Today’s big idea from Ed Miliband (although he has been going on about it for a while) is to “ban” Zero Hours Contracts (ZHCs), or to ban “exploitative” ZHCs, or rather to give people on ZHCs the right after 12 weeks to have them converted into a “regular” contract. On the face of it, this sounds great, after all, when Jeremy Paxman asked David Cameron during his live interview last week whether he could live on one, the answer was “no” so, as Milband said, if it’s not good enough for him why is it good enough for anyone?
However, as so often, the important part of this is the detail and how it relates to reality. One of the aspects of ZHCs which is often cited in their favour is that they provide workers with flexibility – they are able to take or refuse work that is offered and therefore have some control over their hours. So someone on a ZHC could take extra hours if they were offered during term time and do fewer hours during the school holidays if they had children to care for, or if they were a student, they could do more evenings during term time and longer full days during the holidays. Only around a third of those on ZHCs according to surveys would like more hours and a slightly higher proportion work full time. It is not clear how providing the 700,000 or so on ZHCs with the right to convert them into a “regular” contract (however that might be defined) will do anything for the two thirds who are generally happy with the hours they get or indeed tend to those who would like more hours being able to get them.
So, perhaps the thing to look at would be the extent to which ZHCs are “exploitative”. There are a number of ways of looking at the issue of exploitation by means of ZHC. The Labour proposal seems to be deliberately vague on this. One would be to say that ZHCs are by definition exploitative and so should be banned entirely. But, even if some people are exploited by employers using ZHCs it is not clear that all are. Were it such a clear moral issue it would be surprising if we found that say, Labour run councils or Labour MPs would employ anyone on such contracts. Yet they do.
So, exploitative ZHC must mean something slightly different. When discussing the issue what almost always comes up is the core of the question Paxman put to Cameron – could you live on one? That boils down to whether someone on a ZHC earns enough on a regular enough basis to be able to live. How many hours one works and how consistently over time is clearly an important part of this, but more important is how much one is paid for the hours actually worked. The examples usually given of workers being exploited on ZHCs are of people being paid minimum wage or thereabouts. However, if you are earning minimum wage and doing the average 23 hours a week that those on ZHCs do, converting your contract to a “regular” one may help you to smooth out the difference between the weeks when you work 18 hours and those when you work 28 hours but it won’t make your average of 23 hours pay a week any greater. If what you earn for those 23 hours is inadequate it remains so regardless of contract type. Recently I saw that Next was recruiting for staff on regular fixed hours contracts paying minimum wage for 11 hours a week for one or two specific fixed shifts. Those jobs would not be affected by the proposal but would be just as hard to live on as a ZHC delivering similar hours. While Ed Miliband also talks of raising wages, this seems to be by the magical means of “predistribution” without any real thought as to how or why employers might do this, or indeed whether they would be inclined to do so.
If it is unclear what is meant by “exploitative” it is also unclear whether the promise of a “regular” contract for those doing regular hours for 12 weeks addresses such exploitation even if we leave aside the issue of how much someone on a ZHC is paid. In his speech, Miliband identifies the budgeting problem that those on ZHCs face – not knowing from one week to the next (or from one day to the next in some cases) how much you will earn. But, if someone is on a ZHC and getting regular hours, or at least having regular core hours, they won’t have that uncertainty and moving to a “regular” contract won’t be of particular benefit. It is the people who have irregular hours and an employer who won’t tell them from day to day whether they will be needed who will find ZHCs harder to live on. So the proposal doesn’t solve the more obvious and real problem.
I should declare here that I write with a personal interest as I have myself been employed on what is basically a ZHC for the last 4 years. True, I earn rather more than minimum wage as an experienced lawyer and most of my engagements with clients for work are for a month or more (I have done a few hourly paid stints but they’re not the main part of my work). However, this is really mainly a matter of degree. With long term monthly outgoings like mortgage/loans, utilities, council tax etc if there is no work in a month’s time, I need to dip into savings, overdrafts, credit cards to tide me over to the next piece of work. In extreme circumstances I’d need to put the house on the market, sell my car or (as OMB suggested when I had a three month gap between engagements last year, sell my stuff at a car boot sale). I start with more assets and savings than most on minimum wage ZHCs but face the same issues if I’m workless (and in practice have less of a welfare safety net until I’ve exhausted those assets).
Yet in practice I have been able to live on a ZHC and it has, despite gaps when I haven’t been given work and so haven’t been paid, ironically, been no less secure than my previous recent experiences of “regular” contracted employment. Twice in the three years prior to starting my ZHC I was made redundant from permanent full time contracts when there was not enough work. Each time it took months to find new employment. From a personal perspective, working somewhere where I know that it is in my employer’s interest to find me new work (they also don’t earn if I’m not working) rather than it being in their interest to get rid of me if there’s no work is not a bad situation. Were my ZHC to have been converted into a regular contract last year, I’d potentially have been made redundant during the three month gap I had and would have then had to look for new work. Although I missed out on a redundancy payment, instead I was placed with a new client who I’ve since been with on a rolling monthly basis rather than having to start from scratch. I’m genuinely unsure whether I would want a traditional permanent contract again.
Perhaps the best approach would be for Labour to define exploitation rather than use it loosely to demonstrate it’s caring side – it is hard to argue against exploitation but the rhetorical advantage of using the term shouldn’t distract from the serious business of policies that actually address the problems identified and experienced by people. Exploitative employment contracts could be defined as ones where the average weekly income over a certain period fell below the full time Living Wage and they could be amended by law to take them over that level. This would create a sort of Minimum Wage Plus so that everyone who worked more than a certain number of hours in a week could be guaranteed to be “able to live on it”. Needless to say, while this would be effective in ensuring that everyone who worked could afford to live on their income it would make it very expensive to employ people part time, whether they were flexible or not, so there would be many fewer part time jobs and a few more full time ones. Another policy would be needed to support those who were thus rendered unemployable. Alternatively, we could ditch the emptily emotive concept of exploitativeness and the equally empty focus on ZHCs and let people get on with their lives as more and more have in fact managed to do quite well as the country has recovered from recession whether they are in the small minority on ZHCs or not.