17 March 2015
Article by Gareth Thomas, National Assembly for Wales Research Service
Zero-hours contracts have received substantial media and political attention over recent months and years. For the first time, the Office for National Statistics (ONS) has published statistics showing how many people are employed on zero-hours contracts in Wales – in October to December 2014 this was estimated to be 35,000, or 2.5% of the workforce. So, what do we know about zero-hour contracts in Wales, and what more can the data tell us?
What is a zero-hour contract, and why are they so controversial?
A zero-hours contract is one where a person is not contracted to work a set number of hours, and is paid for the number of hours that they actually work.
The number of people reporting that they are employed on a zero-hour contract has nearly quadrupled across the UK since the 2008 recession. However, most of this increase has been over the last couple of years and the ONS think this may be partly down to more people being aware that they are employed on a zero-hour contract. The figures are estimates based on a sample survey and rely on people reporting that they are employed on a zero-hours contract, so are subject to some uncertainty.
Employer organisations such as the Institute of Directors (IoD) are more supportive of zero-hours contracts, and argue that the increased flexibility that they provide contributes to a flexible labour market that benefits the UK. The IoD also state that zero-hours contracts have led to unemployment increasing by less during the economic downturn than might otherwise have happened.
However, trade unions do not support the use of zero-hours contracts. The Trades Union Congress (TUC) has stated that zero-hours contracts mean that people are not guaranteed work from one day to the next, and can be used to reduce terms, conditions and costs regardless of the impact on services and the workforce. Action is also being taken by the UK Government to prohibit the use of ‘exclusivity clauses’ in zero-hours contracts, which is estimated to be around 9% of people employed on zero-hours contracts by the Chartered Institute for Personal Development.
How do the Welsh figures compare to the rest of the UK?
People employed on zero-hours contracts in Wales represent 5% of the UK total of 697,000. However, the 2.5% of the Welsh workforce employed on zero-hours contracts represents the third highest proportion of the English regions and devolved nations, behind South West England and the West Midlands. London has the lowest percentage of its workforce employed on zero-hours contracts.
What do the figures tell us about people who are employed on zero-hours contracts?
Very little from a Welsh point of view, as the ONS only publish headline figures below UK level. However, across the UK figures from October to December 2014 show that zero-hours contracts impact upon groups of people in different ways:
- A third of people working on zero-hours contracts would like to work more hours, compared to 13% of other people in work;
- Over 40% of those employed on zero-hours contracts are employed in the food and accommodation or health and social care industries;
- A third of those employed on zero-hour contracts are aged 16-24; and
- Women are more likely to be employed on a zero-hour contract than men, and are 55% of those employed on zero-hour contracts.
Didn’t I read something about 1.8 million people being employed on zero-hours contracts across the UK?
According to a separate ONS survey of businesses, in August 2014 there were around 1.8 million employment contracts across the UK that did not guarantee a minimum number of hours. This counts contracts rather than the number of people employed on them, as people may be employed on more than one contract without guaranteed hours. The ONS say this is also higher than the figure of 697,000 people employed on a zero-hours contract highlighted above as employers are more likely to know whether their staff are employed on a zero-hour contract.
The ONS defines contracts without guaranteed hours more widely than looking at just zero-hours contracts. This includes casual contracts and other forms of work that do not guarantee hours.
What developments have there been from the Welsh and UK Governments in this area?
There has been political debate in the context of the Social Services (Wales) Act 2014 around whether the Welsh Government should take action through legislation on the use of zero-hours contracts in the social care sector, or whether this would relate to non-devolved employment law. Following the Supreme Court judgement in July 2014 on the Agricultural Sector (Wales) Act 2014, the First Minister stated that the judgement meant that the Welsh Government was clearer in what could be done around zero-hours contracts.
In December 2014 the Minister for Public Services commissioned work on the extent of zero-hours contracts in the devolved Welsh public sector. This aims to better understand their use and prevalence, and the impact of their use on workers, services and employers.
In Westminster, the Small Business, Enterprise and Employment Bill is currently going through Parliament. One of the aims of the Bill is to prohibit the use of ‘exclusivity clauses’ in zero-hours contracts where workers are contractually required to only work for one employer without any guaranteed hours.