What you need to know about zero-hours contracts
Photo credit: sadmafioso
August 5, 2013 // By: Faiza Shaheen
The revelation today that the number of people on zero-hours contracts may be a million - well over the ONS estimate of 250,000 - has sparked further discussion about the impact of insecure work. Many already consider zero hour contracts to be detrimental, subjecting workers to insecure and unfair working conditions. But others, such as the CIPD who published the figures, argue there are some who prefer to be on these contracts, often those looking for flexible working arrangements.
Let’s get one thing straight – those on zero-hours contracts who are ‘happy’ with this type of arrangement are in the minority. The ONS’s Annual Population Survey showed last year that people on temporary contracts have substantially lower well-being than people on permanent contracts – lower life satisfaction, a lower sense of feeling that what they do in life is worthwhile, and greater levels of anxiety. The differences can be seen when using controls for demographic and socio-economic variables – in other words, it’s not just because people on temporary contracts come from more deprived backgrounds. The size of the effect on life satisfaction is 0.25 (on a scale of 0-10): roughly one-third the effect of being unemployed, versus having a job.
It is likely that the odd few who are indeed ‘happy’ to have flexible contracts are often those that are second earners and not in dire need of extra cash. This is not the case for the majority of workers in low paid work. Having interviewed several care workers on this issue recently I’ve been thinking about the human and societal costs of zero-hours contracts.
Take the issue of budgeting. How can anyone budget when they don’t know how much they will be earning next week? Interviewees explained that they had learned to live on the bare minimum – giving up such luxuries as sugar in their tea. Anyone with some intuition can see that this type of weekly uncertainty creates a considerable amount of anxiety and stress.
Unlike those on consistent levels of low pay, those on zero-hours contracts face difficulties claiming tax credits. They are also unlikely to be saving for their pensions, meaning that their insecurity is likely to continue on into old age. Furthermore, as the majority of those in this type of work are women, there are various gender-related impacts. One interviewee said she felt like we were going back in time – to a time when women were forced to be in relationships in order to have some financial security.
Longer term and broader societal consequences include the pensions shortfall, the costs of the impacts on those children growing up in households living on the edge, and the longer term health consequences of the kind of stress and anxiety zero hour contracts can cause.
Vince Cable has ordered a review into zero-hours contracts. I’m hoping that the case for intervention is made clear during this review. Zero-hours contracts have been banned in the Netherlands, but employers are already finding ingenious ways to get around the ban, such as arguing for an annual 20 hour contract. The only way to sustainably push back on the increasing power of employers is to have stronger trade unions and greater collective bargaining coverage.
Let’s hope Ed Miliband has something to say on this when he returns for the summer break. In the meantime, those on zero-hours contracts may or may not be having a break – either way, it won’t be up to them.
Increasingly insecure employment will have long term consequences that affect us all.