Zero hours contracts

Zero hours contracts have received media coverage from a multitude of sources recently, with almost all coverage being negative. Zero hours contracts are essentially a type of employment whereby hours are flexible, but dictated almost entirely by the employer. As such, employers do not have to guarantee any work or pay, as well as holiday and sick pay.

Recent research has suggested that just over a quarter of UK companies use zero hours contracts, with the prevalence of their use being approximately twice as high amongst college and higher education employers than any other sector.

Those for and against the use of zero hours contracts cite advantages and disadvantages associated with their usage. Whilst it is true that zero hours contracts do provide workers with employment when they may otherwise be forced to claim benefits from the state, it seems unfortunate that the only way they are able to do so is through a contract which seems to place the employee at essentially the employer’s whim.

Another problem that I see with zero hours contracts is that they would appear to support short term economic growth ( when there is a shift in Aggregate Demand but not supply ). As such, despite overall demand for goods and services within the economy increasing, the overall productive capacity of the economy remains the same, for workers ( represented by the term “labour “ in the four factors of production which form an economy’s productive capacity ) are not actually becoming more skilled, being arguably “exploited “ by contracts which on average pay 40 % less than traditional employment.

Whilst zero hours contracts are providing some growth to the economy, it is simply not the basis for growth that we as both a society and an economy wish to see.