How zero-hours contracts hide real unemployment

If you're on contract without work, the ONS can count you as employed.

The CBI and Institute of Directors have both waded into the debate over zero-hour contracts, arguing that tenuous labour is a necessary tool in the fight against unemployment. The Financial Times' Elizabeth Rigby, Duncan Robinson and Andrea Felsted report:

John Cridland, director-general of the business lobby, said those complaining about such contracts needed a “reality check”…

“These contracts play a vital role as a way of keeping people in employment,” said the head of the employers’ body. “If we hadn’t had this flexible working when the economy contracted, unemployment would have topped 3m – and it didn’t it went to 2.5m.”

Cridland may or may not be correct (the actual numbers do not appear to be based on any research, but even numbers pulled out of thin air may be correct through chance), but somewhat misses the point.

People on zero-hours contracts may count as employed even while, for all functional purposes, they have no job. When the ONS is counting employment, anyone who has a currently active zero-hours contract counts as "employed", even if they haven't taken a single shift in the week of the survey. And given the anecdotal evidence that employers frequently stop giving employees work as a way of effectively firing them, many of those employees actually are unemployed, then just haven't been told yet (official statistics on the practice don't exist for obvious reasons). Dawn Foster details the sort of stories which are common:

One colleague was slightly late two weeks in a row, and when asked why replied she’d had trouble finding a parking space. She didn’t come in the following week. Looking at the month’s rota I saw her name but with no shifts allocated. Two months later I saw her near my house. “Have you got a new job?" I asked. She explained she hadn’t, and that while she’d not been sacked, she hadn’t been offered any shifts and there’d been no explanation.

The ONS explains how they measure zero-hour workers who may be in that trap:

People who are on zero hours contracts count as employed. If they worked at least an hour in the survey reference period they would be counted in the employment numbers as usual. If a survey respondent did not in fact work in the reference period, the first question asked is whether they are 'temporarily away from a job' (they could be sick or on leave, etc..). Those on a zero-hours contract should reply to say they have a job to return to. In this instance they would be in employment but listed as having worked no hours

In other words, there are people who are not currently receiving work from an employer, and who will never again receive work from that employer, but who still count as "employed" in national statistics because their employer sees no need to officially fire them. This has additional implications for their lives. Some zero-hour contracts include rules banning the employee from taking work for other employers at the same time, while those who end up "voluntarily" leaving work are unable to claim many out-of-work benefits.

The effect of this on employment statistics is hard to measure, particularly since it is widely believed that employment statistics already fail to capture the full effect of zero-hours employment. The latest figures from the ONS show just over 200,000 people on the contracts, but the FT reports that "research released this week by the Chartered Institute of Personnel and Development claimed there were about 1m zero-hours workers in the UK". Regardless of the total, however, one thing is clear: for some people, the difference between a zero-hour contract and unemployment is negligible.

McDonalds is one of the firms at the centre of the zero-hour contract row. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.