A rose tinted view of zero-hours?

26 November 2013

The CIPD has released Zero-hours contracts: Myth and reality, their research into zero-hours contracts. It’s an interesting document and well worth reading in full.¹

The report is generally optimistic about zero-hours contracts. It suggests 60% of workers on zero-hours contracts are satisfied with their job, compared with 59% of all workers. 65% say they are satisfied with their work-life balance, compared with 59% of all workers. 64% of employers say that they’re pay zero-hours workers about the same hourly rate as permanent employees.

But, I think, digging deeper, there are some worrying signs. First, on pay. 84% of zero-hour works earn less than £25k a year. The median UK salary in £26,312. 59% earn less than £15k – more than £10k less than the average wage. Some of this is explained by zero-hours workers working fewer hours – 34% work 33 hours or more. But, then 34% of all employees work 32 hours or less, so this is by no means a complete explanation.

Second, 23% of zero-hours workers have worked for the same employer for more than 10 years. 62% have worked for the same employer for more than 2 years; and so would be able to claim unfair dismissal is they were employees. This is less than all employees, 78% of whom have worked for the same employer for more than 2 years – but not massively so.

Whatever the arguments for flexibility, it seems to me that someone who has worked consistently for the same employer for 10 years, really should have some sort of unfair dismissal rights.

This also raises the problem that many of the disadvantages of zero-hours contracts aren’t necessarily immediately apparent – even after some time. For example, employment status doesn’t matter much while you’re happily getting work. But if you get sacked, or just stop getting hours, for a trivial reason, it makes the difference between having a claim for unfair dismissal and not. And that, in turn, may make the difference between you being treated decently by an employer who knows you have some rights and badly by an employer who knows they can mistreat you with impunity.

I also think it’s undesirable to concentrate poorly paid workers in employment relationships with few rights in the name of flexibility. It’s precisely the poorly paid who tend to need the protection of employment rights in the first place.

I also I think the research does suffer from a form of sampling bias. It’s based on surveys managed by YouGov, who conduct online active sampling from their panel. For the CIPD research, members of CIPD were also surveyed. Basically, panel members are emailed with a survey, which they complete online. YouGov then weigh the sample responses, to match data about business population and other demographic data.

This is a perfectly sensible way of conducting research. But it’s important to understand its limits. In particular, I think it has problems in the context of zero-hours contracts. Anecdotally, the worry is that zero-hour contracts are used by rogue employers to exploit the vulnerable.² Neither rogue employers nor vulnerable workers are likely to join YouGov panels or fill in online surveys. They’re also unlikely to be CIPD members, who almost by definition, tend to work in reputable organisations.

So I fear that the survey is examining the nicer parts of the zero-hour world, rather than it’s unpleasant underbelly. Which is particularly worrying, given that the data on the more pleasant bits already raises the concerns above.

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