Are zero-hour contracts all that bad?

zero-hours

You can’t have missed the recent furore over news that an estimated one million people across the UK are employed on zero-hour contracts – roughly 3-4% of the workforce.

Under the terms of such a contract, employers can keep their workers on call without guaranteeing them even a minimum amount of work. In addition, they only pay for the hours worked. The worker can refuse a shift, but critics say that can result in the employer “punishing them” by not offering them further shifts for a long period.

On the face of it, this sounds as if employers are exploiting jobseekers by cashing in on massive unemployment. However, in a climate where permanent employment is hard to come by, not all observers reckon it’s such a bad thing.

So what are the facts?

 

The extent of the issue

A survey released in August of 1,000 employers by the Chartered Institute of Personnel and Development (CIPD) found that one in five used zero-hour contracts for at least one member of staff. This is considerably more than the 200,000 that the ONS figures suggested at the end of 2012.

For sure, it’s a trend that is on the increase. A Workplace Employment Relations Survey conducted by the UK government shows that the proportion of workplaces with some employees on zero-hours contracts has increased from 4% in 2004 to 8% in 2011.

Larger companies are more likely to use zero-hours contracts. They are used most frequently in the voluntary and public sectors, particularly education and healthcare, as well as the hotel, leisure and catering industries.

 

The pros

According to the CIPD, about 38% of those employed under zero-hours contracts considered themselves to be employed full-time, working 30 hours or more a week. Some, 16% of those on zero-hours contracts felt they did not have an opportunity to work enough hours. This, however, implies that the majority are content or would, in fact, like to work fewer hours.

Exploding the myth that it is unskilled workers who are being “exploited”, a recent Labour Force survey found that some 43% are managers, technical staff or other high earners, compared with 17% in semi-skilled jobs and just over one-tenth who were unskilled. Some 80% were not looking for another job.

There is, therefore, plenty of evidence that these contracts suit some workers as much as they suit the employers. If used well, for instance, they create flexible working opportunities that particularly suit women-returners, parents, carers and students.

In uncertain economic times it also means that employers can take on more workers to meet fluctuating demand without having to commit and it circumvents the need for costly temp agencies.

In short, they can open up opportunities for people who would not otherwise be able to work regular hours and easing the pressure on full-time staff.

 

The cons

The Unite union has called for the Government to halt these contracts in order to protect what they describe as an attack on workers’ rights. Several MPs have also called for zero-hour contracts to be banned.

Certainly, it results in some workers having an unpredictable income from month to month. In some reported cases, they don’t get the chance to earn a living wage as they have to be “on call” with that one employer. They might also have no sense of job security or recourse to their employer and in some cases sick pay is not included.

A particular criticism is that zero hour contracts allow employers to replace full-time workers, who are entitled to more rights. Companies such as Sports Direct, McDonald’s and JD Wetherspoon employ 80-90% of their staff on zero-hour. McDonald’s has argued all of its staff are given regular shifts and are not on call.

 

Should it be banned?

Understandably, there is a fear that the pendulum is swinging back in the employers’ favour and that zero-hour contracts are open to abuse.

No doubt in some cases they are. However, in this economic climate these contracts do serve a purpose.

Business secretary Vince Cable has ordered a review into the practice, but has said Government is unlikely to outlaw zero-hour contracts because “for many workers, as well as their companies, it’s a perfectly sensible arrangement.”

It certainly seems that workers and employers alike would be better served by improving the system rather than simply banning it. Not least, the crushing unemployment levels that have resulted from the inflexible labour market in Spain, Greece and Italy back this up.

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