This morning has begun with a rather unseasonal message as the Trades Union Congress (TUC) has published some research on wages and conditions for those who are on Zero Hours Contracts in the UK. This is an area which has been pretty much ignored by our official statisticians until recently in spite of the fact that the existence of such contracts stretches back at least to the beginnings of this century. So let us first examine the official data.
What is a Zero Hours Contract?
The phrase gets bandied about fairly regularly in the media so let me present you with the official definition.
where a person is not contracted to work a set number of hours, and is only paid for the number of hours that they actually work
How many people are on Zero Hours Contracts?
Back in August the Office for National Statistics used its Labour Market Survey for the spring of this year. First they asked workers if they felt they were subject to a Zero Hours Contract.
The latest Labour Force Survey (LFS) estimate of the number of people in employment on zero hours
contracts is 622,000 for the period April to June 2014.
A substantial number but we were reminded that even a survey of this size (100,000) has a variance for error.
For the April to June 2014 figure, it is estimated that the true figure is likely to lie between 558,000 and 686,000.
If we look at the analysis then some matters stand out from the numbers. For example women are disproportionately affected as are younger people.
37% of people on zero-hours contracts are aged 16 to 24, compared with 12% for those employed who are not on zero-hours contracts.
Also part-time workers are disproportionately affected.
64% of people on zero-hours contracts reported that they worked part time, compared with just over a quarter (27%) of those employed who are not on zero-hours contracts.
Also one particular sector contains many Zero Hours Contracts.
Accommodation ; Food Services or Health ; Social Work.
The effect on what is considered to be a normal working week is as follows.
The average actual weekly hours worked by people in employment who report being on a zero hours
contract is 22 hours compared with 32 hours for all workers. The average usual weekly hours is higher at 24 hours (37 hours for all workers).
However even such relatively thorough analysis was questioned ironically from another part of the same Labour Force Survey.
For the ONS business survey, there were 1.4 million employee contracts that did not guarantee a minimum number of hours, which provided work in the survey reference period.
So more than double. Ouch! We can erase a little of the difference by considering that some workers will have more than one Zero Hours Contract but a large gap remains. Also the lower employee number is only for those who have a Zero Hours Contract in their main job.
The TUC Research
The TUC seems to have no doubts about the differences between the two methods of calculating the number of people on Zero Hours Contracts.
In April 2014 ONS published new research which estimated that there are at least 1.4 m zero-hours contracts in use in the UK.
At least? Rather oddly it then mentions the 558,000 number which last time I checked is not at least 1.4 million!
However the main thrust of the research is on pay and conditions. It finds a similar state of play in terms of occupations where Zero Hours Contracts are widespread to the official data.
Skills for Care, the workforce development body for adult social care in England, estimates that 307,000 adult social care workers in England were employed on zero-hours contracts in May 2013, representing at least one in five of all workers in the sector.
The numbers in terms of hourly pay show quite a drop as we move from permanent work, to temporary work and then to Zero Hours.
Average gross hourly pay for employees is £13.30 for permanent employees, £11.28 for temporary workers and £8.46 for zero-hours contract workers.
So there is quite a gap on hourly rates which gets worse if we look at weekly wages due to the fact that those on permanent and even temporary contracts work more hours.
Average gross weekly pay for employees on permanent contracts is £476.26 compared with £296.06 for temporary workers.
This compares with £188.19 per week for those on Zero Hours Contracts according to the TUC. Quite some gap isn’t it?
What about other work benefits?
This is an area where those on Zero Hours Contracts are likely to miss out too. By this I mean primarily pensions and holiday and sick-pay although of course some employers provide other benefits as well.
Of course for some on Zero Hours Contracts there are what we might label as negative benefits. What I mean by this is that uncertain work hours and pay do not go well with the certainty of most people’s bills for necessities and the basics of life.
Misery loves company
This was on my mind as I noted this release on inflation trends earlier.
The rate of inflation experienced by lower-spending households has averaged 3.3% per year over this period, compared with 2.3% per year for the higher-spending households.
So even the official data appears to be noticing that falls in real wages at the bottom end of the wage spectrum have been more than they have previously told us. I will cover the full details tomorrow as we have the monthly inflation report but I would make each member of the Bank of England sign that report under a statement which says that they have read it and understand the implications.
There is much to consider about Zero Hours Contracts and the pay and conditions that they bring. Firstly we need to note that they tend to be in lower paying occupations so that we need to apply something of a filter to the differences above. What I mean by this is that in the official data the median weekly wage for those in the caring,leisure and service sector was £335 per week compared to £518 for the whole economy. So some of the gap discussed by the TUC is down to the sector in which Zero Hours Contracts are most prevalent.
But there is a clear gap even allowing for this and to the question what do we do about it we have a clear issue? The world is changing and there is severe pressure on employment conditions which the UK has mostly taken in the wages area since the credit crunch began but France for example, as I discussed on Thursday has taken it in unemployment. Neither is especially pretty or welcome are they? What troubles me is the fact that we have one group who seem to receive more workers rights as time goes by and one group which seems to barely have any. We could do with a rethink and some sharing as it is a horrible image of one group in effect preying on the other to some extent which comes to mind. If you think of my theme of the UK’s propensity to institutionalised inflation and the impact of this on our poorer citizens you will get my point. I am also reminded of the breakdown of the recent ASHE (Annual Survey of Hours and Earnings?) survey where for 70% the credit crunch had not changed things much but 30% had been badly affected. In the end it all comes down to what sort of society we want. We are increasingly unwilling to punish those in authority but sadly also turn our eyes away from the fact that the price is often paid by those least able to afford it.