Army of workers trapped in insecure, badly-paid 'jobs'

Zero-hours contracts tie employees to on-call working and have become part of the efficiency drive in the public sector

At a recent conference to promote investment opportunities in Britain, David Cameron emphatically rejected demands to cut the minimum wage.

There was no future for Britain as a low wage economy, he said. A skilled labour force paid well for its efforts was the route to prosperity.

That message, however, is lost on a growing number of employers: zero-hours contracts allow them to escape almost all their obligations other than paying the minimum wage.

With no holiday pay or sick pay, and any waiting time spent at home rather than at work, firms need only pay for the time workers actually spend on the job.

At best workers can expect a monthly rota outlining their potential earnings four weeks ahead. Many may have to earn a certain amount to meet fixed monthly outgoings, but are regularly banned from taking other jobs without permission.

Often they get only a weekly schedule. At worst they can be called to work at a moment's notice and sent home when they are no longer needed.

Until last year zero-hours contracts, which tie employees to on-call working without guaranteeing any specific hours or income or employment rights, were part of the hidden economy. But they have now become part of the efficiency drive in the public sector.

NHS trusts began to issue zero-hours contracts to professional staff and make them fight it out for shifts. Radiologists, psychiatrists and heart specialists found themselves in staff "banks" that trusts could draw on when demand peaked.

Critics condemned the short-termist outlook that sacrificed staff goodwill and loyalty for a few pounds off the wage bill: why should workers go the extra mile for an employer that shows virtually no commitment towards them?

But the debate was drowned out by the demand for austerity that was taking bigger slices out of other departments. And radiologists have nowhere else to go. The NHS is virtually a monopoly employer.

Alongside the explosion in the number of public sector zero-hours contracts, large sections of the private sector have seized the opportunity to free themselves from the traditional employer obligations.

The care industry has shifted almost all staff to zero-hours contracts. Such contracts are also increasingly popular among hotel, catering and leisure companies – who call in staff as bookings come in – and leave them at home, unpaid, when trade is tough.

Retailers, which are longstanding fans dating back to the 1990s recession, also use them, though the big supermarket chains tend to offer minimum hours contracts – four, eight or 12 hours – to staff expected to work variable hours.

The extent to which zero-hours contracts have become the business norm is underlined by Sports Direct, where 20,000 of the 23,000 staff are on zero-hours deals.

The financial benefits, at least in the short term, are significant enough for many other big high street names – including McDonald's, clothing chain Abercrombie & Fitch and cinema chain Cineworld – to adopt similar contracts. Even shop staff at Buckingham Palace are on the same deal.

The strategy does not always work – it famously backfired on G4S last year in the runup to the Olympics. Before the Games the FTSE 100 company, which runs vast prison and security contracts, had advertised for thousands of staff to act as security guards at Olympic venues.

There was a healthy response and the company spent thousands of pounds on training for each prospective worker. But there was no work between the training period and the opening ceremony.

With no pay, and no commitment that work would be available even if they waited, staff left in droves.

With days to go before the big event, the army had to be drafted in to plug gaps and G4S was forced to book a £60m loss on the contract.

But G4S has not been discouraged. It is winning contracts from police forces and hiring new staff on zero-hours contracts. Earlier this year it advertised for custody detention officers to work alongside Lincolnshire police officers on zero-hours contracts. These G4S staff will help restrain people held in custody.

The Police Federation's fears that a G4S worker might not spare the time to keep abreast of the latest legislation, training, equipment and policies were brushed aside.

G4S said zero-hours contracts allowed the company "to provide additional resilience to forces, and ensure they can respond effectively to peaks and troughs in demand, typically coinciding with major sporting events or music festivals".

Complaints from workers typically focus on the way variable hours jobs make it difficult to claim benefits such as jobseeker's allowance.

Going a week without pay is not a long enough period to justify terminating a contract and making the trek to a jobcentre. It also becomes difficult to claim tax credits, which demand a worker clocks an average of 20 hours of work a week.

According to the Office for National Statistics, nearly one in four large companies used zero-hours contracts in 2011 – double the number in 2004.

But it is the Resolution Foundation thinktank that has pulled together much of the information available on the full extent of zero-hours contracts.

The thinktank says it is likely that official estimates of 200,000 zero-hours workers are too low, especially after a study highlighted by the Labour health spokesman, Andy Burnham, found that there are some 300,000 care workers alone on the controversial contracts.

Taking that into account, the total number of workers who have little idea of what work they will get and how much money they might earn from one week to the next could be more than half a million.

Workers on these deals earn an average gross wage of £9 an hour, compared with £15 an hour for those on conventional contracts.

Undoubtedly, zero-hours contracts offer employers flexible working arrangements that suit some staff.

"Yet it is clear," said the Resolution Foundation, "that the benefits these contracts provide for employers come at too high a price for the majority of those employed on them."

The business secretary, Vince Cable, has said he wants to examine reforms that prevent workers being exploited.

But given that the business models of entire industries are now being built on zero-hours contracts, he is likely to meet stiff opposition from employers. © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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