Call to ban zero hours contracts cannot be taken seriously

Published on Monday, 19 August 2013 17:22
Written by Alexander Ehmann

In uncertain times, businesses face tough decisions about the risks that they are willing to take.  Risks over inventory, expansion and staffing to name a few.  Employers will only create jobs when they are certain the hours and finances exist to provide the opportunity.

Taking on a full-time member of staff is an expensive and risky process. What if they don't work out? What if demand dries up? Faced with these questions, and with an economic recovery still tentative, a flexible labour market can be the saving grace for many businesses. Furthermore, the flexibility offered by a zero hours contract is often extremely valuable to the employee. The figures published by the Chartered Institute of Personnel and Development, which suggested one million people are on such contracts, also found that just 14 per cent of them felt they weren't getting enough hours from their employer. Calls to ban the use of zero hours contracts cannot be taken seriously.

In the present climate many companies do not feel confident enough to offer contracts with guaranteed hours, but they are able to create opportunities under a more flexible zero hours model.  These contracts have acted as an 'employment stabiliser' for the UK, providing a method of employment that businesses can maintain in a difficult business environment.  As market conditions improve and business certainty increases, many of those on zero hours contracts will undoubtedly progress to contracts with guaranteed hours.

Being able to hire staff in accordance with demand is a freedom that employers on the continent may look to with envy. It's no coincidence that unemployment is higher in countries with rigid labour laws. In France, where the labour code runs to 3,200 pages, the government is at last pushing through reforms that will make it easier for businesses to hire people. Francois Hollande has unions to the left of him, clinging to restrictive employment laws, and the IMF to his right, who say that without sweeping changes his country risks being left on the periphery of Europe.

In Spain, youth unemployment has passed 50 per cent and the recent drop in total jobless figures from 27 per cent to 26 was welcomed as a good news story. Just as the French have been ordered to loosen their employment laws, Spain has been told it can expect to see a full quarter of its workforce unemployed until at least 2018 if it doesn't take drastic action. Among the medicine prescribed by the IMF in its recent report are calls for more flexibility for employers when it comes to hiring and firing.

At the height of last week's national debate on the use of Zero Hours Contracts, the BBC interviewed the owner of a small business who employed several members of staff on such arrangements. She was asked to imagine what it felt like not to have a guaranteed monthly income. In response, she pointed out that as a small business owner she knew only too well how it feels. Business owners up and down the country who watched this interview would have understood exactly what she meant. Just over 10 per cent of IoD members say they use zero hours contracts, and of that figure the vast majority use them for just 10 per cent of their workforce or less. This demonstrates that such contracts are rarely the norm for most businesses, and are in fact a vital tool that can be called upon to respond to changing conditions.

Source: IoD

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