Zero-hours contracts
Debate between Julie Elliott and Nia GriffithWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Julie Elliott (Sunderland Central) (Lab)
It is a great pleasure to serve under your chairmanship, Ms Dorries. I am grateful to have secured this debate on an issue on which I and many other hon. Members have been working for some time.
Zero-hours contracts are contracts whereby a worker is guaranteed no minimum hours and no minimum pay. In this country, we essentially have a large pool of workers, and employers have no legal obligation to pay them when they are not needed.
Zero-hours contracts have a widespread and deeply damaging effect on workers, and I call them “workers” advisedly. People employed on zero-hours contracts are treated differently to employees, and as such they are second-class staff. People employed on zero-hours contracts earn 40% less than those in fixed-hours employment. A study by the Resolution Foundation shows that, before tax, people on zero-hours contracts earn an average wage of just £9 an hour, juxtaposed with £15 an hour for people with set contract hours. Among graduates, the difference is £10 an hour versus £20 an hour. Firms that use zero-hours contracts have a higher ratio of low-paid staff than firms that do not use such contracts. Zero-hours contracts have traditionally been employed in the hospitality and leisure sectors, but they are increasingly being used in the health, social care and further education sectors.
Nia Griffith (Llanelli) (Lab)
Does my hon. Friend agree that being undervalued not only has a cost to the individual? Not having pension contributions, for example, could lead to a much higher burden on the state in the long term than if those people were properly remunerated and were joining proper pension schemes.
Julie Elliott
I totally agree with my hon. Friend. In fact, there are other areas in which having such contracts costs the state money, and I will address that later.
According to the Government’s own estimates, nearly a quarter of major British employers use zero-hours contracts. The 2011 workplace employment relations study found that the number of firms with workers on zero-hours contracts increased from 11% in 2004 to 23% in 2011. The recession and the lack of recovery are hitting Britain’s lowest paid workers hardest.
Zero-hours contracts are not new, and they were not borne out of the financial crisis or the recession. The figure of 200,000 people employed on zero-hours contracts in 2012 is almost certainly an underestimate, as many people will not realise that they are on such contracts.