THE BLOG
09/09/2015 13:39 BST | Updated 09/09/2016 06:12 BST

It's Time We Supported Zero Hours Contracts

Whether or not the number of people on zero hours contracts is on the up (the ONS has warned against that conclusion, saying that it could just be that more people are aware of the contracts), they are here to stay. "We should not lament or celebrate an increase in the number of people using them," James Sproule said last week, but rather acknowledge that they are a small - but important - part of the UK's flexible labour market.

The great novelist Victor Hugo once said: "It is the essence of truth that it is never excessive. Why should it exaggerate? We must not resort to the flame where only light is required." It's wisdom long ignored by our politicians, who all too often resort to hyperbole over reality.

Had you believed Ed Miliband's headline-grabbing rhetoric on zero hours contracts in the run up to the 2015 General Election, for example, you would be forgiven for thinking miserable employees across the country were being forced into exploitative employment against their will.

"We have an epidemic of zero hours contracts in our country, undermining hard work, undermining living standards, undermining family life," the then-Labour Party leader said back in April. The Tories may have won the election but they have not yet won the argument on these contracts, despite having statistics on their side.

Last week, when news broke that there had been a 6% rise in the use of these contracts - where the employer is not obliged to provide the worker with any minimum working hours and the worker is not obliged to accept any hours that are offered - by UK businesses, shadow business secretary Chuka Umunna equated "zero hours" with "insecurity at work". Frances O'Grady, general secretary of the TUC, described them as a "stark reminder of Britain's two-tier workforce". But perhaps the most spurious analysis of these figures came from Jon Ingham of Glassdoor, who claimed; "It's safe to say that employees who accept a zero hours contract do not do so as a career choice."

It is vital, of course, to ensure that employees are not being treated unfairly. But while there were problems previously with the employment contracts, notably exclusivity clauses which prevented people from working for more than one employer, these were rightly scrapped earlier this year. And recent polls suggest that employee satisfaction among those on zero hours far surpasses those in full-time employment. A 2015 survey conducted by the CIPD found that 65% of people on zero hours said they are happy with their work-life balance, compared with 58% of average workers. They were also less likely to be treated unfairly by their employers than average workers.

And while 41% of those on zero hours would like to work more, the majority would prefer to stay in their current job than move to one with a fixed contract, and only 12% want another job. This is hard to reconcile with Ingham's analysis. So too is the fact that of the 744,000 people employed on zero hours contracts, a fifth are students. People on these contracts are more likely to be women, in full-time education, working part-time, or aged under 25 or 65 and over, ONS statistics revealed earlier this year. These are the people you would expect and want to be on these sorts of contracts: they're the groups most likely to value flexibility in the workplace.

Another important consideration is their economic impact. But as Ben Southwood, head of research at the Adam Smith Institute tells me: "The UK's flexible labour markets are one reason why we have been able to create so many jobs despite what was, for a long time, a lackluster recovery." In the second quarter of 2015, the UK hit its highest ever employment rate - 73.4% - and one element of this is zero hours contracts, which have been a vital crutch for both employers and employees since the Great Recession.

They have been particularly beneficial to smaller companies - which account for almost half of all private sector employment in the UK - proving a valuable tool as they try to scale up. As their businesses start to grow, many entrepreneurs face a catch-22: they cannot pitch for new clients as they're short-staffed, but they are unable to hire more full-time employees before securing new business.

Zero hours contracts allow these employers to manage employment very closely with demand, which can potentially raise employment: they can hire as many people as they want during peak times (or peak seasons) without having to worry that they will be required to pay these people when they aren't needed. As Daniel Naftalin of Mishcon de Reya pointed out earlier this year, the UK's employment landscape is as good as it has ever been for entrepreneurs.

But whether or not the number of people on zero hours contracts is on the up (the ONS has warned against that conclusion, saying that it could just be that more people are aware of the contracts), they are here to stay. "We should not lament or celebrate an increase in the number of people using them," James Sproule said last week, but rather acknowledge that they are a small - but important - part of the UK's flexible labour market.