‘Zero hour’ contracts have been making headline news in the UK over the past month. The suggestion is that employers are exploiting workers desperate for any kind of job. But such arrangements are not new and the solutions being offered miss the point.
‘Zero hours’, or ‘nil hours’, is a colloquial term for an employment contract under which the employee is not guaranteed work and is paid only for the work he or she carries out. The worker is usually expected to be around when the employer needs him or her to work, but the worker can also refuse the offer of work. Frances O’ Grady, general secretary of the Trades Union Congress, has condemned zero-hours contracts, calling on the Lib-Con coalition government to ‘stop stripping workers’ rights’. Andy Burnham, the shadow health secretary, says he hopes that a future Labour government would ban them, while his colleague Chuka Umunna, the shadow business secretary, wants a ‘proper’ consultation exercise on the use of zero-hour contracts.
Others, though, have come to the defence of zero-hours contracts. John Cridland, director general of the Confederation of British Industry, said those complaining about these contracts need a ‘reality check’: ‘If we hadn’t had this flexible working when the economy contracted, unemployment would have topped three million – and it didn’t. It went to 2.5million.’ Mark Bateson, chief economist of the Chartered Institute of Personnel and Development (CIPD), said it was ‘too simplistic to dismiss such contracts as bad for the labour market or as the tool of greedy private-sector employers’.
So what is all the fuss about? Figures from the Office of National Statistics’ Labour Force Survey indicate that around 250,000 people (less than one per cent of the workforce) were on zero-hour contracts in 2012. This is about double the number in the mid-2000s, though not much different to the situation in 2000, when the number was 225,000. However, a survey published last week by CIPD put the figure for the number of zero-hour contracts today much higher - at about one million, or about three per cent of the workforce.
Zero-hour contracts may serve useful pragmatic purposes for both employers and employees. They allow greater flexibility for both, in that employers save money by not having workers sitting around being idle, being paid but not doing any work, while workers can decide when and if they want to work. But they also often mean that workers struggle to earn enough for a decent standard of living.