Zero Hours Contracts and Their Growth
| Author | Colin Green,Duncan McVicar,Egidio Farina |
| DOI | http://doi.org/10.1111/bjir.12512 |
| Published date | 01 September 2020 |
| Date | 01 September 2020 |
British Journal of Industrial Relations doi: 10.1111/bjir.12512
58:3 September 2020 0007–1080 pp. 507–531
Zero Hours Contracts and Their Growth
Egidio Farina, Colin Green
and Duncan McVicar
Abstract
This article studies the prevalence and nature of zero hours contracts (ZHCs)
in the UK labour market. It is widely argued that the headline count of ZHC
workers based on the Labour Force Survey historically underestimated the
number of workers in ZHC jobs. Here, we argue that this likely continues
to be the case, particularly if one considers other, similar, no-guaranteed-
hours jobs alongside ZHCs. ZHC jobs and workers are heterogeneous, but
ZHCs have become increasingly concentrated among young workers, full-time
students, migrants, black and minority ethnic workers, in personal service and
elementary occupations, and in the distribution, accommodation and restaurant
sector over time. Compared to other forms of employment, median wages in
ZHC jobs have also fallen. The most common prior labour market state for
ZHC workers is non-ZHC employment, particularly part-time employment,
with part of the reported growth in ZHCs driven by reclassification of existing
employment relationships. Finally, we show that growth in public awareness of
ZHCs contributed substantially to recent growthin reported ZHCs, particularly
over the period 2013/14.
1. Introduction
There is a growing concern internationally about the increasing share of
contingent jobs (often described as precarious jobs) in overallemployment (e.g.
Katz and Krueger 2016; Prosser 2016). In the UK, a particular concern has
been the dramatic increase in the prevalence of employment contracts that
do not guarantee any hours of work at all, known as zero hours contracts
(ZHCs). These types of arrangements can be attractive for employers facing
erratic and unpredictable demand. They also enable employers to designate
individuals as workers, with fewer entitlements and employment protection
rights, rather than employees (Brinkley 2013). ZHCs can also be attractive for
workers desiring flexibility regarding when and where they work. The use of
Egidio Farinais at Queen’s University Belfast. Colin Green is at Norwegian University of Science
and Technology. Duncan McVicar is at Queen’s University Belfast & IZA.
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2019 John Wiley& Sons Ltd.
508 British Journal of Industrial Relations
these contracts, however, raises serious questions about job insecurity, lack
of access to work-related benefits and entitlements, lack of opportunity for
career development and unpredictability of hours and income, particularly if
employers expect flexibility from workers but oer little flexibility in return
(for evidence on this last point, see CIPD 2015). This has made them
highly controversial, even as other forms of contingent employment and self-
employment havealso grown.
ZHCs — for which there is no universallyaccepted single definition — have
been used in the UK and elsewhere (although they sometimes go by other
names in other countries, e.g. ‘If and When’ contracts in Ireland (O’Sullivan
et al. 2015)) for many years. Adams and Prassl (2018) suggest their use in the
UK goes back to at least the 1970s, and point to examples of the use of ZHC-
like contracts as far back as the nineteenth century. More recently, the Oce
for National Statistics(ONS) reports figures from the Quarterly Labour Force
Survey (QLFS) suggesting that over200,000 workers were employed on ZHCs
in their main job in the UK in the year 2000, the earliest available data point
(ONS 2018). Their use appears to have grown rapidly over the last few years
even as the labour market has tightened following the Great Recession. ONS
estimates of the proportion of people in employment employed under a ZHC
in their main job in the UK grew from 0.5 per cent in 2006 to 2.8 per cent (or
901,000 workers)in 2017 (ONS 2018). The ONS (ONS 2014a) notes that these
statistics are likely to underestimate the actual prevalence of ZHCs because,
among other things, they are based on self-reports from the QLFS and not
all ZHC workers may realize they are employed under a ZHC, as opposed
to, say, a casual contract (for which thereis also no universally accepted single
definition). Employer-based surveys tend to suggest higher — possiblydouble
— ZHC (or ZHC-like contract) prevalence (ONS 2018), as do sectoral data
(Adams and Prassl 2018; Bessa et al. 2013; Jacques 2013). On the other hand,
the QLFS may exaggeratethe growth in ZHC prevalence because,as awareness
of ZHCs has increased, under-reporting of ZHCs has likelydecreased. Indeed,
the QLFS suggests that growthin the prevalence of ZHCs has levelled o since
2016. What is not in doubt is that ZHCs now constitute a significant segment
of the UK labour market.They are also highly concentrated among particular
demographic groups (notably young people), in particular industrial sectors
(accommodation and food),and in particular occupations (caring and leisure)
(ONS 2018).
Despite this, and growinginterest among researchers in the changing nature
of work and contingent employment more generally, uncertainty persists
about the prevalence, distribution and nature of ZHCs, and particularly
about their growth over time. As a consequence, our understanding of the
contemporary labour market in the UK is incomplete, and the current
debate about ZHCs is taking place against the backdrop of this incomplete
understanding. This article seeks to fill these gaps in our understanding by
exploiting data fromthe QLFS and the longitudinal LFS (LLFS). Specifically,
we address the followingresearch questions. How many workers are employed
on ZHCs or ZHC-like contracts? What do ZHC jobs and workers look like?
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2019 John Wiley& Sons Ltd.
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