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Kevin Green
CEO of the Recruitment & Employment Confederation
Kevin  Green

Zero hours contracts: What’s the alternative?

Authors: Kevin Green Kevin Green, Chief Executive, Recruitment and Employers Confederation

08 July 2013

In order to understand the increasing use of zero hours contracts (albeit they still only account for 0.7% of all work contracts), we need to understand the economic context for this change. This has been the longest and deepest recession in living memory and yet employment levels have remained remarkably high, especially in comparison to our EU neighbours. The reason for this is because of the growth in flexible working.

Much of the attention around the flexible labour market has focused on the negative – and zero hours contracts has been one of the areas ‘exposed’ by the media as exploitative, where some workers have reported they have had no choice but to accept these arrangements in an effort to stay in work.

In actual fact, and as last week’s debate at The Work Foundation highlighted, before coming to these conclusions we need far better data on why zero hours contracts are being used and how they are being delivered. The Resolution Foundation’s recent report found that only 18% of those on zero hours contracts are actively seeking alternative employment or additional hours.

There are two things driving the development of the flexible labour market – a business need to keep up and compete, and individual choice.

For some people, such contracts might be an important foot in the door of the labour market; for example for full time students they can be a way of earning extra income and of getting some work experience on their CV.

Taking an industry perspective, they can be a way of meeting fluctuating market demand. Businesses today have had to operate in a leaner, more competitive way if they are to survive. For example in the driving sector, if all workers were on full time contracts, frequent changes in demand would mean that businesses would not have enough work for all the staff. This would make them highly uncompetitive and may end up with businesses going under and the loss of all the jobs within the firm.

One of the areas which must be considered as BIS and the Secretary of State conduct their investigation into zero hours, is what else might be driving behaviour. Domiciliary care is a sector radically increasing their use of these contracts - largely because of current public procurement practices. I cannot see how this will change under the current framework and as the UK’s ageing population expands.

It is our job in the recruitment industry to get people into jobs that are right for them and for their employers. The last thing business needs is more regulation – there is a proliferation of legal frameworks out there - but we agree that good practice needs to be encouraged and supported. The problems with how zero hours contracts are managed can be addressed if we support businesses, in both the public and private sector, to ensure that workers have absolute clarity around what they mean and how they should operate.

This is why Alison McGovern’s proposal for a code of practice is potentially the right focus – it puts the onus on the employer doing the right thing based on a coherent business case. Industry and worker needs need to be at the forefront as we create such a code.