Zero-hour contracts - Zero benefit for workers

The Resolution Foundation think- tank  found that workers with zero-hours contracts are being exploited by employers, earn significantly lower wages than those on conventional deals,  and being on standby with no guarantee of any work, live with “almost permanent uncertainty”. They struggle to balance their family budgets and fear that, if they turn down the chance to work, employers will punish them by not offering it in future.

The study shows that zero-hours workers earn on average £9 an hour (gross) compared with £15 an hour for people on more conventional contracts. Graduates on zero hours average £10 an hour, compared with £20 for those with set hours.

Workplaces using zero-hours contracts have a higher proportion of low- paid staff than those which do not. People on zero-hours contracts work less on average – 21 hours a week, compared with 31 hours for more conventional contracts. This suggests the shift towards zero-hours working is contributing to the rising rates of “under-employment” since the start of the recession.

The shift may explain why the UK has combined relatively high employment levels with a severe squeeze on wages in recent years, according to today’s report, A Matter of Time.

Use of the contracts has grown sharply in recent years, and they are particularly common in the health and social care, hospitality and administrative sectors. Although official figures show that 208,000 people were on them at the end of last year, the foundation believes this is a huge underestimate because 150,000 domiciliary care workers alone are employed in this way.

The authors found evidence that where the threat of “zeroing-down” a worker’s hours  – reducing them to a few or none – is used as a management tool, it makes staff more fearful of complaining about unfair treatment or employer abuses.

Employers can “zero-down” hours as an alternative to making staff redundant, to save money. The report suggests that, at a time of recession, employers find it easier to adjust to fluctuating demand with a pool of flexible labour and that zero- hours contracts allow them to reduce the initial costs of recruiting and training staff. Some firms appear to use the contracts to avoid giving workers full employee status, with the costs and obligations that involves.

Matthew Pennycook, senior analyst at the Resolution Foundation, said:  “For many workers, zero-hours contracts mean a life of permanent uncertainty. They leave staff fearful of turning down work, unable to plan and budget for life away from work and prone to having their employment rights undermined. Zero-hours contracts also seem to have a negative effect on staff morale, teamwork and productivity in a way that leads to a poorer quality service.”