Earl of Courtown
Main Page: Earl of Courtown (Conservative - Excepted Hereditary)
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.
The Earl of Courtown
The noble Baroness is right. I know that there are some questions that I have not referred to. I will write to her on any issues that have not been covered in my speech and ensure that copies are sent to all other Peers who have taken part.
I want to reassure noble Lords that this Government have recognised that there has been an inappropriate use of zero-hours contracts and that is why the Government took action on exploitative zero-hours contracts. Both government and independent research found that exclusivity clauses were the key issue and were wholly unfair. That is why the Government banned the use of exclusivity clauses in zero-hours contracts in 2015 and further strengthened that ban in January this year by creating a route of redress for individuals via an employment tribunal. We have not been complacent since and continue to monitor zero-hours contracts but have so far not seen any evidence of avoidance of this ban. However, I can assure noble Lords that back in the department we will take careful note of what has been said.
When used appropriately, as by the majority of employers, zero-hours contracts play a valuable role in the labour market for those who cannot do or do not want a standard full-time job. When used appropriately, these flexible forms of employment make it easier for individuals such as mothers returning to work, and enable higher participation rates among groups that might otherwise be excluded from the labour market. Finally, we should remember that many people choose to work in this way. These contracts provide choice and the ability to combine work and other commitments.