Baroness Quin
Main Page: Baroness Quin (Labour - Life peer)
Baroness Quin
To ask Her Majesty’s Government, in the light of the increased use of zero-hours employment contracts nationally and regionally, what assessment they have made of the effects of such contracts on an individual’s chances of gaining full-time salaried employment, and on specific sectors, both public and private, of the UK economy.
Baroness Quin (Lab)
My Lords, I welcome the opportunity to raise the subject of zero-hours contracts this evening. I welcome, too, the fact that a short debate such as this has attracted an excellent list of speakers and I thank noble Lords, and my noble friends in particular, for putting their names down to speak. I look forward very much to their contributions on this subject.
I applied for this debate before the European referendum result was known. As a lifelong supporter of the European Union, I was utterly dismayed at the outcome. In terms of this debate, I know from my experience of the EU and the EEC before it, what a good record the EU has on employment rights. I am concerned that leaving the European Union will undermine rights at work for British people. We must do whatever we can to prevent that happening.
Whether inside or outside the European Union, we have a responsibility to see that being in employment and being willing to work rewards people and does not plunge them into insecurity and stress. Unfortunately, in many cases the increased use of zero-hours contracts in employment contributes greatly to insecurity and stress among some of the poorest-paid employees in a number of sectors of our economy.
The trigger for my tabling this Question for Short Debate was not, however, the statistics about the growth in zero-hours contracts, worrying though that is. Indeed, the statistics are somewhat unsatisfactory for a number of reasons. The trigger was the experience of a young friend of mine in the north-east of England who, for a number of years now, has struggled to find any employment other than that on zero-hours contracts. Nothing else has been offered to him. My friend even finds the name “zero-hours contracts” ironic since the employers with whom he has worked have never given him a proper contract and in no case has he ever been given, despite occasional encouraging words, any guarantee that a permanent contract might follow, even when a satisfactory probation period has been served. The stress he experienced from never knowing whether he was going to be working or not was enormous. Being subject to such variable and uncertain employment conditions meant that he could never plan ahead and, of course, he was never anywhere near getting on the housing ladder. Furthermore, because his benefits would be cut when he found employment but work was not always offered, he found that he then had to reapply for benefit—a process that takes time—and that the only way he could then survive was by taking out loans, which in turn, unsurprisingly, led to considerable indebtedness.
The exploitative behaviour by some employers using these contracts is simply unacceptable and has to be stopped. Similar concerns were expressed in a House of Commons debate last year by one of the Minister’s honourable friends, Richard Bacon, the Member for South Norfolk. One of the people he met described how his son travelled to Norwich each day to work in a retail outlet. When he got there at 9 am he was told to go and sit in a store-room at the back. Later, if it got busy, he would be called out on to the shop floor, for which he would be paid. He would then be ordered back to the store-room to wait for his possible next period of work. I understand that that behaviour is illegal and I hope that it has been stopped but, none the less, this example was cited. The union USDAW has done a great deal of work in compiling deeply worrying examples of people who have been exploited in such ways.
I concede—I am probably anticipating the Minister’s comments on this—that for certain people zero-hours contracts can work; for example, students who perhaps want to work for only a few hours each week and, if that work is not offered, have financial support to survive. Similarly, one or other parent in a supportive family framework might find such contracts work for them. They can give them the flexibility that they want as well as giving employers flexibility. However, for people wanting permanent work and who cannot rely on financial support from partners or families when no work is available, the situation is often dire.
I mentioned that the statistics on zero-hours contracts need to be improved and deepened. I shall expand briefly. In a written reply to me, the noble Baroness, Lady Neville-Rolfe, said that the Government had not made their own assessment of the proportion of people on zero-hours contracts who are seeking full-time guaranteed paid employment. She none the less quoted figures which suggested that 60% or so of those on such contracts were content and not looking for permanent employment. Aside that leaving up to 40% who are not content, the figures themselves come from limited surveys of employees under the Labour Force Survey or, again, limited research commissioned by the Office for National Statistics. There is little direct information from employers on how much use they are making of zero-hours contracts and in what circumstances they are used. It is vital for us to be able to get such information. I urge the Government to do their own studies and research so that a fuller picture is obtained across the country. I notice, from the excellent brief provided for us by the House of Lords Library, that the Work Foundation agrees with this in favouring,
“a more systematic approach which would get the best possible picture of the incidence and drivers of zero hours contracts from all currently available information sources”.
The Government should also look at this issue in the different regions of the country. There is currently no accurate regional breakdown. Naturally, as a north-easterner, I am concerned that there seems to be a lot of use of zero-hours contracts in our region. Even before these contracts began to be used on this scale, our region was one in which low pay was all too prevalent. The Government should also look at particular sectors of the economy. Again the noble Baroness, Lady Neville-Rolfe, in answer to an Oral Question—and, I think, to a supplementary from the noble Lord, Lord Stoneham of Droxford, who is to speak later—said that she did not have a breakdown between public and private sectors regarding the use of these contracts. Does the Minister now have this information, and if not, are there plans to obtain it?
I would also like the Government to look at particular sectors. First, in the security industry, I know of examples where zero-hours contracts are given to people who very much want permanent employment, which never materialises. Secondly, and very importantly, there is the domiciliary care industry. The issue with the care industry is twofold: there is the exploitation of care workers on zero-hours contracts but also the effects of this on the client—the person being cared for—because of the lack of continuity of care. They are not able to get to know the carer and are subject to the stress, in a vulnerable situation, of coping with many different carers within a short period.
In the earlier debate in the House of Commons, the Minister was urged to set up a working group to look at these issues. Was this set up, and if not, what other initiative was taken? What protection is being given to whistleblowers who expose exploitation, and as also mentioned in the earlier debate, will there be a central and trustworthy contact point for whistleblowers, so that the information can be collected?
In this House, the noble Baroness, Lady Neville-Rolfe, said that the Government would bring in a route of redress against employers who ignore the ban on exclusivity. I fully concede that the Government took that important step, which I welcome, but has that route of redress now been established? I would also like the Government to consider urgently a requirement for employers to disclose how much use they make of zero-hours contracts and how long individuals who are seeking permanent employment end up on such contracts. As the contracts become more widespread and long-lasting, this is an entirely legitimate concern.
In looking forward to other contributions to this debate, I urge on the Government the importance both of investigating how much exploitation is taking place and of then taking action to stop it and prevent it recurring in the future.
The Earl of Courtown (Con)
My Lords, I join other noble Lords in thanking the noble Baroness, Lady Quin, for raising this important subject. Noble Lords need only look at the breadth of experience on the Benches opposite on this subject to know that a lesson on employment has been received and inwardly digested by myself. I should make a declaration. The noble Lord, Lord Monks, referred to wobbly contracts; I started off at one stage of my life on a wobbly contract out of need, and I ended up jointly running a successful SME which employed 25 people.
The right reverend Prelate mentioned the pastoral care available to people in these situations. I assure him that SMEs, to get the most out of their employees, need to give proper pastoral care.
It is unfortunate that zero-hours contracts have recently been demonised due to the wholly inappropriate practices of a minority of employers. Let me be clear—the Government condemn exploitative behaviour by irresponsible employers. Zero-hours contracts, when used appropriately, as the majority of employers do, fit positively within the UK’s strong and flexible labour market, and the opportunities that they provide. That was acknowledged by many noble Lords. The UK’s labour market is one of the most flexible in the world, and it is this flexibility that allows individuals and business to vary working arrangements to weather changing demand that has helped the UK to exit the recession with high levels of employment.
I want to be clear that it is not just business that benefits from this flexibility. Zero-hours contracts are one example among a whole range of flexible employment contracts which make it easier for workers who cannot or do not want to commit to standard, full-time employment. The most recent ONS Labour Force Survey showed that around 63% of those on zero-hours contracts in their main job were not looking for more hours. That does not mean that the 37% should be forgotten. We should not simply assume that the remaining 37% of those surveyed wanted a full-time regular job instead of a zero-hours contract. They may be considering taking a second zero-hours contract job, or simply a few more hours in their current job. In any case, we know that, on average, individuals on a zero-hours contract work 26 hours a week. To further demonstrate that not everyone on a zero-hours contract wants a full-time job, we have only to look at the recent example of a fast food retail chain. It responded to criticism about its use of zero-hours contracts and offered all staff the option of a fixed-hours contract. The result was that 80% of workers elected to stay on zero-hours contracts. In any case, if there are those on a zero-hours contract who wish to seek full-time work, there has been nothing to prevent them from doing so since this Government implemented the ban on exclusivity clauses in 2015. My own experiences in this business showed that people do go on to get full-time contracts. The ban on exclusivity means that nobody on a zero-hours contract can be prevented from seeking work elsewhere, whether it is a full-time job or another flexible arrangement that they may wish to pursue.
We should also bear in mind the acknowledged point that someone is more likely to be successful in their pursuit of a job if they are already in some form of employment or activity. In fact, for many people, the skills obtained by working on a zero-hours contract can improve their employability in later life. For instance, many students and young people benefit from this type of casual work as it shows future employers that they have work experience and commitment, and have developed valuable soft skills to secure a job. A CBI survey confirms this view and reports that nearly two-thirds of respondents believe that flexible employment contracts, including zero-hours contracts, are an important stepping stone into work for groups most vulnerable to periods of unemployment, including young people and the long-term unemployed.
The noble Baroness, Lady Quin, referred to a breakdown of zero-hours contracts by region. According to the ONS, around 2.5% of those in employment in the United Kingdom were on zero-hours contracts. That figure rises to 3.8% in the north-west, 3.6% in the south-west and 3.4% in Wales. In part, the higher rate of use of zero-hours contracts in these regions can be attributed to the hospitality sector. In London, Scotland and the east of England, only 2.2% of those in employment were on zero-hours contracts in their main job.
A number of noble Lords referred to zero-hours contracts by sector. The latest ONS data show that the main sectors that use zero-hours contracts cut across both the public and private sectors. Of all workers on zero-hours contracts in their main job in 2015, around 24% worked in the accommodation and food industry and around 22% worked in health and social work. This means that around 12% of those employed in accommodation and food and around 4% of those in health and social work were on zero-hours contracts. These are both sectors where there can be fluctuating demand for services—whether this be seasonal or patient care. A number of noble Lords also asked about the division between the private and public sectors. I do not believe that I have a breakdown of those figures, but if they are available I will write to noble Lords.
The noble Baroness, Lady Quin, and the noble Lord, Lord Monks, raised the issue of exploitation and in particular the Government’s response to it. It is vital for the UK economy and the wider UK labour market to tackle this labour exploitation. Other businesses struggle to compete against rogue employers, distorting competition and reducing levels of employment over the long term. The Immigration Act 2016 creates a new Director of Labour Market Enforcement, who will be responsible for overseeing and setting priorities for the Employment Agency Standards Inspectorate, national minimum wage enforcement and the Gangmasters Licensing Authority, bringing better co-ordination.
The right reverend Prelate and the noble Lord, Lord Whitty, mentioned rogue employers and their duty of care to their workers. It is vital for the UK economy and the wider labour market to tackle this labour exploitation—I already went into detail on that in my previous point.
Most noble Lords, including the noble Baroness, Lady Warwick of Undercliffe, asked about government action, and the noble Lord, Lord Whitty, in particular, referred to rogue gangmasters. To enable enforcement to be effective, we are creating a new intelligence hub, to enable enforcement to be targeted at certain areas or sectors and to ensure our enforcement strategy is evidence-based, and a new regime of labour market enforcement undertakings and orders, backed up by a criminal offence and custodial sentence, to allow us to tackle repeat labour market offenders and rogue businesses. We are also, as I mentioned earlier, reforming the Gangmasters Licensing Authority into the Gangmasters and Labour Abuse Authority, which will have the ability to tackle labour exploitation.
A number of noble Lords mentioned the ONS Labour Force Survey, which estimates that 801,000 people report a zero-hours contract as their primary job. A separate ONS labour survey estimates that there were 1.7 million individual zero-hours contracts in November 2015. What this shows is what was said by a number of noble Lords—we need to look further into these figures being produced, as there seems to be a gap and look at whether people are individually taking a number of zero-hours contract jobs. I concur with much of what was said on that issue.
People working on zero-hours contracts account, as I said, for about 2.5% of the workforce. The noble Lord, Lord Snape, raised the issue of people being on call at their place of work and going unpaid. Employers should comply with the national minimum wage and the national living wage; employers who do not will face the consequences of a higher penalty and will be named and shamed as part of the Government’s naming and shaming scheme. The Government are committed to increasing compliance with the national minimum wage legislation and effective enforcement of it.
The noble Baroness, Lady Warwick of Undercliffe, mentioned the increase in the number of zero-hours contracts. While the most recent ONS data show an increase in the number of people on zero-hours contracts compared with previous surveys, this does not necessarily mean that there has been a significant increase in their usage. However, if there are any more details on that issue, I will write to the noble Baroness.
All noble Lords raised the issue that working under a zero-hours contract is insecure, precarious, low-value, low-paid and part-time. The most recent figures show that full-time work makes up around 75% of the net growth in employment since 2010. The noble Lord, Lord Stoneham, and the noble Baroness, Lady Dean, said that those on zero-hours contracts did not have a right to ask for more hours. The Government have taken on board the concerns raised around this issue during debates on zero-hours contracts and have addressed it with guidance published on the GOV.UK website. Employers need to understand when it is appropriate to use a zero-hours contract and what other employment contracts are more suited to regular work.
I am getting close to the end of my speech but there are probably some issues that I have not yet—
Baroness Quin
Those of us who have taken part in the debate would be grateful if the Minister would look at all the questions raised and answer any outstanding ones by copying in all those who have spoken and giving them the information.