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The forward march of zero-hours contracts must be halted

The benefits these contracts provide come at too high a price for the overwhelming majority of those employed on them.

Tesco is one of an ever-greater number of employees to use zero-hours contracts. Photograph: Getty Images.

“It’s the uncertainty that gets to me,” Shirley says, despondently. “These contracts only work one way – they don’t offer any flexibility even if you wanted it because if you turn down hours you suffer. One of the girls had her hours permanently reduced because she asked the line manager for a day off to take her child to the doctors. From that day on her card was marked”.

You might assume that Shirley works at the shadowy margins of Britain’s labour market but she doesn’t. She’s a Day Services Support Worker at a North-West care home run by one of the UK’s leading independent providers of health and social care services and for the past year she’s been on a zero-hours contract.

For Shirley and thousands like her, life on one of these contracts means a life lived permanently on-call, uncertain as to whether a sufficient number of working hours can be secured each week to pay the bills and often fearful that any sign of inflexibility or unwillingness to work will lead to future hours being withdrawn as a penalty – what is commonly known as being “zeroed-down”.

Of course, zero-hours contracts are anything but a new phenomenon. Employment contracts of this kind have been around for years. What’s novel is how fast they are growing and spreading. Official statistics put the current number of zero-hours contracts across the UK at 208,000 (up from 134,000 in 2006) but this is almost certainly a significant under-estimate of the true scale of their use given that many workers are not even aware they’re on a zero-hours contract and those who are often fail to accurately self-identify as such in government surveys. Eight per cent of workplaces now utilise zero-hours contracts in some form and their use is becoming standard practice in sectors previously untouched by them such as higher education and retail.

As a report released this morning by the Resolution Foundation makes clear, the forward march of zero-hours contracts is likely to have profound implications for the UK economy, for individuals working on them, and for the services those people provide. Those employed on zero-hours contracts receive lower gross-weekly pay (an average of £236 per week) than those who are not (an average of £482 per week) and work fewer hours (an average of 21 hours per week compared to 31 for those who are not). They are also less likely to prefer this situation – 18 per cent of those on zero-hours contracts are actively seeking alternative employment or additional hours compared to 7 per cent of those who are not. As such, the rapid growth in the use of zero-hours contracts may partly explain the ability of the labour market to combine robust employment levels with an unprecedented squeeze on real wages and rising rates of under-employment.

Beyond the headline numbers, much of the evidence is anecdotal but it strongly suggests that for the overwhelming majority of those working on these contracts – those who require a minimum number of working hours per week to get by – life is extremely challenging. The erratic income stream that often comes with a zero-hours contract can make it difficult to manage household budgets, to juggle family and caring commitments, and to access tax credits and other benefits. Furthermore, the potential for this contractual situation to be used by management as a tool to reward or reprimand raises issues about how workers can adequately assert their employment rights or maintain decent employment relations. 

The impact of zero-hours contracts also often extends beyond the individuals working on them to those who depend on the services they provide. In many workplaces the widespread use of these contracts and the jostling to secure hours they often engender can lead to lower morale, weaker team cohesion, increased staff turnover and reduced service quality. This problem is perhaps most acute in health and social care and among domiciliary care workers, 56 per cent of whom now work on zero-hours contracts. As Shirley puts it: "It definitely has an impact on the care we provide. We look after lots of patients with dementia and caring for them means being positive around them but since we were all put on these contracts everyone is worried and has started looking for other jobs and that rubs off on patients".

In the current climate, it is not hard to see why zero-hours contracts are an attractive proposition for employers. They allow for maximum flexibility to adapt to shifts in demand, they can facilitate better management of risk, they can reduce the costs of recruitment and training, and for a minority, they can be used as a means of avoiding particular employment obligations. They may even benefit a minority of employees who have the means to cope with an erratic income and place a high premium on choice and flexibility.

But it is clear that the benefits these contracts provide come at too high a price for the overwhelming majority of those employed on them. The government has acknowledged the need for reform and a review will report in the autumn. That review is unlikely to lead to an outright ban of zero-hours contracts. Nor is it a precursor to a much-needed agenda for promoting fair employment. But Shirley and thousands more like her across the UK, will be hoping that, at a minimum, the government recognises the indisputable case for introducing more stringent safeguards to provide greater certainty and security to those growing numbers working uncertainly on these contracts.