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Ian Brinkley
Economic Advisor
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Ian Brinkley

Zero hours- where to now?

Authors: Ian Brinkley

25 June 2014

The Coalition is currently translating its commitment to ban 'exclusivity' on zero hours contracts into law. Employers who are not prepared to make a commitment to their employees on hours of work will no longer be able to insist they only work for that employer. This seems a sensible measure, though I would expect the number of cases to be small.

In thinking about where next for policy, it may be worth revisiting some of the principles that would help make future interventions well-designed and effective.
Policy should be evidence based. We have come a long way in a short period on zero hours in terms of knowledge but there are many areas we still guessing – not least, over the basic drivers and whether we are dealing with a big structural change, a shift related to the economic cycle, a changing fashion in HR in some organisations or all three.

Policy should be clear about which problem it is trying to address. We need to clearly distinguish between problems which are specific to zero hours and much bigger problems of which zero hours may be part. Many policy makers are concerned at the excessive share of low pay and low skill jobs in the economy, the associated problems of poverty and lack of social mobility, and the extent of under-employment. The growth of zero hours may have made a contribution in all these areas but it is likely to have been a small one.

Policy should be proportionate and recognise the trade-offs. Over the top legislation or regulation can easily do more harm than good. We have to balance the needs of employers to retain flexibility with the needs of employees to exercise some choice over working hours. At the extreme there may be a choice between tolerating some zero hours employment and not having the jobs at all.

Policy should be effective – which may sound so obvious it is hardly worth saying. But policy driven by popular pressure that “something must be done” may please the crowds and have almost no practical effect or simply transfer the problem elsewhere. Moreover, it is important to evaluate and build in evaluation processes from the start so we know what works and can make changes as policies and circumstances evolve over time.
Finally, policy does not always mean new legislation and regulation. Ensuring high awareness of rights and responsibilities, effective enforcement, and speedy and accessible means of redress all have important parts to play. So too have officially backed guidelines on good employment practice and the influence that policy makers can exert directly over employment practices in public institutions, public funded organisations, and some private sector bidders for public sector contracts. The evidence suggests that there is considerable confusion and ignorance among employees and employers about employment rights and what would constitute a “good” zero hour’s contract.

Some employers may be able to reduce use of zero hours through better demand forecasting techniques and making more organisations aware of what is now possible will help.

We can apply these principles and ask where public policy on zero hours should go next. Most would agree the evidence base needs widening and deepening. But most importantly, we need to understand zero hours as part of potentially big changes in the structure of employment and work that conventional descriptions of jobs as temporary or permanent or employee and self-employed may not be good at capturing.

In terms of more legislation, the Pickavance report has proposed an opt out for individuals who want to work zero hours and a right to convert to contracts with a minimum number of guaranteed hours for those who do not. Some combination along these lines could be a sensible and workable compromise between the needs of firms and the needs of individuals while preserving employment opportunities. But going much beyond this does not seem at the moment justified.

The use of non-regulatory and 'soft power' to influence organisational behaviour and employment practice across the public, not for profit and private sectors should now be a major focus for our efforts. This approach offers the flexibility to craft solutions that work in different sectors – from the NHS, universities, social care to hospitality and retailing. And by changing organisational behaviours around high profile specific issues such as zero hours, we can generate spill over benefits by addressing the wider weakness in managerial behaviour, skills development, and work organisation that often lie at the heart of poor practice and poor treatment of employees on all forms of contract.