Zero Hours Contracts hit a new record but there might be grounds for optimism

The rate of increase slowed dramatically in the second half of 2016 according to an analysis by the Resolution Foundation

Sports Direct: The controversy over its use of zero hours contracts may have slowed their growth (Reuters)

You could be forgiven for thinking that the controversy surrounding zero hours contracts (ZHCs) is having zero impact on the employers that exploit their staff through their use.

The figures just released by the Resolution Foundation appear to make for grim reading: The number of workers on them reached an all time high of 910,000 during the final three months of 2016.

The Foundation's analysis found that the number of people on a ZHC over that period grew by more than 100,000 when compared with the last three months of 2015 – an increase of 13 per cent.

Based on that, you might expect the symbolically important barrier of 1m to soon be breached, perhaps in a matter of weeks.

However, there are some chinks of light to be found within the Resolution report.

While the year on year rise makes it look like this potentially exploitative form of employment is growing like President Donald Trump’s ego, the rate of increase in the second half of this year, when compared to the first half, slowed markedly.

In fact the number of ZHCs grew by just 7,000 over that time period, a rise of just 0.8 per cent. That represents a sharp slowdown when set against the 7.7 per cent growth recorded during the second half of 2015 and would suggest that we might have to wait a while for the 1m barrier to be broken after all.

The increase was also slightly slower than the rate of employment growth across the economy during that period. So the proportion of the overall workforce on zero hours fell, albeit very slightly. The Foundation says that this is the first time that ZHCs haven’t grown substantially faster than overall employment since they first became a part of the public debate back in 2013.

What's causing this? The Foundation wonders whether part of the reason might be that employers have started to react to concerns that they may find roles without guaranteed hours harder to fill as a result of the Government's hard line stance towards Brexit. However, that may result in a slowdown in hiring generally, so it isn't altogether clear and some have predicted a fresh jump in zero hours contracts as a result of the economic damage it will cause.

There are other factors driving the fall in zero hours. Public awareness about them and about their exploitative nature, may be putting workers off from pursuing and accepting zero hours jobs.

It is also true that firms deploying them have endured considerable reputational damage. The scandalous events at Sports Direct over the last couple of years have provided a salutary lesson to the business community. Treating your workers badly can rebound on you and damage your business.

Sports Direct had little choice but to respond, by offering its workers better. Others have followed suit and still more, who might have been considering a greater use of ZHCs, have been given pause for thought.

So is the problem on the way to being solved? Not necessarily.

We don’t yet know whether the slowdown in the second half of last year will be sustained. There are grounds for cautious optimism, but they will be shattered if it proves to be just a blip.

Zero hours contracts started to become problematic when they were made part of the operating models of companies in sectors where they had not previously existed, or had only limited use, such as retail.

However, there are economic drivers for their growth in certain other sectors, such as social care, which is in the midst of a profound funding crisis that badly needs addressing.

Government inaction created that crisis, and there is no room for it to be complacent on the subject of zero hours more generally.

It should be said that zero hours contracts are acceptable in limited circumstances; where there is a genuine need on the part of the employer, and a desire for flexibility on the part of the employee. And where employees are not punished by losing the opportunity for hours when they are available if they have needed to call on that flexibility.

But we need to get back to that being the norm, rather than the exception, and despite the glimmer of light provided by Resolution’s figures, we’re not there yet.