Why Zero Hours’ Contracts Are Becoming Increasingly Popular

There is so much hype in the media about how zero hours’ contracts (also known as contingent work contracts) are the enemy, but are they really as bad as we’re being led to believe?

According to the BBC, new figures based on an analysis from the Office for National Statistics, reveal that 105,000 more people were on contracts that do not guarantee work in 2016, compared with the same period in 2015.

Over the years, many people have called for there to be a ban on zero hours’ contracts however in June 2016, Prime Minister David Cameron refused calls to ban zero hours’ contracts insisting; “some people want to have the choice”.

Age, Gender & Employment Status

A survey undertaken by the Office for National Statistics states that people on zero hours’ contracts are most likely to be young, part-time working women, or people in full-time education.

903,000 people surveyed throughout the UK were on a zero hours’ contract. The pie chart below shows how the number of people on zero hours’ contracts in the UK is split by age.

404,000 of people surveyed were male and 499,000 were female.

Advantages of Zero Hours’ Contracts

Sterling currency, British Pound SterlingThe rhetoric tells us that people on zero hours’ contracts are underpaid, don’t have the same entitlement as others and lack job security.

Whilst we‘re constantly talking about the negatives of zero hours’ contracts, we tend to forget that a large number of people actually appreciate this type of contract for a variety of reasons:

• Flexibility for parents with children;
• Flexibility for people who want to work in other places;
• Retired people who want to get out of the house for just a few hours a week;
• Employees who receive employment rights such as annual leave, do not have to accept work offered;
• According to Fairwork.gov Casual Employees in Australia receive a higher hourly pay rate than equivalent full-time or part-time employees.

We spoke to 29-year-old Nurse from London about her experience of working on a zero hours’ contract in retail part-time:

“I was extremely happy with being on a zero hours’ contract at a large multinational retailer, as it gave me the flexibility of working in other places whilst not being tied down to one company. I worked for this retailer for 7 years however, last year the company sent me an email to say my contract had been terminated as I hadn’t worked at the store for over a year.

“I had no written evidence to say if I didn’t work a certain amount of time my contract would be terminated, which was appalling and not something you would expect from such a large high street retailer.”

We also spoke to another source who works at a large UK airport:

“A lot of my colleagues are on zero hours’ contracts and it suits them because some of them have children so they can choose hours to fit around their lifestyles.

“Also, some of my colleagues are retired and only want to work a few hours a week just to get them out the house, so this type of contract is perfect for them.”

There’s no doubt that many people are happy with working on zero hours’ contracts, however, employees do need to be made aware of the rules beforehand.

If zero hours’ contracts were banned, it would be difficult for older members of a company’s workforce to embrace this change, given the commitments and lifestyle choices they’ve already made.

Is the younger workforce less committed to work?

Do zero hours’ contracts actually mirror the work ethic of the younger generation?

From research undertaken we found that Generation Z is much less likely to burden themselves with the types of commitments previous generations would, for example, loans and mortgages.

So, it doesn’t naturally follow that Generation Z is less committed to work, but it does mean they are more relaxed about it. This, in-turn, allows for some flexibility in their lives.

Unions are unhappy, but do unions actually represent the demographic most affected by the increasing numbers of zero hours’ contracts?

Unions have recently been voicing their concerns about zero hours’ contracts, however, whilst they were at the forefront in the 1970’s when employees expected a ‘job for life’, they’ve since declined in membership and are lacking in relevance.

The U.S. Bureau of Labour Statistics reported the percentage of wage and salary workers who were members of unions was 10.7 percent in 2016, down 0.4 percentage from 2015. The number of wage and salary workers belonging to unions, at 14.6 million in 2016, declined by 240,000 from 2015. It is evident there is a decline in membership as unions and demographics split for membership.

The majority of workers on zero hours’ contracts are content with their hours

Acting Chief Economist at the CIPD, Ian Brinkley, speaks about zero hours’ contracts on CIPD Community and in a survey undertaken, found that around 30% of people on these contracts wanted more hours, which demonstrates that the majority are content with the hours that they work.

He also found that only 15% of people on zero hours’ contracts want a new job compared to 5% of those in other contracts.

The Independent discusses how the charity Centrepoint claims zero hours’ contracts are ‘trapping young people in homelessness’ and landlords prefer tenants on benefits

The charity Centrepoint told The Independent that 16-25 year olds on zero hours’ contracts are likely to be saddled with rent arrears, forcing them to be evicted.

They claim that research undertaken suggested Landlords would prefer to take on a Tenant that was on benefits rather than someone on a zero hours’ contract due to the uncertainty of the amount of money they would earn each month.

A new business starting up would majorly benefit from a workforce on a zero hours’ contract

There’s no doubt that a start-up would benefit hugely from a workforce on zero hours’ contracts: as their business grew, they would incur lower overheads yet still have a skilled resource that you can call upon when needed. With the expectations, the younger generations are bringing with them to the workplace, this more flexible approach fits perfectly, and takes the current demands from Generation Z for a flexible 40-hour week to a whole new level!

In summary

Zero hours’ contracts have always had a bad public reputation, but evidence suggests a more nuanced policy response, rather than the outright ban that some have advocated. As the CIPD has argued, the promotion of best practice around the use of zero hours’ contracts and the treatment of zero hours’ contract workers remains a key means of addressing shortcomings while continuing to offer flexible work options for those who want them.

Employers also benefit from this approach to work, as a more flexible workforce can be called on when needed, rather than being on the payroll the entire time.

We need to stop vilifying zero hours’ contracts, and start supporting them as an alternative that provides flexible, paid employment for growing numbers of people around the world.

The ‘job for life’ is out, and the ‘flexible, global workforce’ is in.

References:
The BBC
Office for National Statistics
Acting Chief Economist Ian Brinkley
The Independent
Fairwork.gov
The U.S. Bureau of Labour Statistics