John Humphrys asks: are zero-hours contracts exploitative, or is the labour market maximising the number of jobs available?
August and holiday-time may not seem the most appropriate moment to be asking questions about working contracts and whether or not people are being exploited. But then for many people August isn’t holiday-time and nor is any other month: the conditions of their work (if they’ve got any) don’t offer any chance of a holiday. So this week’s revelations about the number of workers on so-called ‘zero-hours contracts’ is timely. Are such contracts exploitative or an indication of a properly working labour market maximising the number of jobs available?
A survey of a thousand employers conducted by the Chartered Institute of Personnel and Development has discovered that the number of people working on zero-hours contracts is about a million, or four times the official estimate. Such contracts require people on them to be available as and when required but without any guarantee that their services will be needed. So there are no fixed shifts or work patterns and workers can be sent home without warning and therefore also without pay. The usual entitlements to holidays or sickness and redundancy pay don’t apply.
The CIPD reckons that around 20% of employers have at least one employee on such a contract. Many of them are in the low-paid sectors of hotel-working, catering and leisure but also in some areas of education and healthcare. Fast-food outlets such as McDonalds use such contracts as do the pub chain JD Wetherspoon and the leisure company, Cineworld. The chemist chain, Boots, employees a few thousand people on zero-hours contracts and Sports Direct has around 90% of its 23,000 workers on them. Even Buckingham Palace makes use of the contracts.
Perhaps surprisingly the voluntary and public sectors take advantage of the contracts more than the private sector. Local councils, for example, buy in around 70% of their home care workers on zero hours contracts.
That anyone should be employed on such insecure contracts is seen as an outrage by many. The Guardian columnist, Seamus Milne, has described them as a form of ‘twenty-first century serfdom’. Some unions have called for them to be banned. Dave Prentice, the general secretary of Unison, said: “The vast majority of workers are on these contracts because they have no choice. They may give flexibility to a few, but the balance of power favours the employers and makes it hard for workers to complain.”
But employers tend to see things very differently. John Cridland, the director-general of the Confederation of British Industry, said: “These contracts play a vital role as a way of keeping people in employment. If we hadn’t had this flexible working when the economy contracted, unemployment would have topped 3m – and it didn’t. It went to 2.5m.”
While such contracts may have helped reduce the overall unemployment rate to below what it otherwise might have been, they have also added to the problem of underemployment, whereby people in work are doing far less work than they want to or are capable of. The CIPD survey showed that on average those working on zero-hours contracts were working just under twenty hours a week, though only 16% said they had insufficient work. Defenders of the system point out that the advantages are not only with the employer: some employees like the flexibility
Vince Cable, the business secretary, has been conducting a review of the practice in the last couple of months. He points out that such contracts are not new and says that they “can work for the worker as well as the employer”. The age groups in which such contracts are most common are the 18-24 year-old group and the over 55s. But he is aware that “at one end of the market there is some exploitation taking place”. In particular he seems to wish to act against a particular abuse whereby some employers are forbidding workers on zero-hours contracts to take work elsewhere.
The argument over zero-hours contracts is a particular case of a much broader issue – how to strike a balance between the rights of workers and the need to create an efficient and dynamic economy. Defenders of so-called ‘flexible labour markets’ argue that only by having such contracts can enough job opportunities be created and the economy provide the services we all need. They point to higher overall levels of unemployment elsewhere in Europe where employment laws are tighter. But opponents of such labour market flexibility argue that such light employment laws risk returning us to an era of Victorian exploitation of workers and that full employment and a healthy economy neither should nor need be achieved by creating such insecurity for workers.
What seems clear is that the trend to looser employment contracts and the greater use of zero-hours contracts seems established. We shall need to ask whether or not we are happy with them not just in general but in particular cases. Our ageing population is going to require more and more social care. The cheapest way of providing it may be to employ more and more home care workers on zero hours contracts. But are we sure we want our most vulnerable citizens being looked after by people on vulnerable employment contracts? In other words, the arguments about zero hours contracts go beyond the rights of workers and the needs of employers.
