Issues surrounding employment and the economy are set to feature heavily in the run up to this year’s General Election and so the Chancellor must be extremely pleased by the continuing fall in the number of people out of work. The UK’s unemployment rate now stands at 5.8% of the working population, its lowest level for more than 6 years and represents a remarkable turnaround for the UK economy.
Yet data released recently by the Office for National Statistics (ONS) about zero hours contracts shows that many of the jobs being created are low paid and offer little job security.
Zero hours contracts are highly controversial because of the fact that they offer no guarantee of work. Those working in this way often have no idea how many hours, if any, they will be working next week and the lack of a regular wage packet makes budgeting and managing bills extremely difficult. Those working in this way are also more likely to come from groups that traditionally perform poorly in the labour market. So more than half of them are women, roughly a third are aged 16–24 and 6% are over 65.
These groups are paid significantly less than their counterparts, by way of example the pay gap between men and women in all types of employment is currently 19.1%. Despite this, zero hours contracts are regularly used by many employers including JD Wetherspoon, Burger King, Domino’s Pizza, Sports Direct and McDonald’s. Their use is also rapidly increasing as the statistics released by the ONS illustrate. In 2014 the number of people estimated to be working under a zero-hours contract in their main job was 697,000, representing 2.3% of all people in employment. In that same period in 2013, the figure was 1.9% of all people in employment or 586,000.
Alert to the issues surrounding zero hours contracts and their potential abuse, both the Conservative and Labour parties have expressed a desire to reform this area should they win the General Election. The Conservatives have been thin on details so far, whilst Labour have signalled an intention to give those workers on zero-hours contracts, who are actually working regular hours, the right work fixed minimum hours. Labour have also promised to stop employers forcing zero-hours workers to be available at notice, insisting they cannot work for anyone else, or cancelling shifts at short notice without compensation.
Given their significance, this won’t be the last we hear about zero-hours contracts in the run-up to the General Election. Yet whilst the Conservative and Labour parties express a desire to reform them, it also needs remembered that their use has made a significant contribution to the number of people now in work. Any reform of this area, whilst badly needed, may show that the UK’s economic recovery is built on shakier foundations than first thought.
Senior Lecturer in Law
Nottingham Law School
Nottingham Trent University
Read Election 2015: Reform of zero hours contracts ‘could show UK’s shaky economic foundations’ – an interview with Peter McTigue in the Nottingham Post