Zero-hours Contracts

Debate between Charlie Elphicke and Julie Elliott

Wednesday 16th October 2013 Commons Chamber

[Julie Elliott]

I agree. In fact, those people face difficulties in getting not just a mortgage, but a rental agreement, because they are not classified as an employee.

We need to take a more holistic approach to reforming the labour market. We need to understand that zero-hours contracts are just one of many ways that people in this country are having their rights eroded and their living standards squeezed. Energy costs, food costs, rail fares and private rental costs are hitting people’s pockets on the one hand, and unfair working practices are making them feel insecure for their incomes on the other.

The Labour party, like everyone in Britain, wants to see economic growth, but there is more than a lingering sense that sustained economic growth, when it comes, will not halt this cost of living crisis, because rail fares will still go up, the price of food will still soar and the cost of rent will continue to go through the roof. The hundreds of thousands of Britons who are on zero-hour contracts, temporary contracts or the minimum wage will not see the fruits of that growth.

[Charlie Elphicke]

Will the hon. Lady give way?

[Julie Elliott]

No. I am going to carry on so that others have a chance to speak.

Many lost their jobs or were forced to accept stagnant wages during the downturn, but they are seeing none of the proceeds of growth during the upturn. Those in work are earning, on average, £1,500 a year less than they were in 2010, while others have no choice but to put up with zero-hours contracts. Meanwhile, those out of work have been left on the failing Work programme.

The Institute for Fiscal Studies has calculated that for every pound spent paying the living wage, the Treasury saves 50p through not needing to pay tax credits and benefits. The Resolution Foundation has calculated that if everyone receiving the minimum wage received the living wage, there would be a £2.2 billion net saving, comprised of higher income tax and national insurance receipts. There is growing evidence that living wages boost productivity, motivation and performance and reduce the leaver and absentee rates, thereby offsetting the cost of the higher wage. The people who reject this analysis are the same people who said that the national minimum wage would lead to vastly higher levels of unemployment, but they were wrong—it simply led to higher wages.

I have welcomed the Government’s review of zero-hours contracts, but I think it is wholly insufficient. Indeed, parliamentary questions tabled by my hon. Friend the Member for Streatham (Mr Umunna) have found out that the Government have allocated all of three officials to the consultation. They are holding informal discussions with stakeholders without any formal calls for evidence or consultation. The irony that these three officials are looking into zero-hours contracts on a part-time basis should be lost on no one.

Reforming zero-hours contracts and increasing the number of people on the living wage is not just the right thing to do for hard-working people; it will also be good for the economy. Instead of shares for rights, we need to improve working conditions and boost wages. It is an injustice too far to expect people to live a life of permanent uncertainty, and I urge the Government to take a small step that will make a big difference.