Zero-hours contracts reach record levels

Nearly one million now in place, but think tank finds growth has slowed significantly because of negative publicity

The number of employees on zero-hours contracts (ZHCs) has hit record levels – closing in on the million mark – but the increase in their use has slowed considerably in the past six months.

Analysis of the latest ONS Labour Force Survey figures by the Resolution Foundation revealed an increase of 100,000 between the last three months of 2015 and the same period in 2016, bringing the total number of workers on ZHCs to 910,000.

This represented a 13 per cent rise – up 30 per cent on Q4 of 2014 – but growth over the second half of 2016 was recorded at only 0.8 per cent, or just 7,000 extra people.

Conor D’Arcy, policy analyst at the Resolution Foundation, said that ever since ZHCs hit the headlines their usage had increased sharply every six months. “[But] the latest figures bring this run to an end,” he said.

The think tank cites several reasons for the fall in growth, including public sentiment around companies that are well known for using them. Homebase, Wetherspoons and McDonald’s have all publicly announced they will either be ditching ZHCs or offering their staff the chance to move to fixed-hours contracts. Other organisations may be quietly following suit, said the Resolution Foundation.

“The negative publicity these contracts have attracted may well have played a role in their slowdown, as firms rethink their use,” said D’Arcy. “Not providing guaranteed hours of work for those who want it, especially those in low-paying roles, can have a huge negative impact on the living standards of workers and their families, as budgeting becomes near impossible.”

But proving that employers are moving away from ZHCs because of public opinion would be difficult, said Ian Brinkley, acting chief economist at the CIPD. “I suspect we may be seeing the first signs of a wane in corporate enthusiasm for these types of contract,” he said.

The record rate of employment is also thought to be a factor, especially as organisations may be cautious about a lack of labour supply after Brexit, and may be finding it harder to fill roles without guaranteeing hours. The Resolution Foundation also said the initial rapid rise in the reported number of workers on ZHCs in 2012 was driven by an increase in awareness of the contracts use. Most workers on ZHCs are likely to be aware that their contracts are of this nature.

The Resolution Foundation’s analysis shows that 46 per cent of the net increase in ZHCs in the past year has been among workers aged between 55 and 64 – possibly because they offer a more flexible transition from full-time work to retirement. This echoes CIPD analysis of growth in other forms of atypical employment among older workers, said Brinkley. He added that further growth in this area was a high possibility resulting from an ageing workforce – although the increase in ZHCs is being seen at both ends of the age spectrum.

Source: CIPD 03.03.17