The number of workers on zero-hours contracts has increased by almost a fifth in the last year, sparking concerns that employers are increasingly turning to the controversial arrangements to cut back workers’ pay and conditions.
The Office for National Statistics said the number of people reporting that they work on contracts without a minimum number of hours climbed to 744,000 from 624,000 in 2014, a rise of 19% to 2.4% of the total UK workforce of 31 million.
Workers are more likely to be contracted to large employers than smaller firms, and to work in the hotels and leisure industries, the ONS said. The health and education sectors followed closely behind, indicating that more employers in the NHS, the care industry and universities have come to rely on zero-hours contracts than last year.
The ONS also found that 40% of those on such contracts wanted to work more hours than they were offered, suggesting that seven years after the financial crash many employers are still operating below their capacity.
Labour said the figures showed the “Tories are the party of insecurity at work,” and unions said the official figures represented the tip of an iceberg, with thousands more workers tied to other forms of contracts under which they do not know how much work they will have from one week to the next.
John Philpott, the director of The Jobs Economist, said that even a small proportion of zero-hours contracts can drag down overall pay levels.
“Although the share of zero-hours contracts in total employment remains relatively small and some employees like the flexibility these contracts offer them, the ability of employers to hire people in this way undermines the bargaining power of other workers, thereby dampening pressure for improved pay and conditions, particularly at the bottom end of the labour market,” he said.
“The effect of zero-hours contracts on market behaviour and outcomes is thus likely to be greater than their incidence might suggest.”
He also said that more employers would stop offering full-time permanent contracts to avoid paying the steep rise in the national living wage for the over-25s that comes into force next April.
“In an otherwise very lightly regulated UK labour market the forthcoming large hike in the minimum wage when the national living wage (NVL) is introduced next year might act as a further incentive to employers to increase their use of zero-hours contracts – which are already very prevalent in sectors where the NVL will bite hardest - in order to minimise the impact on total labour costs.”
Research has shown that workers on zero-hours contracts earn less per hour than staff in similar roles and are denied benefits such as sick pay. A study published by the TUC in December showed that average weekly earnings for zero-hours workers were £188, compared with £479 for permanent workers.
Forty percent of zero-hours workers earn less than £111 a week, the qualifying threshold for statutory sick pay, compared with 8.5% of permanent employees.
The TUC estimates that in addition to Britain’s zero-hours workforce, there are another 820,000 employees who say they are underemployed.
General secretary Frances O’Grady said: “Zero-hours contracts are a stark reminder of Britain’s two-tier workforce.
“People employed on these contracts earn £300 a week less, on average, than workers in secure jobs.
“I challenge any minister or business leader to survive on a low paid zero-hours contract job, not knowing from one day to the next how much work they will have.”
The GMB union said it was representing staff at an Asos depot in Barnsley, where the online clothing retailer was under pressure from some staff to offer fixed-hours contracts.
“We have had similar problems with zero-hours at a Marks and Spencer depot in Swindon where members employed by an agency are campaigning for parity with permanent staff on fixed hours,” the union said.
Commenting on the latest ONS statistics, Chuka Umunna, the shadow business secretary, said:“These stark figures show that the Tories are the party of insecurity at work.”
He said it was noticeable that the rise in zero-hours contracts coincided with a jump in the number of people working part-time because they could not find a permanent job.
The Institute of Economic Affairs, a free market thinktank, said the rise of zero-hours contracts was “neither surprising nor important” and illustrated “the flexible nature of the UK’s labour market”.
Mark Littlewood, the IEA’s director general, said: “Not everyone is able to work at fixed and regular times and adaptable contracts such as these offer the opportunity of employment to students, single parents and many more.
“Without this flexibility, opportunities for these individuals would be dramatically reduced, as is the case in European countries where rigid employment structures have resulted in staggeringly high levels of unemployment.”