Zero hours contracts are part of the digital age and the gig economy. Offering individuals and organisations alike the choice and freedom about how, when and where they work. In turn this creates agility, cost savings, reduces use of natural resources and creates opportunities.
Of course, there can be down sides. The other side of the flexibility and freedom coin is insecurity, lower earnings and new ways of exploiting the workforce.
One example of this is zero hours contracts.
Zero hours contracts are not inherently bad. If you think about it, many freelancers have been working with a sort of zero hours contract for years. Working in the advertising industry in the 80’s, we used a legion of freelances; designers, copywriters, photographers, illustrators, etc. They did not even have a contract. We used them as and when we needed them. If trends changed, we sought new suppliers. No notice, no commitment. The most security they had was a purchase order for that job and that job alone. No minimum hours or income.
What about other jobs, like commission-only sales roles or self employed brick layers and other tradesmen and farmers?
If we go back further in time, few people had guarantees. When a crop failed, it might affect not just the farmer but the community. If work dried up in a town or city, it could affect a great number of people.
However, in a civilised society, we protect against failure so that everyone has the same chance. And also because the ripple effects of failure can be vast and unexpected (like betting on a sub-prime mortgage). A modern economy is looking for consistency and a huge tract of the workforce in insecure jobs is a source of potential instability.
Do zero hours contracts help?
They give organisations some control over outlay. No business? No payroll. They may not give access to the best staff, but when you need a lot of staff to cover peak periods (like Christmas, say, in hospitality and retail) but don’t want them at other times, the quality is less important than the quantity.
Some organisations, like Uber and Deliveroo, have based their business model on zero hours. Both of these companies have faced backlashes because it appears to be a way of abdicating responsibility for the people working for you; harking back to industrial-age working practices.
Many will argue they can give workers freedom and choice. Earn money while building a business or studying; take more than one job; supplement other income and so on.
But it can be an insecure existence and can lead to stress if abused this way. No rights, no minimum earning, no regular income, no sick pay or holiday pay and no pension.
These organisations and those in the hospitality and retail sectors will say they cannot afford to pay more. Nor can they take on more responsibility, because these actions would adversely affect profit and endanger their organisation.
Why do we work?
This is a purely capitalist argument: humans as a resource, to be used as necessary for as little outlay as possible to fulfil the profit motive.
And it ignores two obvious questions. How much is enough profit and is money our only motivation for working?
Once a business makes profit, when is this enough? Is it thousands of pounds, or millions, billions, etc? What are you going to do with this money? Is it going to help anyone else? Can an organisation pay everyone a comfortable remuneration and minimise profit or seek to make it work better for the community and still be a success?
Of course much profit goes towards paying shareholders and other stakeholders. And it is right for them to get a return on their investment, but again, how much is fair or enough?
And anyway, why do we work? Yes, many of us want nice things and financial freedom. But is it our sole motivator? Much research suggests we work for our own reasons, like development, worth, social belonging, status and so on. Money is not often high up on the list.
This is borne out by the trend towards self employment. This is a trend that started in the sixties, but has been noticeable since the recession. The self employed exchange more freedom and choice for lower pay, harder work and a little insecurity. They may be escaping highly stressful jobs or want to spend more time with family and the likely reduction in income is a price they are prepared to pay.
Does pay improve performance?
So, it stands to reason that if you treat people better, and focus on these areas of self development, creativity, input and control, they will perform better. With zero hour contracts, it is not necessarily about the money, but about the level of engagement.
This is not to say that money is not a factor at all; just that it is part of a mix. It stands to reason then, if you pay better, improve conditions and engagement, you will get better staff. They will perform better, sharing goals and values, innovating and improving the business (More info on employee engagement here). You may then find you need less staff because of gains in performance and efficiency. And, in addition, costs go down naturally instead of forcing them down.
Thes contracts can be useful. They can be part of an organisations success, making them agile, competitive and lean. However, this does not naturally have to lead to treating staff poorly and without access to the same securities as their fully employed counterparts.
How can the self employed gain security?
Workers on zero hours are not necessarily self-employed because they are usually on PAYE with the company. However, they get few employee rights, no minimum hours, sick pay or holiday pay, no pension entitlement, etc. so in most real measures they are just like the self-employed.
To provide this protection and support would obviously cost money, so who would pay for it?
And who would organise it? Probably only government or trade body, like a trade union, could do so. This is because it would have to be on a national scale, with the infrastructure in place to support it.
Perhaps organisations using freelancers and zero-hours workers would make some small contribution, which could go towards holiday pay, sick pay and pension. Supplemented by the workers themselves, but means tested. A highly paid consultant is more able to protect themselves than someone on minimum wage.
Perhaps insurance companies could provide some suitable products, like critical illness but on a smaller scale.
If this sort of work was more attractive and better protected, it may attract more people and become part of the norm. Paying similar contributions would be a small price for businesses against the savings they would make and the improved performance.
Similarly, they may even contribute towards training and development, in the same way they would for employees. Again, this helps with performance, commitment and innovation, while still maintaining the necessary agility to thrive in the modern global economy.
Thus organisations can support that workforce that feeds them. Zero hours may be better for business in certain situations, but it doesn’t have to mean zero rights.