Print

12/04/2014 - Zero hour contracts lead to low-pay

zeroThe truth is out on zero hour contracts. Workers on zero-hour contracts get paid far less than other workers. So not only do these workers lack any security of income but their pay packets get hit as well.

A staggering four in five (79.1% of workers on zero-hours contracts earn less than the median hourly rate of pay for all employees, according to a new report published by the TUC.

Casualisation and Low Pay shows that individuals in temporary or insecure employment are experiencing a significant pay penalty because of the kind of contract that they are on. Average gross hourly pay is £13.39 for permanent workers, compared to £10.93 for agency workers and £8.83 for those on zero-hours contracts.

The TUC analysis also finds that zero-hours contract workers (often working in cleaning, retail, hospitality or social care) and agency temps (often found in administration, health and education) are more likely than workers on conventional contracts to be earning below the living wage – currently set at £8.80 in London and £7.65 an hour around the rest of the UK.

In London more than three-quarters (75.8 per cent) of workers on zero-hours contracts get less than the living wage, with 57.6 per cent of workers outside the capital earning less than this benchmark.

Agency temps fare slightly better, but nearly half (47.9 per cent) in London take home less than the living wage, and nearly two-fifths (39.5 per cent) miss out around the rest of the UK.

Only 15.5 per cent of employees on more stable, permanent contracts earn less than the living wage in London, and one in four (26.9 per cent) of all employees elsewhere earn less than £7.65 an hour.

In addition to struggling with low pay, workers on casual or insecure contracts are also less likely to get as many hours as they would like. Around one in three (almost 30 per cent) workers on zero-hours contracts work less than 16 hours a week, compared to just 8.6 per cent of agency workers and 8.5 per cent of all employees.

The report reveals that two in five (39 per cent) of zero-hours workers have no usual amount of weekly pay – compared to around one in fifteen (7 per cent) of those in other kinds of work arrangements. Limited or uncertain working hours can lead to an unpredictability of take-home pay which makes it difficult for families to plan their budgets or organise childcare, says the TUC.

While the flexibility of temporary and zero-hours contracts can be useful for some workers and in certain industries, the TUC found that rates of those working in temporary work because they could not find a permanent job were high across most age groups.

The report suggests that young people in particular are struggling to get on the career ladder and secure permanent jobs. Around 40 per cent of temps aged 20-24 and 45 per cent of temporary workers aged 25-29 said they were working part-time because they couldn’t get full-time work. Similarly more than 40 per cent of zero-hours workers in their twenties reported involuntary part-time working.

Pat Harrington, general secretary of Solidarity commented:

“The use of zero hour contracts is widespread. Companies like Sports Direct and Burger King employ almost their entire non-management staff on zero-hours contracts leaving their workers with no guaranteed hours from one week to the next. This means that it is next to impossible to make any plans for childcare or bill payment. They have no security of income. We must exert pressure to end this abuse. We are actively considering the promotion of consumer boycotts of companies who mistreat their workers in this way.”