Over the last 30 years, employers have jettisoned one by one all their original social obligations: first career, then pensions, and now even the promise of rising living standards – by 2020 an ordinary family will be bringing in 15 per cent less than in 2012, according to the Resolution Foundation. Completing the offload of responsibility to employees, employers are now busily abandoning the job, as they increasingly sign their workers up to euphemistically named zero-hours contracts.
The ultimate flexible labour arrangement, zero-hours deals hold workers on standby but offer no guarantee of work, pay, holiday or sick pay, or education and training. Such contracts originated in traditionally low-paying sectors such as retail, bars and restaurants and call-centres, but surveys show they are now making inroads into white-collar domains like journalism, the law and university teaching, where the number of establishments using them increased tenfold from 2004 to 2011. Although numbers are small, they are increasing fast, rising 25 per cent in 2012 and more than 150 per cent since the autumn of 2005, according to the British Labour Force Survey. In the NHS alone there are now 200,000 such contracts, up 24 per cent in the last two years. Up to one quarter of employers are using them.
Contracts like these of course represent the antithesis of traditional employer-employee relationships, and of official HR rhetoric – as with performance management, this is another example of apparently benign HR morphing into its evil opposite. Although the arrangement may suit some people who might otherwise be unemployed, the advantages are clearly on the side of employers, enabling them to switch between quiet and busy periods without the cost penalty of carrying full-time employees to cover the difference.
But the cost to the latter in terms of, unpredictable working patterns, up-and-down earnings and general insecurity is heavy. Although earnings are often low, claiming benefits is a nightmare when they and hours are so erratic, while being on constant standby makes it impossible to supplement meagre pay by taking a second job. The consequence, according to labour expert Guy Standing, is a burgeoning ‘precariat’: ‘It is induced inertia, an impediment to social mobility and in most cases it is degrading’ – the resulting stress and demoralisation a reminder that, as New Scientist has put it, austerity is not just an experiment with the wealth of nations but their health too.
The phenomenon ought to be just as worrying for policymakers, not to mention sensible employers, as for workers.
As ever, it is the public purse which picks up the bill for private failure in the shape of rising benefits for the working poor – yet more proof that welfare is what happens when the labour market, not government, fails. What’s more, the further shift the trend signifies to a transactional, affectless, commitment-free working relationship is not only a sinister step towards a truly Orwellian futurel: it goes against the grain of everything we know about what makes successful, high-achieving workplaces work.
Great workplaces are not created by fear but by security and commitment. Committed workers perform better than uncommitted ones, are more willing to go the extra mile and less likely to leave. But commitment is a two-way street, requiring people-centred management of which zero-hours contracts are the diametrical opposite. This path does not lead towards the high road of an advanced knowledge economy in which a highly skilled workforce turns out innovative products and services for demanding and sophisticated customers but the reverse: the low-skilled, low-paid, low-commitment commodity economy ghoulishly predicted in Larry Elliott and Dan Atkinson's Going South: Why Britain Will Have A Third World Economy by 2014. The UK has proportionally more low-paid workers than any other developed nation except the US, and it is creating jobs of lower status, with lower skills and lower rates of pay than any of its immediate rivals.
To put it in perspective, the rapid uptake of zero-hours contracts is taking place from a very small base: 200,000 out of a workforce of 30m. Clearly pressures of recession make them look increasingly attractive to hard-pressed employers. But they are no longer a novelty, and are spreading between as well as within the traditional sectors. Past history strongly suggests that without a countervailing force, arrangements that start out as experiments, such as zero-hours contracts and ‘crowdworking’, where people bid for small work tasks online, are here to stay as employers get used to the advantages of a spot market in labour and become increasingly reluctant to give them up, even when the economy recovers. Some observers predict that in the long term few except the most elite professions will be untouched by the trend. So be afraid for yourself and your children. Next stop, slavery?