Zero hours contracts, mini-jobs, they're both ways of solving the same problem


Outrage in all the usual quarters as the number of zero hours contracts is reported to have expanded again: Nearly 700,000 people are on zero-hours contracts in their main job - a rise of more than 100,000 on a year ago - according to new official figures.

The rise is likely to trigger renewed debate over the widespread use of contracts that offer no guarantee of hours and only those benefits guaranteed by law, such as holiday pay.

Part of this increase is simply that ONS is getting better at counting these jobs, part is a genuine expansion. But there's a terrible confusion in those same quarters about what this all means:

Let’s not be sour. The bounceback in jobs during the current recovery has been staggering – exceeding all predictions. During the depths of the slump too, although things were dreadful, the UK shed far fewer posts than any of the macroeconomic models suggested. Whereas in the past there had been something close to a one-for-one proportional relation between lost jobs and lost output, for every three percentage points of GDP that disappeared after 2008, only 1% of jobs went up in smoke.

But let’s not be blinkered either. If there is reason to be cheerful in the quantity of jobs in a famously flexible labour market, there is reason to be fearful when it comes to the quality. Underemployment, perma-temping and the recasting of low-grade staffers as “self-employed” hires shorn of all rights were striking features of working life in the recession, and all trends that have been stubbornly slow to reverse in the recovery. That much is reaffirmed every month when the official labour market statistics appear. Nothing, however, sums up the pall of insecurity that has befallen so much of the workforce like zero-hours contracts.

What's missing in there is the word "because". We did not have the usual rise in unemployment as GDP fell "because" we had more people on these zero hour contracts. The same is true of Germany, where they have "mini-jobs". And the opposite is true of places like France where they don't have this sort of labour market flexibility.

It should be obvious that the bottom end of the labour market is going to be pretty insecure and badly paid. That's why it's the bottom end of the labour market. And there's two things we can do about it.

We can ban low pay and job insecurity. Other countries do do that and we could too. The result would be that we have more unemployment, as those places that do ban such things have.

We could simply accept that the bottom end of the labour market is going to be badly paid and insecure and have lower unemployment as a result.

It is, clearly, a choice. But those are the binary options. We cannot insist on better pay and more security and also have those 3 or 4% of the workforce working. That's just not one of the options available to us. Those jobs that are being done simply aren't worth very much. Therefore people won't pay very much to get them done. Whether that cost is in the actual wages or in the overhead of having to provide security. Low paid and insecure employment or unemployment: which will you pick?

And we should note something else as well. When given the choice for themselves hundreds of thousands do choose those zero hours contracts, those mini-jobs, instead of unemployment. Meaning, to the people who are doing them, that they prefer that option. And we really shouldn't go around banning something that people are, by the choice they themselves make, preferring, should we?