The problem with zero-hours contracts is not that they are too flexible
BRITAIN'S flexible labour market was a boon during the economic slump,
helping keep joblessness down and then, when the recovery began, allowing employment to rise.
Yet one of its bendier bits is causing politicians to fret.
Ed Miliband, the leader of the Labour Party, has promised a crackdown on “zero-hours contracts” if he wins the next election.
The government has launched a consultation.
Zero-hours contracts allow firms to employ workers for as few or as many hours as they need, with no prior notice.
In theory, at least, people can refuse work. Fully 1.4m jobs were based on these contracts in January 2014,
according to a snapsho taken by the Office for National Statistics.
That is just 4% of the total, but the share rises to a quarter in the hospitality business.
The contracts are useful for firms with erratic patterns of demand, such as hotels and restaurants.
They have also helped firms to expand during the recovery—allowing them to test new business lines before hiring permanent staff,
who would be more costly to make redundant if things went wrong.
Flexibility suits some workers, too. According to one survey,
47% of those employed on zero-hours contracts were content to have no minimum contracted hours.
Many of these workers are in full-time education.
The ability to turn down work is important to students, who want to revise (or sit in the sun) at this time of year.
Pensioners keen for a little extra income can often live with the uncertainty of not having guaranteed hours.
Yet that leaves more than a quarter of workers on zero-hours contracts who say they are unhappy with their conditions.
Some of this is cyclical. During recessions, a dearth of permanent positions forces people
into jobs with no contracted hours even if they do not want them
(the government has just said that unemployed people who refuse to accept zero-hours contracts could be cut off from benefits).
Underemployment is particularly prevalent among these workers, 35% of whom would like more hours compared with 12% in other jobs.
As the economy recovers, many should be able to renegotiate their contracts or find permanent jobs.
But the recovery will not cause unwanted zero-hours contracts to disappear.
Some workers will never have much negotiating power: they are constrained by geography,
family commitments and lack of competition for their skills among a small number of big employers.
Zero-hours contracts make it easier for employers to abuse their labour-market power.
Some use them to avoid statutory obligations such as sick and maternity pay.
Workers are penalised for not being available when requested.
And some contracts contain exclusivity clauses which prevent workers from taking additional jobs.
These can harm other employers as well as workers, and actually reduce labour market flexibility.
That, at least, is worth doing away with.