Zero hours contracts boom: should we worry?

The number of people working on Zero-hours contracts has soared to record levels. New figures from the Resolution Foundation have found that 910,000 people are now on contracts that don't offer any guarantees over how much work they will have from one week to another. This follows hot on the heels of news that people on zero hours contracts earn less than their full-time counterparts. So should we be alarmed by the growth of zero hours? And should we be banning these contracts?

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There is strong evidence that some people on these contracts are suffering. Thousands have turned to them out of desperation after not being able to find full time work, and a study by the CIPD recently found that a third would prefer to work more hours.

Not being able to guarantee secure earnings from one week to another is bound to cause financial problems, as there's no way they can reduce their outgoings below the bare minimum in the weeks when they don't get enough hours. Citizens Advice Scotland says these contracts have forced people to use food banks to feed their family, and to turn to payday lenders in desperation.

A separate Resolution Foundation study found that workers on zero hours contracts lose an estimated £1,000 a year compared with employees doing the same work - and earn 93p for every £1 of their employed counterparts. These sorts of findings are why Jeremy Corbyn responded to news of the growth in zero hours contracts by Tweeting Labour's commitment to banning them.

The benefits

However, the issue is not quite as simple as we might initially think. A recent study found that 65% of people on zero hours contracts are happy in work - around the same figure as for those in more traditional employment.

While there are plenty of people who would prefer longer hours, there are some who prefer a flexible working pattern. The study found that almost half the net increase in zero hours contracts last year was in the 55-64 age group. In many cases, it's a mechanism to allow them to take early retirement, but continue working on a more flexible basis. They may not want to be tied to regular hours, and a zero hours contract is the right solution for them.

Likewise, in certain circumstances, it can suit younger people, including students. They may welcome the opportunity to accept those shifts that fit around their studies, and then take on more work during the holidays.

For employers, meanwhile, the ability to employ people more flexibly can be a lifeline. For small, seasonal businesses, it enables them to have workers during busy times, without the financial drain of employing them during quiet periods. We can argue that it would be better for them to be employed year-round, but if the business cannot afford it, you have to ask whether it's better to employ them on a zero hours contract, or just insist the full time staff work harder when it's busy.

One area that has seen a boom in zero hours contracts is social care. It's how cash-strapped councils are trying to solve the massive black hole in their care budgets. You could argue that we should all pay higher taxes in order to fund full-time employees, but in the absence of more funding, you have to ask whether it's better to have carers on zero hours contracts or no carers at all.

Fair contracts

Perhaps the problems we see with zero hours contracts aren't a fundamental issue with this kind of contract per se, but the contracts themselves. There are some employers operating restrictive and demanding contracts, that leave employees in an impossible position.

Some of these insist that workers are always available for any shift: and if they turn down work they will be sacked. Others refuse to allow people on zero hours contracts to work for anyone else in order to make money in quiet weeks.

Some employers give staff no notice as to when they will work, so they may be on their way in when they are told they are not needed. Others won't offer sick pay.

Clearly these practices are unfair, and are leaving employees in desperate situations. The question is whether we should be banning all zero hours contracts in order to stamp them out, or whether we ought simply to insist on minimum standards for zero hours contracts.

What do you think should be done? Let us know in the comments.