rThe UK employment rate may be rising, although it has not quite reached pre-pandemic levels, but official figures masks a disturbing reality. According to a study by the Resolution Foundation, young people aged 18-34 whose work was interrupted between February 2020 and summer 2021  ("returners") were more likely to in insecure work, compared to those who were able to continue working during this time.

In a survey of 6,100 adults, it was found that 33% of young returners were in atypical work (temporary contract, zero hours contract, agency work or variable hours contracts), compared to 12% of those who stayed in work during the pandemic.

On top of that, it was also found that 25% of returners were looking for a new job and 9% were looking for an additional job, compared to 19% and 5% of those who could stay in work during the pandemic, suggesting that those who have returned to work are slight less satisfied with their current working conditions. 

The pandemic also had an impact on how young people felt about working in their sector. A third of young people working in highly affected sectors, such as hospitality, before the pandemic, had changed sectors between February 2020 and October 2021.  Only 14 of those working sectors that were less affected by the pandemic decided to switch. Of those who moved out of a highly-affected sector, 30% moved to a different sector and just 3% moved to highly-affected sector. 

It's incredibly worrying that a lot of young people who were unable to work during the pandemic, through no fault of their own, are finding it difficult to find secure work. This will have had an impact on their earnings and could worsen both the cost of living crisis and their ability to plan for the future. It is also clear, from the study, that young people do not want to have insecure work and taking the opportunity to switch to sectors that can offer more secure work. 

Almost half of workers on zero hours contracts could end up losing their jobs by 2040 as a result of automation, according to research by Forrester.

According to the the consultancy's Future of Jobs forecast, insecure workers, including those on zero hours contracts in the UK, will be among those most affected by the loss of the 34% of jobs in France, Germany, Italy, Spain and the UK.

The sectors that will be most affected by automation are expected to be the ​wholesale, retail, transport, accommodation, food services, and leisure and hospitality. According to the Office for National Statistice, these sectors currently account for just under 50% of workers on zero hours contracts (495,000).

The various restrictions imposed by the Goverment during the pandemic, whilst arguably essential, have also had an adverse impact on many people.

One group that hase been affected by lockdown and social distancing measures have been workers on zero hours contracts, particularly those within the hospitality, retail and leisure sectors. With non-essential businesses being required to close during lockdown - or later open up under certain conditions - many zero hours workers saw their work, and hence pay, disappear or significantly reduced

According to research by the TUC, 40% of workers in insecure roles saw their living conditions worsen during the pandemic, compared to 27% of those in secure roles. Nearly three quarters of workers on zero hours contracts reported losing out on shifts or hours. 

There are many criticisms that have been levelled at the Government over their handling of the pandemic. But one good thing that was done was the launch of the Coronavirus Job Retention Scheme (CJRS), which enabled employers who had to close to continue to pay staff who were unable to work. The scheme was arguably a lifesaver for many workers on zero hours contracts. It is unfortunate, however, that not all employers chose to make use of the scheme to pay their zero hours workers.

The CJRS certainly seems like a model that could used for future pandemics, if not a permanent support mechanism for precarious workers.

Yet when Boris Johnson announced its Plan B in response to the spread of the Omicron variant, including asking people to work from home as much as possible, one knock-on effect was that people started to impose on themselves a "voluntary lockdown". This resulted in hospitality businesses and retailers seeing a fall in business and cancellations in the run-up to Christmas - usually one of the busiest times of the year - and hence a fall in the amount of work for staff on zero hours contracts. Without a furlough scheme, many of these employers would have been unable to support zero hours staff who may have been working for them for some time.

It didn't help that the Government did not exactly challenge rumours that an official lockdown would be announced straight after Christmas - a lockdown that, in the end, did not happen.

Charlotte Gill, Deputy Edity of Conservative Home, put it succintly: "Whatever the case, the combination of lockdowns, and de facto lockdowns, with zero-hour contracts, is not a successful one, and the Government should show more awareness of this – especially one that wants to “level up” the country. People can feel “left behind” when the working-from-home elite shows no consideration for industries that don’t have this advantage. It is yet another example of how the pandemic has affected members of the public differently. Too often our political class, and the media, forgets that every cry for more restrictions leaves a huge dent in someone else’s trade. 

​"Given that it is January – when activity, particularly in hospitality, tends to be at a low point – one imagines that insecure employment may be even more of an issue than it was when Johnson spoke of Plan B. Add to this the cost of living crisis, and we are no way (economically) out of the woods yet. Either way, the Government must not lose sight of this part of the electorate."

Zero hours contracts have been around for almost 200 years. Its proponets argue that it is a necessary working arrangement that helps employers adjust staffing levels to fluctuating or hard to predict demand. It would be reasonable to describe them as a necessary part of the economy. In recent years though they have come to greater prominence in the news as their inherently exploitative nature was exposed to the public. Necessary changes did follow - it is now illegal for an employer of zero hours staff to prevent those staff taking additional work elsewhere. 

Minimum hours contracts are a very slight improvement on zero hours contracts, but only barely. Under such contracts, the worker is guaranteed a minimum number of hours each week, but this is often something paltry like four hours a week. Hardly enough to live on and there is still the uncertainty as to how much work one will have. In a sense, a zero hours contract is a special form of minimum hours contract, the minimum being zero.

When you don't know how much work you will have one week to the next, it is difficult to budget accordingly and plan your finances. Statutory sick pay (SSP) only kicks in if you earn on average at least £120 a week, so there is greater pressure on zero hours workers to go into work while sick. And, even if a zero hours worker is eligible for SSP, it is only around £95 a week - they are likely to earn more by going into work; when work cannot be guaranteed, every penny matters. Indeed, in a study for the Trade Union Congress, it was found that the insecure work was major contributor in the spread of Covid 19.

Of course, all workers on zero hours contracts are entitled to the National Minimum Wage (NMA), currently set at £8.91 per hour for those aged 23 and over and due to go up to £9.50 per hour from April 2022. But you don’t need to be an economist to see that a minimum hourly wage does not really solve the problem of not knowing how much work you will have from week to week, especially if some weeks are lower than usual.

According to the latest figures from the Office for National Statistics, almost a quarter of all workers on zero hours contracts said they were underemployed, compared to 6.5% of people who were not on zero hours contracts. There is always the benefits system to top up any shortfall of pay but it is simply not designed to for a working pattern where hours can vary from a little as 3 hours to as many as 48 hours from week to week. This further compounds the income insecurity these workers experience, making budgeting for day to day needs almost impossible.

It's not enough to simply leave it up to zero hours workers to "get more hours" or a second job. If an employee could dictate how many hours they worked each week, they wouldn’t need government support. The exploitative nature of these contracts is that all the control lies with the employer, leaving the employee feeling like Oliver Twist, asking for more please. A second job may be feasible in some cases. But the nature of zero hours contracts is that shifts can be cancelled without notice and without pay. How can someone possibly commit to additional hours with a second employer if they don’t know what days or hours they will work for their first employer? On top of that, there may be difficulties in arranging care for children or elderly or ill relatives.

There is a better way, however. It isn’t perfect, but it may address some of the exploitative aspects of zero hours contracts, while keeping the flexibility employers need to keep their businesses viable, especially in these uncertain times.

I am calling for an Annualised Minimum Wage. This would be a guaranteed earned income over the course of the year and in conjunction with the prevailing minimum hourly wage. Initially, I’d suggest it be set at the level of the income tax threshold, currently £12,570, but I’m sure clever people may suggest a different threshold in time. This would be achieved by annualising both pay and hours. For example, presuming the worker is paid weekly, they would receive £241.73 per week gross, regardless of hours worked that week. (If they are usually paid monthly, that would amount to £1,047.50 a month.) The employer would have the choice to provide no work at all, or the legal maximum of 48 hrs (subject to opt out). Over the course of the year it would be the employer’s responsibility to ensure they provided sufficient work to match the income being provided. As an extreme example, this would mean an employer could stand their staff down for 22 weeks a year when work is quiet, then bring them back for a 48 hr week for the remaining 30 weeks. I would envisage that for most businesses a happy medium could be found between this example and simply putting the employee on a 27 hr week. It would seem logical to me that this model learn from the road haulage industry, where drivers’ hours are capped both on a weekly basis, but also as an average, with this average being calculated over either a 17 or 26 week period. This would offer the employer some quite reasonable protection from unscrupulous employees.

Agreement would need to be reached between the employee or worker, or employee representatives, and employers about how variable hours could be. The example I gave is quite extreme, but is perfectly feasible in the right industry. Furthermore, if agreement could be reached about what shifts could be asked of an employee and with what notice, this would genuinely open the prospect of a second job for those employees who would know what days and times they could commit to.

This arrangement offers many potential benefits to both employer and employee. As both pay and hours are annualised, it allows for a couple of days to be taken as “sick” or personal days, with no fluctuation in pay, as long as the hours are paid back within the terms of the contract. The employer is no longer paying an employee not to work and the employee doesn’t have to worry about whether they can afford to take a day or two off to get over a cold. Workers with young families may be able to agree to work the majority of their hours during term time, taking school holidays off, again with no loss of weekly pay. This could bring thousands of workers back into the workforce potentially. At a time when we need a larger pool of potential job candidates, this is one means of achieving this. Possibly the greatest benefit might be that it could actually make the Universal Credit system work by stabilising the pay of workers

Employers would benefit from greater employee loyalty, less staff turnover, as well as greater productivity because staff are feeling healthier and not having to worry, as much, about meeting their daily needs. For early adopters of such a scheme I imagine their vacancies would be highly prized. Some employers may argue they simply couldn’t afford an annualised minimum wage. I would counter, that at this threshold, on average, it almost matches what they’re paying anyway. Yes, overall, it is likely to cost the employer a little more in cash terms, but one has to put the various benefits against this cash outlay.

For society, the potential benefits are significant. An employee on £12,570 will generate almost £850 in National Insurance (NI) contributions (from April 2022). There are an estimated one million workers on zero hours contracts, that’s almost £1 billion for HMRC. Research suggests that almost four million employees don’t pay tax, plus 1.2 million self employed, so if they could all be brought into the tax threshold by a scheme such as this, it could raise a further £4.5bn annually from NI contributions alone.

Furthermore, improved employee welfare makes for better productivity, a conundrum governments of all colours have struggled with over the years. A stable income means less government support is needed to prop up low paid employment and fewer Department for Work and Pensions staff needed to calculate payments for incomes that previously fluctuated wildly. Giving all workers access to workplace auto enrolment pensions means they can do what they were designed to do and help employees provide for their old age, again reducing the burden of future tax payers. This is, potentially a win, win, win scenario.

This proposal isn’t perfect, it isn’t fully formed and the devil is always in the detail, but it takes from existing working models. Salaried staff are already paid an annualised income regardless of hours worked in any given week. Some employers are already offering annualised hours to hourly paid staff, so the leap to annualised pay is a small one

As you can see, I’m not calling for zero or minimum hours contracts to be scrapped, rather a slightly Frankenstein merging of the two, offering both employer and employee the best aspects of the respective contracts and society a potential solution to the zero hours enigma that has dogged them for so long.

The industry sectors with some of the worst compliance with National Minimum Wage (NMW) legislation are also the ones with relatively high numbers of staff on zero hours contracts.

The Department for Business, Energy and Industrial Strategy (BEIS) have released data on 208 employers who failed to comply with the law and pay staff the National Minimum Wage (NMW).

According to the data, of the 208 employers, 45 were in the hospitality sector, 36 were in the retail sector and 14 were in the domicilary care and childcare sector. 

According to recent data from the Office for National Statistics, there are almost 1 million workers on zero hours contracts and 24.9% are in the accommodation and food sector, 11.6% are in the wholesale and retail sector and 19.4% are in health and social care.

The various employers named and shamed by BEIS range from multinational companies to sole traders and they breached national minimum wage legislation in a number of ways. ​Whilst not all breaches were intentional, the main reasons for employers' non-compliance were the practice of making workers pay for the cost of uniforms or complying with a dress code (37%) and unpaid working time such as mandatory training, trial shifts or travel time (29%). For workers earning the NMW, these practices effectively takes their pay below that level.

It was also found that 16% of the 209 employers did not pay the correct minimum wage rate to apprentices and 11% failed to increase NMW pay whenever the rate rose or paid the wrong rate. 

Whilst zero hours workers are also entitled to receive at least the NMW, the types of deductions or errors that are made to reduce the NMW rate can exarcebate the financial insecurity faced by those who cannot rely on guaranteed hours of work. 

Kristian Fuzi, a PhD student at the University of Mancester, is interested in speaking to workers on zero hours contracts as part of study into how their working arrangement has affected their finances during the pandemic.

He is looking to hear from zero hours workers in all sectors, particularly individuals aged 30-50 who are earning roughly between £12,000 and £20,000 per year and living in the North West of England. 

The focus of his research is in understanding how people in various forms of previous work, including zero hours contract and self-employment, manage their financial situation witout employer benefits, such as full-time hours, sick pay, maternity pay and pensions. Kristian believes that precarious work creates an higher level of personal or financial risk, compared to those in permanent employment. 

The Chartered Institute for Personnel and Development (CIPD) has released their own data analysis, from which it has concluded that employment in general is becoming more secure, with only "pockets of insecurity".

​According to the CIPD's analysis, the proportion of people working on variable hours, working part-time involuntarily or want to work more hours has fallen since 2010.

However, according to the latest figures from the Office for National Statistics (ONS), the proportion of people in employment who are zero hours contracts has actually increased from 0.6% for the period October to December 2010 to 3.1% for the period July to September 2021. Whilst we accept that this is statistically a small proportion of people in employment, it still amounts to almost one million people on zero hours contracts.  

Whilst the  majority of people on zero hours contracts have told the ONS that they do not want to do more hours, there are still almost a quarter (23%) who say they are underemployed and either want an extra job (3.1%), another job with longer hours (5.2%) or more hours in their current job (15.1%).  

We are not opposed to zero hours contracts, where people have the choice between that and a different type of working arrangement. However, just because the majority of zero hours workers say they do not want more hours, that does not mean that employers are using zero hours contracts appropriately. According to the ONS, more than a third (33.7%) of people on zero hours contracts say that they work full-time hours and, for those in one job on a zero hours contract, the average number of hours per week is 25.5.   

The whole argument put forward in favour of zero hours contracts is that it allows employers to match staffing levels to fluctuating business demand. If there is enough work for someone to be working on a full-time basis or for a weekly average number of hours that amounts to part-time work, we would question why that person needs to be on a zero hours contract. There is clearly enough work to warrant giving them an a permanent or fixed term employment contract. Our view is that employers should regularly monitor hours actually worked and, where a regular working pattern develops, they should offer a fixed or guaranteed hours arrangement.

The CIPD also found that 64.5% of people on zero hours contracts are actually in permanent employment, so they should have full employment rights, subject to continuity of service. In theory, that is correct. The problem is that continuity of service depends on there being no periods of non-work of at least a week. So, it is quite possible for someone to be employed with an employer for two years or more, but the number of weeks they have actually worked - apart from annual leave and sick leave - does not amount to two years.  

The use of zero hours contracts may be relativey low, compared to more secure working arrangements, but the "pockets of insecurity" identified by the CIPD are still quite deep.

There are now more people on zero hours contracts in the United Kingdom than there were before the beginning of the Covid 19 pandemic in March 2020, according to the Office for National Statistics (ONS)

In the latest Labour Force Survey, 996,000 people told the ONS that they are on zero hours contracts during the period July to Septemer 2021, compared to 985,000 people for the period January to March 2020.

It's not quite as high as the peak during the first lockdown, when the number of zero hours contracts broke through the one million mark. But, with employment going up, despite the ending of the furlough scheme, it quite likely to reach that level by next year.

The data indicates that many people are not happy to be on zero hours contracts, with 14% looking for either a new job or extra work, compared to 4.3% of those who are not on zero hours contracts. A big factor of this dissatisfaction has to be the lack of work - and thus lack of income - available on a zero hours contract, with almost a quarter (23.4%) saying they are underemployed, compared to 6.5% of people who are not on zero hours contracts. 

​Source: Office for National Statistics

Over a third (36.4%) of people on zero hours contracts have been with their employer for just 12 months of less, with 25.9% staying with their employer for two to five years, 16.4% staying between 1 and 2 years and 21%  staying for longer than five years. 

People on zero hours contracts are, statistically,  more likely to be foreign origin. When looking at nationality, 3.8% of non-UK nationals are employed on a zero hours contract, compared to 3% of UK nationals. When looking at country of birth, 4% of  those born outside the UK are employed on zero hours contracts, compared to 2.8% of those born in the UK.

The maximum pay increase that the average worker on zero hours contract, earning the National Minimum Wage (NMW), is likely to see from April 2022 is just £20 a week, according to an analysis of government data by Zero Hours Justice.

Rishi Sunak, the Chancellor to the Exchequer, announced in the Budget that the National Living Wage (the top rate for the NMW for those aged 23 and over) would be increased by 6.6% from £8.91 to £9.50. Much has been made of the fact that this amounts to an increase of just 60p an hour.  Whilst any pay rise is good, this is quite pitiful for anyone earning the NMW.

The situation is recognised as been even worse for those on zero hours contracts, who do not have guaranteed hours - or even guaranteed work - each week and so whose income will vary from week to week.

According to the latest data from the the Office for National Statistics, a zero hours contract worker, doing only job, works an average for 25.5 hours. The data also shows that a zero hours contract worker doing two jobs works an average of 20.2 hours.

This means that, following the 6.6% increase in the National Living Wage, a zero hours contract worker, aged 23 and over, doing one job and earning the minimum wage, could see an average pay increase of just £15.05 per week.

If the worker is aged 23 and over and doing two jobs, both on zero hours contracts and the minimum wage, they are likely to see an average pay increase of just £11.92 a week. 

The biggest benefit will be seen zero hours contract workers aged 21-22, with an average weekly pay increase of just £20.91

If a zero hours worker has been topping up their low wages with Universal Credit, then the rise in the minimum wage is, in most case, not even enough to offset the ending of the £20 uplift. The increase does not kick in until April 2022 so, with the recent rise in National Insurance and with inflation going as high as 4% by the end of the year, workers would arguably be worse off in the mean time and any forthcoming pay rise could easily be swallowed up.  

But, of course, all this depends on whether a worker on a zero hours contracts is able to be offered around 25 hours a week on a regular basis. The reality is, whatever their working pattern, a zero hours worker cannot be certain of how much work they will have from week to week. And, despite government assurances to contrary, we cannot be certain that there won't be another lockdown as the NHS comes under pressure - thereby leading to the loss of even regular work. 

What would help zero hours workers even more would be a legal or contractual right to a fixed hours contract and the obligation on employers to regularly review hours worked and more workers to fixed hours contracts. At the same time, with the unpredictability of hours, it would we believe that employers should provide at least two weeks' notice of shifts and still pay if shifts are cancelled at less than two weeks notice. 

Almost 25% of all jobs in adult social care (380,000) employed on zero hours contracts, with care workers making up the highest proportion (35%).

Those in management positions made up just 6% of staff on zero hours contracts, indicating that it is the junior staff who are more likely to be disadvantaged by job insecurity.

Across all job roles, most zero hours contracts are concentrated in domiciliary care, followed by community care. Amongst care workers, 55% of those on zero hours contracts are in domicilary care, compared to 26% in community care.