Labour market enforcement
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Labour market

A Matter of Time: The rise of zero-hours contracts

Matthew Pennycook
Matthew Pennycook
Giselle Cory
Giselle Cory
Vidhya Alakeson
Vidhya Alakeson

It is not hard to see why zero-hours contracts can appear attractive to employers. They allow for maximum flexibility to meet changing demand. They can facilitate the management of risk, reduce the costs of recruitment and training, and they can, in certain circumstances, enable employers to avoid particular employment obligations. Yet it is clear that the benefits these contracts provide for employers come at too high a price for the majority of those employed on them.

Key findings

  • It is possible that zero-hours contracts may suit some groups of workers employed on them. For those who do not require a fixed number of working hours in order to live, for example students or, in some circumstances, older workers who wish to reduce their hours as they progress towards retirement, such contracts can offer flexibility and a welcome choice of working pattern that can aid a better balance between work and other family or leisure commitments.
  • However, it is clear that for the majority of those employed on zero-hours contracts this freedom and choice are more apparent than real. For those individuals who require a minimum number of working hours per week to ensure their family is financially secure or those who, confronting severe power imbalances in the workplace, fear that turning down hours as and when offered will result in future work being withdrawn, life on a zero-hours contract is one of almost permanent uncertainty. For those who have had their hours zeroed down on the basis of a perceived unwillingness to work the hours their employer requires or following the lodging of a workplace complaint, this uncertainty can be coupled with the anxiety that comes from exploitation.
  • Given the potential for work on a zero-hours contract to negatively impact on the management of household budgets, to impinge on family commitments, to undermine employment rights and relations, and to complicate access to tax credits and other benefits, the continued rise in their use is of growing concern. Yet their impact also extends beyond those working under them, impacting on staff morale, team cohesion and turnover in a way that can damage the quality of the service being provided.
  • It is not hard to see why employers are turning to zero-hours contracts, particularly in today’s difficult economic climate. In allowing for maximum flexibility they allow employers to more successfully adjust to variations in demand, manage risk, reduce the costs of recruitment and training and, in certain circumstances, avoid particular employment obligations. Yet it seems clear that these benefits of zero-hours contracts for employers come at far too high a price for the majority of those employed on them.

Recommendations

  • It may be too early to move toward an outright ban of zero-hours contracts given that a minority value the flexibility and choice they provide but there is an indisputable case for preventing the unacceptable aspects of their use and for introducing measures that provide greater certainty and security to those working under them.

Further reading

Calculating the Real Living Wage for London and the rest of the UK: 2024
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Nye Cominetti, Louise Murphy
Labour Market Outlook Q3 2024
The Growth and Skills Levy
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Sofia Corcoran, Louise Murphy
Low Pay Britain 2024
Examining the Government’s proposed employment reforms
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Nye Cominetti
Matthew Pennycook
Matthew Pennycook Former Senior Research and Policy Analyst
Giselle Cory
Giselle Cory Former Senior Research and Policy Analyst
Vidhya Alakeson
Vidhya Alakeson