Rapid rise of zero-hours contracts has slowed to a crawl

Zero-hours contracts (ZHCs) have hit a record high of 905,000, but a significant slowdown in their recent growth has been confirmed, the Resolution Foundation said today (Wednesday) in response to the latest ONS figures.

The latest figures show that the number of people on a ZHC grew by more than 100,000 between the last three months of 2015 and the last three months of 2016 – an increase of 13 per cent. However in the second half of 2016 they rose by just 2,000, or 0.2 per cent.

The Foundation says that, while many people prefer the flexibility that a ZHC provides, overall workers on such contracts face a significant pay penalty – typically earning £1,000 a year less. This means the recent slowdown will be welcomed by many, but today’s figures also confirm that ZHCs are a permanent feature of the labour market.

The slowing of ZHC growth is likely due to a combination of factors, including firms struggling to fill contracts that do not guarantee any hours of work in a tightening labour market, the reputational risk now associated with ZHCs, and a much higher awareness of the contracts having been achieved in recent years.

There are also signs of intergenerational flux in the figures, with over two-thirds of the increase over the past year driven by those aged 50-64, whereas the number of people aged 16-24 on ZHCs has fallen by 5,000. However young people are still disproportionately likely to be on a ZHC – 7.5 per cent (300,000) of those aged 16-24 in employment are on one.

Dan Tomlinson, Researcher at the Resolution Foundation, said:

“The number of people on zero hours contracts has reached an all-time high at the end of last year, further confirming that they are now a permanent feature of our jobs market.

“But the zero-hours juggernaut is showing signs of slowing down, with barely any increase during the second half of 2016.

“This slowdown is likely due to a strong jobs market meaning that job hunters now have more options available than taking a contract without guaranteed hours, firms being reluctant to be associated with using zero-hours contracts following the bad press received by firms like Sports Direct, and the high profile of these contracts meaning there is no backlog of people reporting being on one artificially boosting numbers.

“Zero-hours contracts are by no means the only form of insecure work. More scrutiny must be given to the large rise in self-employment, and other less-discussed areas of insecure employment such as agency work and short hour contracts. The government should ensure, through the Taylor Review, that workplace rights and responsibilities are brought up to speed to reflect these shifts.”