The ‘epidemic’ of zero hour contracts

Well, I did warn you.

Today Ed Miliband promised that a future Labour government would end the “epidemic of zero-hours contracts” which are “undermining hard work, undermining living standards, undermining family life” in Britain. But the Office of National Statistics, workers on zero hours contracts account for 2.3% of the workforce. Is that really an ‘epidemic’?

I’ll admit, I wouldn’t want to be on a zero hours contract (though it might have been useful when I was studying). You might not want to be on a zero hours contract. But, surely, what matters is whether the people on zero hours contracts want to be on them?

In 2013 the Chartered Institute of Personnel and Development produced a study of zero hours contracted workers. It found that

  • “Almost half of zero-hours contract workers (47%) report they are satisfied with having no minimum contracted hours, with 27% saying they are dissatisfied and almost a quarter (23%) neither satisfied nor dissatisfied.”
  • “Almost two-thirds of employers surveyed that use zero-hours contracts (61%) report that zerohours staff are not contractually obliged to accept work and are free to turn it down. However, 15% of employers say zero-hours staff are contractually required to be available for work, and a further 17% report that in some circumstances zerohours contract staff are expected to be available for work.”
  • “In all, 80% say they are never penalised for not being available for work, a further 17% say they are sometimes penalised and 3% say they are always penalised if they are not available.”
  • “Most zero-hours contract workers (52%) don’t want to work more hours than they typically receive in an average week. However, 38% say they would like to work more hours, with 10% undecided.”
  • “About a third of employers that employ zero-hours workers say they have a contractual provision or policy outlining their approach to arranging work with zero-hours workers or cancelling work that had been offered. However, about four in ten employers say they don’t have such provisions or policies and a quarter say they don’t know.”
  • “In all, 46% of zero-hours contract workers say they either receive no notice at all (40%) or they find out at the start of a shift that work is no longer available (6%).”
  • “Six in ten zero-hours workers report they are allowed to work for another employer when their primary employer has no work available. A further 15% say they are able to sometimes. Just 9% say they are never able to work for another employer and a sizeable 17% don’t know.”
  • “Almost two-thirds (64%) of employers who use zero-hours workers report that hourly rates for these staff are about the same as an employee doing the same role on a permanent contract. Nearly a fifth (18%) report that hourly rates for zero-hours staff are higher than permanent employees. Around one in ten employers report (11%) that they are lower.”

So, a mixed picture. Or maybe that doesn’t matter. Maybe whether people like them or not is immaterial to whether the government permits them or not. That’s a political question and this is an economics blog.

So, take a look at the chart below


Source: OECD

Unemployment has been one of the relative British economic success stories in recent years. And, in large part, this is down to its relative labour market flexibility – the ease with which workers can be hired and fired, in other words. Indeed, as the graph below shows, countries with less regulation of temporary employment see more employment.


Source: OECD

But maybe those unemployed Greeks and Spaniards are, actually, better off than British workers on zero hour contracts? Actually, the evidence shows that it’s better to have a temporary job than no job.

It’s early days in the campaign so there will be more of this stuff, no doubt, from all parties. But it would be a mistake to let a part of a labour market which has weathered recession remarkably well fall victim to political posturing.


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