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20 August 2013

Labour promises “action“ on zero-hours contracts – its supporters want a ban

One challenge facing Miliband is that many would like him to back more radical solutions to the problems the party is highlighting than he is prepared to support.

By George Eaton

After the shadow cabinet’s alleged summer slumber, Chuka Umunna is busily touring the studios this morning attacking the growth of zero-hours contracts. As he has noted, figures from the ONS (collated by the Resolution Foundation) show that employees on these contracts, which offer no guaranteed work and require workers to be permanently on-call, are paid 40% less than others. In addition, the Chartered Institute of Personnel and Development estimated earlier this month that up to a million workers could be employed on them, four times larger than the most recent ONS figure of 250,000. 

Later today, Umunna will host a summit on the issue with representatives of employers and employees, including the CBI, the TUC, the British Retail Consortium (BRC), the British Chamber of Commerce, the Local Government Association and Unison, the TSSA, the GMB, the CWU and the NUT (Unite is a curious omission). He said:

David Cameron says he’s fixed the economy, but for hard working families things are getting harder not easier. For too many things have become more difficult and less secure as they face a cost of living crisis in David Cameron’s Britain.

New evidence highlights that there could be hundreds of thousands more people on zero-hours contracts than previously thought. That’s hundreds of thousands of people in insecure work earning far less than average pay. Flexibility works for some, but the danger today is that too often insecurity at work becomes the norm.

The huge spike in the use of zero-hours contracts has brought increased reports of abuses and bad practice. There should be zero tolerance of such abuse. That is why Labour has convened this important summit bringing together representatives of employers and employers to consider what action must be taken. In contrast, this Tory-led government has refused to have a proper and full consultation on the rise of zero-hours contracts or to treat this issue with the seriousness which it deserves.

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Labour has previously said that it is “determined to stamp out abuse of zero-hours contracts” and is “looking at how to do so” as part of its policy review. The phrase “abuse of” suggests that it recognises that the contracts do have some benefits. As Vidhya Alakeson of the Resolution Foundation recently noted, “If you want to combine work with studying or childcare then you can juggle things around more easily.” Nicola Smith, the TUC’s head of economic and social affairs, has similarly suggested that an “outright ban” would be a mistake and that the “the vast majority” of employers (including Labour councils) do not use them in an exploitative fashion. 

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But it’s worth noting that many in Labour would like it to pledge to abolish them. In a notable piece of policy freelancing earlier this year, Andy Burnham said: “A living wage could really help to address that and I would say to Ed, personally, go further and ban things like zero-hours contracts. That is a Labour response to the debate about work and benefits.” Labour MP Andy Sawford has attracted significant support for his Private Members’ Bill to scrap the contracts. And the voters are on his side. A YouGov poll in August found that 56% of people (including 71% of Labour voters) “support a ban on zero-hour contracts”, with just 25% opposed. 

One challenge that Miliband faces is that many in Labour would like more radical solutions to the problems the party is highlighting, such as low pay and insecure work, than he is prepared to support. Rather than increasing voluntary use of the living wage, for instance, most party activists would prefer him to introduce it on a statutory basis. But Miliband, aware that studies suggest this would cost around 150,000 jobs, will almost certainly not pledge to do so.

The Labour leader’s mantra is “radicalism and credibility”. Unless Labour offers a distinct alternative to the Tories, voters will see little reason to support it, but unless it is also viewed as a responsible opposition it won’t be trusted with power. Whether or not the party wins a majority in 2015 will depend on him perfecting this balance.