People better off unemployed than on zero-hours contracts

People on zero-hours contracts have less disposable income than the unemployed, according to a new report out today.

According to Scottish Friendly's Disposable Income Index, which tracks the amount of money people have left over each month after bills and essentials have been paid for, unemployed people have on average 9.3% of their income left over each month compared with 7.9% for part-time workers and just 7.8% for workers on zero hours contracts.

This gives the unemployed an average of £174 spending money each month, compared with just £130 for zero-hours staff.

"While the country as a whole has higher disposable income than they did a year ago, there is a broader concern that those who work part-time or that have zero-hour roles are likely to have less cash in their back pocket than someone who is unemployed," says Scottish Friendly spokesperson Calum Bennie.

"The findings should serve as a stark warning of the problems facing so many workers in the UK. It's bad enough that people don't know what is going to be in their wage packet at the end of the month, but the index shows that for certain workers, there now appears to almost be a disincentive to work."

Zero hours contracts allow employers to bypass many of their responsibilities by hiring staff with no guarantee of work. According to the Joseph Rowntree Foundation, there are as many as 1.4 million people currently on such contracts. Partly because of this, it says, there are now as many people in working families as in unemployed ones now living in poverty.

"The labour market has changed significantly in the last ten years: there has been a vast increase in insecure work – zero hours contracts, part time work and low-paid self-employment, which means that getting a job does not necessarily mean getting out of poverty," it says.

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Labour has promised to put an end to exploitative zero-hours contracts. "We cannot go on with an economy that allows businesses to use zero-hours contracts as the standard way of employing people month after month, year after year," Labour leader Ed Miliband said recently.

He attacked Sports Direct for employing 17,000 of its 20,000 staff in this way.

"Sports Direct has thousands of its employers on zero-hours contracts, the vast majority of its workforce," he said.

"Sports Direct has predictable turnover, it is a modern company with stores on many high streets and, judging by its success, where many people shop. But for too many of its employees, Sports Direct is a bad place to work."

Current levels of disposable income by employment type:

Employment type % of income left over Av. take home monthly pay Av. disp. income Full time 11% £3,193 £355
Self employed 10.7% £2,482 £268
Unemployed 9.3% £1,869 £174
Short term contract 8.8% £2,681 £236
Part time 7.9% £2,419 £192
Hourly workers 7.8% £1,647 £130

Source: Scottish Friendly

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