21/07/2014

By Arnab Dutt, Managing Director of Texane


We see the number of people working on zero hours contracts is increasing. Despite claims that they have benefits for employers and employees, zero hours contracts are often misused and I believe we should do away with them entirely.

For employers, zero hours contracts can help manage demand and risk, reduce costs and help to avoid the legal obligations of normal working contracts. Employees, however, have no guarantee of a minimum number of working hours and no visibility of money. They have little chance of getting a mortgage and face difficulties when budgeting for family expenses. The reality is that zero hours contracts are harming the fabric of our society as well as the economy.

Latest figures from the Department of Business show that 1.4 million people are now on zero hours contracts; typically averaging 25 hours’ work a week. It may be politically good news for the government because it brings down the official unemployment figure but it’s not efficient or sustainable for the economy.

Neither a successful economy nor a successful company should need zero hours contracts, nor should the public sector. It may come as a surprise then that the NHS is now one of the largest users of exploitive zero hours contracts.

An economy structured by zero hours contracts is an economy without confidence. As the misuse continues, real market growth and prosperity is limited. The Joseph Rowntree Foundation has said zero hours contracts have exacerbated poverty among those with jobs. These contracts will ensure the UK misses its target on child poverty.

At the moment, young people under 29 years of age are taking home the same level of pay that they would have been getting in 1999. To put it another way, they’re earning 14 per cent less than they were six years ago. Low wage levels are bad for the economy, and we are seeing private debt levels rising once more.

Zero hours contracts can work when used correctly. Their flexibility and convenience means students and the elderly are well suited to these contracts. As you may expect though, this is rarely the case.

Our economy fast becoming one characterised by demoralisation and anxiety. As an employer myself, you may think I would argue for the use of zero hours contracts. However it is my opinion that zero hours contracts are not fit for purpose as they stand, and in the long term are causing immense damage to the social framework of our country.

The misuse of zero hours contracts and their effects on the economy has been acknowledged by the Queen and Business Secretary Vince Cable. It is fair to say that employers need flexible contracts, but employees need more inbuilt protection, giving more security and a certainty of a minimum level of work per week.

I believe it would be best to get rid of them and start anew.