The rise of zero hour contracts and what Sports Direct can teach us
The number of people on contracts that do not guarantee a minimum number of hours has risen by 21 per cent in the last year and 45 per cent in the last two years. The Office of National Statistics estimate that 903,000 of UK workers are now on these contracts. While still a relatively small proportion of the UK labour force at 2.9 per cent, these numbers alongside those that show that more people are on temporary contracts, incomes from self-employment falling and more families are in extreme debt, highlight that the UK labour market is seriously flawed.
It didn’t take long for business lobbies to issue statements arguing that most people on these contracts are happy with the hours they’re working and that greater flexibility is good for the economy. The statistics do show that around two-thirds of those on these contracts do not want more hours, but it would be wrong to take this statistic at face value. Many of those on zero contracts do tend to do regular hours every week so don’t want more hours, the question then becomes: why are companies putting workers on zero hour contracts? It seems that many businesses want to commit as little as possible to their workers.
Myths about zero hour contracts include: the majority of people on these contracts work for cash-strapped small businesses; that these contracts are necessary for seasonal work; and, that zero hour contracts are harmless because it is mainly students that are on them. In reality, big employers are most likely to use the contracts and they are common across a number of sectors including hospitality, transport and social care. Finally, half of the recent increase in zero hour contracts was accounted for by workers aged 25 and over so it’s not limited to students wishing to work part time.
Remember also that zero hour contracts are often combined with low pay. TUC analysis found that the median hourly rate for a zero-hours worker is £7.25 compared with £11.05 for all employees.
A reality check reminds us that it just can’t be true that people are happy when they don’t know how much money they will be paid from month to month. I know I’d be stressed.
So why are we here? Zero hour contracts are part of a broader shift towards a labour market that gives bosses all the control. Falling union membership and curtailment of union rights since the late 1970s means that there is now a clear power imbalance between workers and employers. As history has shown us time and time again, when one group has power over another they tend to abuse that power. The ultimate evidence of this shift is that over the least 30 years we’ve seen the wage share fall and profits rise. The owners are taking more and the workers are getting a raw deal.
But history has also shown us that there is only so much abuse workers will take. The recent demise and public shaming of Sports Direct is a case in point. They’ve seen sharp falls in their share price and Mike Ashley has seen his personal worth decline by £1 billion since 2014. Put simply, over the longer term mistreating workers is bad for business and won’t go unnoticed. The costs of zero hour contracts are too much for our economy and society to bear – if government doesn’t take action workers will revolt.