This week in James Ball’s Deconstructed feature, we look under the bonnet of zero hours contracts; whether they are just a by-product of a changing economy, or whether they’ve been created this way.
We tend to treat insecure work as if it’s an inevitable if dispiriting reality of the modern world. Immutable, inescapable.
For many of us – millions of us – it certainly feels that way.
But the reality is quite different: extensive research conducted for the Trades Union Conference shows that insecure work is the result of deliberate choices made by employers and lawmakers alike, and something that has risen far faster in the UK than other European countries.
From the junior academic on a treadmill of short-term posts to the warehouse worker on a zero-hours contract, millions of UK workers lack the rights and the job security that we have taken for granted for decades.
The loss of these rights disproportionally affects women, people from ethnic minorities and people from regions outside London, because it compounds and exacerbates the inequalities that already abound in the workplace. With Brexit on the horizon, we need to discuss these inequalities as a matter of urgency. Because if they don’t, the situation stands to get worse – a lot worse.
Insecure work: what it is and who does it?
The TUC – a federation of most of the UK’s major trade unions, which represents about 5.6 million workers – says there are around 3.2 million people living in insecure work across the UK.
That’s made up of around 810,000 people on the infamous zero-hours contracts – these offer no guaranteed hours, which can leave people with 40 or 50 hours of work one week and nothing the next.
These people are joined by around 730,000 who are agency or seasonal workers, and other workers with similar contracts which don’t guarantee hours or a term of employment.
Then there’s a further 1.7 million quasi ‘self-employed’ workers on low pay, who often end up working in effect for larger companies or the government, but who receive less than the national living wage.
These totals are skyrocketing: the number of people in insecure work has jumped 27% since 2011, with zero-hours contracts in particular showing the most dramatic increases: in 2006 there were just 70,000 people on zero-hour contracts, versus more than 800,000 today, while the total number of self-employed people increased by a million in the wake of the financial crisis.
The particular challenge of insecure work is that it tends to affect people who already face difficulties getting good jobs, fair pay, and good conditions. Women are slightly more likely than men to be in insecure jobs, with 11% of women doing such roles, versus 9% of men.
Workers from ethnic minorities are even more likely to be in insecure work: overall, BME people are around a third more likely to be in insecure jobs than their white counterparts, but when you focus especially on black workers that disparity grows even further. Around one in eight black workers are in insecure roles, versus just one in 20 white workers.
Finally, the geographical disparity in the rise of insecure jobs is stark: in London, the UK’s richest region by far, just 17% of the job growth since 2011 was in insecure roles. In the North East of England – by some measures the country’s poorest region – insecure jobs made up 67% of all new roles.
What are the effects of working insecure jobs?
The industries which most make up the rise in these casual jobs are hospitality and retail, residential care homes, and education work – and workers interviewed by the TUC said that casual work made their lives difficult to manage, especially if they or their loved ones fall ill.
‘I have often been cancelled at the last minute for work,’ a teacher in her late 20s told the researchers. ‘I have even not been told I was cancelled until I turned up to work, which makes making ends meet and saving up very difficult as I don’t know how much wage I have at the end of each week.’
A care worker in her early 20s said she felt ‘pressured to take on extra shifts at very short notice (less than an hour sometimes), worried that if I don’t take them I won’t get offered extra work in future, which would mean not getting enough work to pay bills’.
Outside of the public sector, the rise of Amazon and other online retailers – especially in fast fashion – has led to a proliferation of courier companies, many who insist their couriers are not staff (zero-hour or otherwise), but instead are independent self-employed contractors, meaning they lose many entitlements and protections such as sick pay.
‘I have phoned in sick and am threatened with a penalty of £50 from the contractor I work for under a self-employment contract if I didn’t come in and to bring a carrier bag or bucket to deal with bad guts I was suffering with,’ one contractor told the TUC.
The rise of insecure work – especially self-employed contractors – also has impacts on the tax base, as employers are required to pay National Insurance for people on secure contracts, but do not need to pay these contributions for non-employees. The estimates of the cost to the taxpayer of the rise in insecure work vary from around £3.4 billion to £5.9 billion a week (about £113 million a week, if you were looking for a figure to put on the side of a bus).
How does the UK stack up internationally?
A lot of the conversation around how work is changing acts as if insecure work is something that will necessarily increase as we see more automation and the rise of effective AIs to displace office jobs. That’s true to an extent – but comparing the UK to other EU nations reveals that actually it is possible to create more secure jobs and fewer insecure ones. It’s just a matter of priorities
The National Institute for Economic and Social Research looked at insecure jobs across the 28 nations of the EU, and found that between 2008 and 2015 the UK had the third-highest increase in temporary workers, but the largest increase (by a large margin) of self-employed workers over that time – self-employment actually fell in 13 of the 28 countries over the period.
This wasn’t because the UK was creating new jobs over that time and other countries weren’t: Germany had the strongest employment growth of any country over the period studied, but the rates of temporary and self-employed workers actually fell over that time.
The UK also hadn’t seen any dramatic changes to workers’ rights over the period: by and large, employment rights have not changed much under the coalition or subsequent Conservative government (though access to justice through tribunals became harder).
The reason for the rise, NIESR proposes, was that the UK’s laws were already tilted in favour of employers and light regulation, but did give dramatically different levels of protection to workers in different classes of employment, giving employers the incentive to change their structures during the financial crisis, enabled by the rise of the app economy.
The UK, they argued, is already an ‘exceptional case’ when it comes to non-traditional work, saying that the UK government’s lack of action to change its employment rules becomes in practice a policy position: ‘absence of new legislation, in the context of other changes, can be regarded as a policy decision in itself, as it can be seen as an endorsement of the already existing deregulated and liberal labour market’.
Or in other words, apparent inaction on the labour market is in fact a positive endorsement of the status quo. A thumbs-up to companies who seek to evade their responsibilities as employers by coasting on zero-hours contracts, and denying sick pay to couriers, teachers or care workers. Other European countries have introduced explicit protections tackling aspects of insecure work: France only allows fixed-term employment for up to 18 months (though faces high youth unemployment), while Germany only allows agency workers to be used for 18 months.
Elsewhere, the Netherlands has placed some restrictions on zero-hours contracts, regulating for a minimum number of paid hours for each shift, and requiring hours to be made regular if a certain number of hours are worked in a given time period. Other countries give employers much more direct responsibility for their contractors, even if self-employed, requiring them to check that people working in such a way make equivalent rates to what the minimum wage would be for employed workers.
The UK could easily introduce any of those schemes – or even just reduce the incentive for employers to shift people out of employment into insecure work – by changing who is entitled to employment rights and who incurs national insurance payments.
Where does Brexit come into this?
Brexit is already so complicated and so badly handled that it might seem odd to start dragging employment rights into the process – until we remember that the EU was instrumental in securing many of the protections for workers that do exist in the UK, and that European courts have helped enforce such protections, sometimes over government protests.
It was the EU that forced the UK government in 1993 to extend maternity leave to all working women. It was the EU that has closed the loopholes in UK law left pregnant British women vulnerable to firing as recently as 1994. It was the EU that forced the UK to legislate for equal pay for work of equal value, and that, most recently, has introduced equal pay and pensions for part-time workers, 75% of who are women. Finally, it was specifically EU law that prevented the Coalition government from introducing a compensation cap that would have made it cheaper for companies to discriminate against women and pay a fine, than to treat them fairly.
In theory the UK government has promised to transfer all these protections into UK law by the time the UK leaves the EU, without watering down or removing any of the existing protections – though several Conservative backbenchers have called for exactly this.
Workers, their unions, and MPs will all need to watch for how these rights are transposed into UK law and how they are enforced – but this will also open up a window of opportunity. Given that workers’ rights and protections will have to be put in front of parliament, why not take the opportunity to reform and extend those protections? With the right political will, measures could be taken to tackle insecure work – and a government-commissioned review lead by the RSA’s Matthew Taylor has set out a range of options which could already be tackled.
The government, with its non-existent majority, would struggle to resist reasonable amendments, especially those based on a report it commissioned itself. Such amendments would not serve to fix the troubles of insecure work – which would also require childcare reform, and fixes to the cost of housing – but could start the UK down a different track.
Brexit will damage the UK economy and pose a real risk to UK jobs and pay, but in this small way, it could also present an opportunity for change for millions of people – if politicians are brave enough to seize it.
In line with gender equality principles, James Ball has taken an 18.4% pay cut this week