Labour To Ban Non-Exploitative Zero-Hours Contracts

Yes, that headline is correct. The BBC reports:

Ed Miliband said a future Labour government would guarantee zero-hours workers the right to a formal contract after 12 weeks of regular work, a move which he said would reduce economic insecurity but which was criticised by employers.

<snip>

The proposal, which has been welcomed by the unions, would see an end to more than 90% of existing zero-hours contracts, Labour said.

Let’s walk through this step by step.

  1. Zero-hours contracts are something generally used by businesses that need flexible staffing in order to deal with demand which can peak and trough quite radically. Think, for instance, of restaurants or cinemas.
  2. When people talk about “exploitative zero-hours contracts”, they are generally referring to the fact that workers on such contracts have very little certainty over when they will be working. They’re powerless, at the beck and call of their employer.
  3. The reality about zero-hours contracts is far from conclusive. For one thing, there are no clear statistics on the number of people who are on them, according to the ONS.
  4. However, that’s a little by the by. If what Labour is looking for is increased certainty for workers, then by all means, this is an area to consider making policy in.
  5. You would think, if exploitation is centred on uncertainty, that the policy response would be to limit that. In this case, the best way of doing so would appear to be to require employers to set a minimum number of guaranteed, regular hours on each contract. The downside of this is likely to be less opportunities for prospective employees – but it would improve conditions for existing employees (at least, the ones that are kept on) by giving them guaranteed and regular hours.
  6. As it turns out, Labour has decided to do exactly the opposite by proposing to ban only those zero-hours contracts where employees have been working guaranteed and regular hours. In other words, by the commonly used definition, they intend to ban non-exploitative zero-hours contracts.
  7. The meaning of this is that only exploitative zero-hours contracts will remain legal.

This is another example of a party making policy based on a set of assumptions that are at best hazy and, at worst, lazy. It may well be that there is a problem with some types of zero-hours contracts. It was commonly agreed, for example, that forcing employees to sign such contracts exclusively (i.e. barring themselves from working anywhere else) was wrong. It has subsequently been banned by the coalition government.

However, Labour’s proposal simply generates heat rather than light, and actually runs the risk of employers putting more, rather than fewer, people on such contracts. Why? Because if you’re an employer, and you know you’ll have to give someone a regular contract if they work regular hours, you might just decide to employ more people and give them sporadic work to do. Some jobs can’t be done that way – sure – but a lot can. And we should bear in mind that zero-hours contracts only represent around 2% of the overall workforce anyway.

All in all, for a policy that has dominated Labour’s third day of the election campaign, this is a bit of a dog. I’m tempted to suggest they spent zero hours – or at least very few – thinking it through.

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