Britain in 'zero hours' contract boom

Employers increasingly offering jobs with no guarantees of regular working hours or pay

PUBLISHED : Saturday, 13 July, 2013, 12:00am
UPDATED : Saturday, 13 July, 2013, 5:09am

No work, no pay, but still employed? Welcome to Britain's "zero-hours contracts", which offer no guaranteed amount of work and pay, and some weeks provide nothing.

Almost unheard of in the rest of Europe and the United States, the rapid growth of this type of work helps explain how Britain's barely growing economy has nonetheless been able to provide jobs for a record number of people.

One in five jobs created in Britain since late 2008 has come with a zero-hours contract, many of them in low-paid roles such as caring for the elderly or stacking shelves, but increasingly in work that requires more qualifications.

Under a zero-hours contract, an employer has no obligation to provide a minimum number of shifts, unlike other jobs.

Workers are not obliged to accept hours either. But critics argue that the flexibility mostly benefits employers because workers who reject being called up on one occasion risk being frozen out of all future work.

This has engendered criticism. Opposition Labour party leader Ed Miliband says the contracts make some British workplaces "nasty, brutish and unfair". His colleague, Julie Elliott, who led a parliamentary debate criticising the contracts, said it put too many people's life "on call".

Some Labour politicians are trying to push through legislation to ban the contracts. But they stand little chance of success, with the governing coalition of Conservatives and Liberal Democrats convinced there is a place for them.

Flexibility in hiring is viewed by many as vital to employment growth, and Britain has long had easier rules on hiring and firing workers than other European countries.

Even so, some change may still be on the way. Britain's business ministry is holding informal talks with employers and unions, which Liberal Democrat employment minister Jo Swinson said this week may presage a more in-depth inquiry.

Politicians say plenty of their constituents face difficulties with the contracts. The experience of one 26-year-old man earlier this year is typical. He worked in warehouse jobs in central England for several months under a zero-hours contract from an employment agency. He did not wish his name to be published in case he got sacked.

Usually he gets a text message to tell him if there is work the following day. But often the number of hours is unclear, and sometimes he is required at even shorter notice.

"It is very sporadic and unpredictable, making it virtually impossible to budget or plan for my other commitments," he said. "I don't earn enough, and since I've been doing zero-hours contracts I've been getting more and more in debt."

Some weeks he works eight hours, others more than 40, generally at a minimum wage of £6.19 (HK$72.84) an hour. The unpredictable income plays havoc with his state benefit entitlements, which assume a steady amount of work each week.

How many people are in a similar situation is unclear. The latest official data from the Office for National Statistic, which covers the last three months of 2012, suggests just 200,000 people are employed under zero-hours contracts, up from 116,000 in late 2008. This is 0.7 per cent of the workforce, but the 70 per cent increase is a fifth of the net jobs increase over the period.

However, the figures may significantly undercount the number of people on zero-hours contracts, as its survey relies on workers knowing the precise legal status of their jobs.

Earlier this week the government said that it was possible that 300,000 people were employed on zero-hours contracts last year in the social care sector alone.

"The numbers are dodgy, really dodgy," said Ian Brinkley, a former chief economist for Britain's Trades Union Congress who now heads the Work Foundation, a labour market think tank.

Brinkley said he expected such contracts to grow further in the future, and while he did not advocate a ban, he predicted that a damaging effect on worker morale would limit their use.