Workers can't pay the costs of zero-hour contracts

It's naive to pretend there are no benefits, but too often only the employers get them.

There are two opposing positions on zero-hours contracts. For some, these contracts represent the unacceptable face of a flexible labour market. By offering work only when the employers needs them, they are a new form of exploitation, taking advantage of workers in a difficult labour market. Yet for others, zero hours contracts are a necessary part of the economy, providing flexibility for workers to balance work with study, caring or their home life.

Labour are in the former category, with Andy Burnham suggesting they should be banned. Many recruiters are in the latter, arguing that without zero hours contracts, unemployment would be much higher. We are yet to see what Vince Cable – who today announced a review of these contracts – thinks, and there is still discussion about the extent to which they are a problem (The Work Foundation is holding an event on this topic in July).

But what is striking about the zero hours debate is how little we know about them. We do know that they are a small part of the labour market – but one which is growing and spreading. In 2007, around 130,000 people were employed on them. This has risen to 200,000 according to the latest figures. This figure is small (less than 1 per cent of the labour market) but probably an underestimate (many do not realise they are on zero-hours contracts). We also know that zero hours contracts are more prevalent in sectors like hospitality and care, but that they are potentially spreading into middle-class professions such as university teaching.

The rest of the evidence is anecdotal. While zero hours contracts can be practical for students looking for some cash on the side, they can be extremely difficult for workers reliant on an erratic income. This uncertainty has other consequences, with anecdotal evidence that they lead to some “sharp” employment practices. For example, without fixed hours, workers are less likely to speak up for their rights or join a union. A lack of training and a "casual labour" attitude can restrict progression, leaving people stuck in dead-end jobs.

And there is one important question we are yet to find an answer to: whether the recent rise in zero-hours contracts is a short-term effect of the recession, or a long-term change in the labour market.

So zero-hours contracts are a mixed bag. But what can Vince do about it? Given that these contracts are important for so many people, banning them seems draconian. So measures are probably needed in two areas. First, we need to intensify efforts to ensure that employers who abuse these contracts don’t get away with it. Yet, given our poor record on enforcing the minimum wage, it is hard to be confident that this will happen.

Second, efforts are needed to provide support for people on the sharp end of zero hours contracts. New tax credits to help them achieve a reasonable income are an important potential solution. And the design of the (increasingly) long-awaited Universal Credit will also be important.

The UK has – relative to most countries – an extremely flexible labour market. For the most part, this is a good thing, keeping employment relatively high. But it does come with costs, and we haven’t always been good at managing these. Zero hours contracts are the latest such labour market problem, with both costs and benefits. The challenge for Vince is to keep the benefits, but make sure workers don’t pay the cost.

Photograph: Getty Images

Neil is the Senior Economist at The Work Foundation


Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.