The number of people on zero-hour contracts has increased by one fifth since last year, which is an alarming amount. This has even caused worries that employers are turning increasingly towards this controversial arrangement to cut back on pay and working conditions.
According to the Office for National Statistics, the number of people reporting that they were working on zero-hour contracts rose to climbed to 744,000 from 624,000 last year. This is a staggering rise of 19% to 2.4% of the total UK workforce which numbers 31 million.
The ONS also discovered that 40% of people on this type of contract wanted more to work more hours than what was being offered to them, which suggests that many employers are still operating below their capacity.
According to John Philpott, who is the director The Jobs Economist, even a small portion of zero-hour contracts can drag down the overall pay levels.
“Although the share of zero-hours contracts in total employment remains relatively small and some employees like the flexibility these contracts offer them, the ability of employers to hire people in this way undermines the bargaining power of other workers, thereby dampening pressure for improved pay and conditions, particularly at the bottom end of the labour market. The effect of zero-hours contracts on market behaviour and outcomes is thus likely to be greater than their incidence might suggest.”
He then went on to speculate that more employers will stop offering standard full time contracts, in order to avoid the increase in wages for over 25s that comes into effect next April.
“In an otherwise very lightly regulated UK labour market the forthcoming large hike in the minimum wage when the national living wage (NVL) is introduced next year might act as a further incentive to employers to increase their use of zero-hours contracts – which are already very prevalent in sectors where the NVL will bite hardest – in order to minimise the impact on total labour costs.”
Research has shown that zero contract workers earn less than people in similar roles, as well as being denied things such as sick pay. A TUC study which was published last December showed that weekly earnings for zero-hour workers were a measly £188, compared to £479 for permanent contract employees.
They also estimate that in addition the people on zero hour contracts, another 820,000 people say they are underemployed.
Frances O’Grady, who is the General Secretary, had this to say: “People employed on these contracts earn £300 a week less, on average, than workers in secure jobs. I challenge any minister or business leader to survive on a low paid zero-hours contract job, not knowing from one day to the next how much work they will have.”
However, according to the Institute of Economic Affairs, this rise in zero-hour contracts is “neither surprising nor important” and apparently illustrates the “the flexible nature of the UK’s labour market.”
IEA’s director general, Mark Littlewood, had this to say: “Not everyone is able to work at fixed and regular times and adaptable contracts such as these offer the opportunity of employment to students, single parents and many more.”
“Without this flexibility, opportunities for these individuals would be dramatically reduced, as is the case in European countries where rigid employment structures have resulted in staggeringly high levels of unemployment.”