Keir Starmer has been warned against caving in to pressure to water down a ban on exploitative zero-hours contracts, after fresh evidence showing the financial hit for millions in insecure work.

Bosses have told the prime minister he risks causing “real damage” for the economy if the government’s proposals for the biggest overhaul in workers’ rights for a generation are pushed through too quickly.

Labour’s workers’ rights overhaul has become one of the biggest battlegrounds between the new government and businesses. In a meeting with business groups and trade unions earlier this month, it is understood that Angela Rayner, the deputy prime minister, and Jonathan Reynolds, the business secretary, reassured employers that they would take a staggered approach to introducing the reforms.

After meeting the bosses of Britain’s largest employers’ groups on Thursday, Rachel Reeves promised the government would “co-design” its policies with business on shared priorities to boost economic growth.

“Under this new government’s leadership, I will lead the most pro-growth, pro-business Treasury in our history – with a laser focus on making working people better off,” said the chancellor.

However, Paul Nowak, the general secretary of the Trades Union Congress (TUC), warned banning zero-hours contracts should remain a top priority despite heavy lobbying from bosses.

“I would challenge any business leader or politician to try and survive on a zero-hours contract not knowing from week to week how much work they will have,” he said.

“It’s time to drive up employment standards in this country and to make work pay for everyone. The government’s forthcoming employment rights bill will help create a level playing field – and stop good employers from being undercut by the bad.”

According to new polling commissioned by the TUC, the vast majority (84%) of zero-hours workers want regular hours. Many of those on such contracts are also struggling financially due to being underemployed.

The survey of 2,458 people aged 16 and over in employment in Britain, carried out by the strategic opinion researcher Peter McLeod, found that 75% of those on zero-hours contracts had experienced difficulty meeting living expenses due to not being offered enough hours.

As many as two-thirds of workers on zero-hours contracts seek extra work, according to the survey, while more than half (58%) had their requests for more hours refused by employers.

Labour committed in the general election campaign to legislate within the first 100 days in office to strengthen workers’ rights, including a ban on exploitative zero-hours contracts, ending fire and rehire practices, and introducing basic employment rights from day one on the job.

Other reforms include repealing anti-trade union legislation introduced by the last government, and creating a single enforcement body to ensure employment rights are being upheld.

Sources at this month’s meeting between the government, business groups and unions said ministers indicated that banning zero-hours contracts would be among the first elements of the reform package to be introduced.

Other more complex changes – such as the creation of a single employment status, to tackle exploitative practices in the gig economy – would take longer.

“They are conscious of the cumulative burden, so it makes sense to think about staggering it,” said a business leader who attended the meeting. “There is concern about the timeframe and if you rush and make a wrong turn.”

However, employers are pushing for exemptions in the zero-hours ban, including carve-outs for seasonal workers and the ability to keep offering the contracts to staff who want to keep the flexibility they can offer.

More than four million people in the UK are employed in low-paid and insecure work, the TUC said, including a million on zero-hours contracts. The unions’ umbrella group published polling in July showing the vast majority (67%) of voters support banning the contracts.

Julian Richer, the founder of the Richer Sounds hi-fi chain, who started the Zero-Hours Justice campaign group, said a ban was “well overdue” while some employers abused the system.

“It is time to rid the economy of these contracts so that every worker who wants a secure contract can have one. Driving up employment standards is in everyone’s interests,” he said.