State levy on employers may be the answer to curb rise, but will any party be prepared to tackle this issue, asks Gregor Gall
The rise of zero-hour contracts has been inexorable. For 2012, the Office of National Statistics estimated that just 250,000 people were employed on these contracts after it emerged that some big household names were using them. This revision, up from 200,000, came after the disclosure that Sports Direct, JD Wetherspoon and the Spirit Group chain of pubs and Cineworld employed pretty much all their 60,000 workers on them. But since then, even more major names, such as Burger King, Domino’s Pizzas, McDonalds, Subway and Amazon, have been revealed as also using the contracts.
Then, a poll by the Chartered Institute for Professional Development suggested the number of people on zero-hour contracts was not only one million but also that the contracts were most common where least expected. Thus, employers in the voluntary sector and the public sector (health and education especially) were more likely to use zero-hours contracts than private sector employers. On top of this, those primarily employed on zero-hour contracts were twice as likely to be young, that is aged between 18 and 24.
The political heat generated by all this led Business Secretary Vince Cable to establish an inquiry into zero-hours work and his Labour shadow, Chuka Umunna, is trying to make some political headway around the issue of the contracts as representing the sharp edge of the wedge for an increasingly insecure workforce.
There is no doubt that a handful at the top end of the labour market do benefit from zero-hour contracts. Having taken early retirement or made a career change with substantial personal resources behind them, these types of professionals can withstand not having guaranteed employment and treat their work when they get it as a hobby; something to occupy their time with and keep them interested, rather than as the income they depend upon.
But for the vast majority on zero-hour contracts, they face a triple bind. First, they have no guarantee of work and, thus, of income from week to week. This means being unable to plan any expenditure, not least buying the basics such as food, and paying rent and utility bills.
Second, the contracts make planning anything virtually impossible if these people want to remain available for work. Those part-time workers with set hours who seek full-time employment can at least get another part-time job to make ends meet.
And third, the wage rates for zero-hour contracts are typically 40 per cent less than for those in equivalent work, whether they are part- or full-time, temporary or permanent. All this gives a sense that those on the contracts are the most dispensable of workers, being the epitome of the flexible labour market espoused by neo-liberalism. It also shows that we have moved in a decade from the pressing problem being overwork and long hours to not enough work.
As economic recovery is fragile and faltering – and with some 80 per cent of the cuts in public expenditure still to come – we can only expect that the rise in use of these contracts will continue. Immoral they may be, but they are not unlawful.
From Cable, the only hope of even limited regulation of the use of the contracts comes from the effective restraint on the right to work for other employers.
But as zero-hour contracts have been defended by the CBI and Institute of Directors, it is highly unlikely that Cable’s Liberal Democrats, the minority party in the coalition, will be able to achieve anything other than a voluntary code, essentially urging employers to be more considerate.
Given that those on zero-hour contracts are largely un-unionised and most of them insecure in terms of working conditions, how can this new scourge be best tackled?
History gives us one obvious precedent – the National Dock Labour Scheme (NDLS). Before its creation in 1947, all dockers had to go down to the docks early each morning to see if they would get work that day. Some did and some did not.
The introduction of the NDLS, paid for by a levy on dock employers, meant that all registered dockers were guaranteed a set level of income per week, even if they did not get a full week’s work. Local boards made up of employer and union sides administered the scheme.
The creation of the NDLS arose out of a series of particular circumstances, such as the 1945 unofficial dock strike, and a mismatch of the supply and demand for dock labour that led to inefficiency. Of course, the creation of the NDLS was not unrelated to the fact that the dockers were unionised and could exercise considerable industrial strategic leverage.
The state, through the Clement Atlee-led Labour government, intervened on the side of the dockers, but also on the side of a more efficient capitalist economy and for the benefit of capital overall.
What the existence of the NDLS showed is that forms of regulation – ultimately underpinned by the state – can be brought into existence to control employer activity. But both the specific conditions and the more general political climate – of the emerging social democratic post-war settlement – are vital to understanding why it came into being. The general economic and political conditions are different today and what needs to be done to reverse the forward march of the zero-hours contracts is different.
An obvious way to regulate zero-hour contracts is to impose a levy upon employers using them. For example, employers could be legally obliged to guarantee a minimum weekly wage for all those that are on these contracts. This would mean that where there was no work, or very little work, in a particular week, the individual worker would know that their income would not fall below a certain level.
Of course, this would provide an economic disincentive to employers to use the contracts. That is the point: a premium would have to be paid for their use. Depending on the size of the guaranteed minimum wage, the disincentive could be more or less.
Some may call this Stone Age economics. But the principle of setting a floor is not so different from having a minimum wage or regulating maximum working hours.
A question though remains: which political party is prepared to enter this territory and would an independent Scotland banish zero-hours contracts?
• Gregor Gall is professor of industrial relations at the University of Bradford