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UK – Zero-hour contracts significantly underestimated

05 August 2013

New research from the Chartered Institute of Personnel Development (CIPD) suggests that there could be approximately one million zero-hours workers in the UK - but just 14% report that their employer often fails to provide them with sufficient hours each week. This report comes shortly after details released by the Office of National Statistics (ONS) that revised the number of zero-hour contracts upward from 200,000 to 250,000 last week.

The figures released today are early findings from CIPD research designed to investigate the usage of zero-hour contracts in different sectors, with a view to informing best practice guidance so that they are used for the benefit of both employers and employees.

Latest figures from the ONS suggest that approximately 250,000 people - less than 1% of those in employment - consider themselves to be on a zero-hour contract.  However, the new CIPD research suggests this may be a considerable underestimate.

Data from the CIPD's forthcoming summer 2013 Labour Market Outlook - based on a nationally representative survey of over 1,000 employers - show that:

  • A fifth (19%) of employers said they employed at least one person on a zero-hours contract;
  • Employers in the voluntary sector (34%) and the public sector (24%) were more likely to use zero-hours contracts than private sector employers (17%);
  • The industries where employers said they were most likely to report they employed at least one person on a zero-hours contracts were hotels, catering and leisure (48%), education (35%) and healthcare (27%);
  • A quarter (25%) of organisations with 250 or more employees used zero-hours contracts compared to 11% of smaller organisations with fewer than 250 employees;
  • Among the fifth of employers who made use of zero-hours contracts, the majority (54%) employed less than 10% of their workforce on these terms and the mean proportion of workers on zero-hours contracts in these organisations was 16%;
  • Based on this data, a best estimate would be that 3-4% of all the workers covered in this survey were on zero-hours contracts, which would equate to about one million workers across the UK labour force.

Data from the CIPD's quarterly Employee Outlook survey series, based on a sample of 148 zero-hours contract workers, provides additional insight into the circumstances of employees who regarded themselves as having no guaranteed hours of employment/as a zero-hours worker:

  • The average hours worked by zero-hours' contract workers is 19.5 per week.
  • In all, 38% of zero-hours contract workers describe themselves as employed full time, working typically 30 hours or more a week.
  • Of the 62% who are working part time, about a third (38%) would like to work more hours.
  • Across all zero-hours contract workers (both part-time and full-time) 14% report that their employer often or very often fails to provide them with sufficient hours to have a basic standard of living. However 18% say this does not happen very often and 52% say this does not happen at all often
  • By age group, those who are primarily employed on zero-hour contracts are twice as likely to be young (18 to 24) or old (55 plus) than other age groups.

Commenting on these findings, CIPD CEO Peter Cheese said:  "Zero-hours contracts are a hot topic and our research suggests they are being used more commonly than the ONS figures would imply. However, the assumption that all zero-hours contracts are "bad" and the suggestion from some quarters that they should be banned should be questioned. There does need to be a closer look at what is meant by a zero-hours contract, the different forms that they take, and clearer guidance on what good and bad practice in their use looks like.  And this needs to consider both the advantages and disadvantages in practice for businesses and employees.”

"Zero-hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities. This can for example allow parents of young children, carers, students and others to fit work around their home lives. However, for some this may be a significant disadvantage where they need more certainty in their working hours and earnings, and we need to ensure that proper support for employees and their rights are not being compromised through such arrangements. Zero-hours contracts cannot be used simply to avoid an employer's responsibilities to its employees,” he added. 

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