ZERO HOUR CONTRACTS
One of the problems in understanding this phenomenon is that there is actually no legal definition of the term and, more importantly, employees and employers may have a different view of what exactly this entails. As a result, it has been difficult to measure the extent of this practice within organisations although it is commonly understood that zero hour contracts relate directly to a lack of a guaranteed minimum number of hours of work.
Using this definition, the Office for National Statistics (ONS) has been on the case and earlier this week, published the first analysis of zero hour contracts from one of its business surveys.
So what do we now know about the use of zero hour contracts in the UK?
First of all, there are nearly 1.4 million employee contracts that do not guarantee a minimum number of hours. The data also suggested that most workers on such contracts had at least two jobs - the number of people who were employed on zero hour contracts was 583,000 or around 2 per cent of the UK workforce.
This suggests that whilst zero hour contracts affect a small proportion of the working population, this particular group seems to be stuck in a position where they have to take a number of these contracts to survive.
According to the study, just over one in ten employers are involved in using zero hour contracts although the data also shows that nearly half of large firms regularly utilise this practice as opposed to only 12 per cent of those who employ less than 20 people. This may be a slightly surprising result, given that smaller businesses are often portrayed as non-unionised entities with looser worker practices than their formalised larger counterparts.
Yet this research shows that the SME sector has largely shunned this practice and has preferred to employ people on normal working conditions even during a recession when greater flexibility was expected within many smaller businesses. In fact, it does focus attention on the human resource practices of larger businesses and perhaps more detailed work is needed to identify those individual firms which employ staff on zero hour contracts in the UK.
In terms of sectors, it is not surprising that nearly half of the businesses based in the accommodation and food retail sector use zero hour contracts given the largely transient and seasonal nature of much of the work offered. This finding could have serious implications for an economy such as Wales with its higher dependency on tourism as compared to other parts of the UK.
Those on zero hour contracts may not be able to undertake further training to improve the service delivery in the industry and, more relevantly, employers will not be willing to invest resources in upskilling such individuals.
This could have an impact on the future of the industry if, as recently suggested by the Welsh Government, higher quality service is the bedrock on which it will be grown here in Wales over the next decade.
In terms of the profile of the employees who are employed on zero hour contracts, the results are not unsurprising.
First of all, women make up a bigger proportion of those reporting working on zero-hour contracts (55 per cent) as compared with those employed who are not (46 per cent). In addition, two thirds of people on “zero-hours contracts” reported that they worked part time, compared with a quarter of those employed who are on normal contracts.
In terms of age, young people seem to be the main group on this type of employment, with 36 per cent of those aged 16-24 on zero hour contracts. To some extent, this is partly due to the fact that a significant number are in full-time education and are combining flexible working with their studies.
But the question remains whether this practice, especially for those young people that have left education, is a short-term response to recent economic difficulties given that full-time jobs have been difficult to create during the recession or whether young people are, because of limited job opportunities, increasingly being forced to take whatever is available.
Therefore, this study is long overdue in examining this phenomenon and we now do actually have the statistics that demonstrate the extent of zero hour contracts within the economy. And whilst it is not as prevalent as some have tried to make out with 87 per cent of employers avoiding this type of work, it should ensure that policymakers shine a light on the work practices of large employers in a number of sectors.
More importantly, it invalidates the suggestion in some quarters that smaller firms are not good employers and perhaps it is time for the debate to move on to an analysis of whether the use of zero hour contracts by bigger businesses for short-term flexibility within the workforce adds any real value to the productivity of the nation in the long run.