contracts also seem to have a negative effect on staff morale, teamwork and productivity in a way that leads to a poorer quality service."
TUC General Secretary Frances O'Grady said: "Zero hours contracts cause real hardship for workers and are becoming a major problem for our economy.
"The lack of regular pay or job security can make budgeting for monthly bills difficult and longer-term planning a pipe dream. It's no wonder then that zero hours contracts are most common amongst vulnerable workers such as care home staff, young people and non-UK nationals.
"The Government must use its ongoing review of zero hours contracts to stamp out abuses, and encourage employers to use proper contracts."