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What impact do zero-hours contracts have on the UK workforce?

Jason Downes, MD of Powwownow

Since the Taylor Review was published in July, zero-hours contracts have been a hot topic of conversation.

The author of the government-issued report, Matthew Taylor, argued that banning them would have a negative impact for workers and employers. But while some argue that they’re a great way for people to work flexibly, others say they create widespread financial instability and stress for employees.

Despite falling in Scotland, figures from the ONS show that the number of employees working zero-hours contracts has risen by 101,000 in the UK since 2015.

But is this a good thing or a bad thing?

Let’s backtrack for a second and look at what zero-hours contracts are, and the benefits and drawbacks of having them in place.

What is a zero-hours contract?

The ONS doesn’t have an official definition for ‘zero-hours contract’, but generally, it’s an arrangement between an employee and employer that doesn’t guarantee the employee any hours after being hired. This means employees don’t have a minimum number of paid hours that they’ll be allocated to work each week or month.

Who works zero-hours contracts?

According to the most recent ONS Labour Force Survey, 905,000 people reported being on a zero-hours contract between October and December 2016 (which is 13% higher than in 2015). Of these people:

  • The majority are women (52%)
  • 33% are aged 16-24
  • 18% are in full time education

The accommodation and food industry hands out the most zero-hours contracts (22%), followed by health and social work (20%), transport (18%), and retail (8%).

What are the benefits and drawbacks?

Zero-hours contracts can be a great option for people who need more flexibility, as they allow employees to schedule work around any other commitments they may have.

However, the fact that they aren’t promised a set number of hours also means that people can be affected by last minute changes and cuts. And, as there are no guarantees as to how many shifts they’ll work in a given week, it can make budgeting and financial planning very difficult.

This lack of consistency and routine can have an emotional impact, especially if employees aren’t getting the number of hours that they need to make ends meet. It can cause a great deal of stress and, in extreme situations, lead to mental health problems.

How do workers feel about zero hours contracts?

According to the ONS survey:

  • The average zero-hours employee worked 22 hours/week in the period between October and December 2016.
  • For 35%, this was less than they usually work (22% worked more and 43% worked the same).
  • 1 in 3 people on a zero-hours contract wanted more work from their current employer. 

After conducting research about flexible working practices, Oxford University’s Dr. Alex Wood told The Independent that many employees are signing up for zero-hours contracts because it’s the only work available to them.

He says there are plenty of people who accept a zero-hours position under the assumption that they’ll be given more hours. However, the reality is that many struggle to make ends meet and live with a constant worry that their hours will be changed or reduced.

Some request more work from employers, which Dr Wood says creates a power imbalance. He argues that this arrangement makes people feel indebted to their managers, and allows managers to discipline or punish some employees informally by denying them work.

So, what’s the solution?

It’s difficult to find a solution that works for all employers and employees, as zero-hour contracts will vary widely from situation to situation.

The Taylor Review suggested that workers should be allowed to request a fixed hours contract after fulfilling a zero hours arrangement for a long period of time. But while this could help to give employees more stability, it still puts the burden of responsibility on the employee.

Instead, focussing on quality of employment can benefit everyone. If employers look to create flexible fixed hour contracts rather than zero-hours arrangements, it can help employees manage their work around other commitments while still having a sense of financial stability.

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