2014, Labour’s year of…Tackling zero hours contracts

This article was originally posted on the Fabian Society websiteearlier this month.

Better jobs and more secure work are vital to tackling the cost of living crisis facing families across Britain. In our lives work gives us purpose and a sense of worth, and most importantly helps us pay the bills that fall through the letterbox every month.  Employees are the most important part of any business and decent pay is critical to delivering a healthy economy.

However, it should not be the case that any job will do.  We must strive for an economy that benefits everyone rather than the drive from this government to create a low wage, low skilled, low productivity workforce.  Job security and decent pay is good for business but bad business practices and poor pay must be challenged.

Recent falls in unemployment are welcome but this masks an underlying problem of underemployment where there are record numbers of people stuck on part-time hours when many of them want to be in full-time.  Also, increasingly, it involves people being exploited with the most insecure form of employment, the notorious zero-hours contract.  These contracts epitomise the rising insecurity at work.

The number of people feeling insecure at work has almost doubled in the past three years, from 6.5 million to 12 million.  This shouldn’t surprise.  This government’s policy approach to rights at work – castigated as a “Rogue’s Charter” – has fomented employee unease and uncertainty.  Whilst the UK requires a flexible labour market we must restate that we already had the third most liberal employment regime in the OECD before the current governments changes.  Flexibility has always been a cornerstone of the UK labour market but flexibility should not be an excuse for exploitation.

The Labour movement know that the economy fulfils its potential with happy, healthy, employees who arrive at work every day and are made to feel like they have a stake in the business, rather than being treated like cogs in a wheel, make for more productive employees.

I used to run my own businesses.  I know that staff perform best when you give them confidence and stability through clear working hours, responsibilities and proper pay.  From the restaurant where staff input ideas from the menu design to the wine list, take ownership of special occasions and events, and critically, shared in the profitability of the business.  Staff became loyal, loyalty was rewarded, efficiency and profitability increased.

This government promotes the opposite, and feed an insecurity that causes great instability in peoples’ lives.  They are already earning £1,600 less a year on average than they were in 2010, working just as hard but for less.  Yet the government would have you think that the overdue growth in our economy means we are back on track. Economic growth must go hand-in-hand with rising living standards.  The challenge that will fall upon the next Labour government will be to permanently restore the link between growth and living standards for all of Britain’s working people.  Because frankly, this government can’t do it.

So where do we start to restore that link?

Security at work should be a priority.  Firstly, we will ban the exploitative use of zero-hours contracts by stopping employers from insisting that those on zero-hours contracts are available for work even when there is no guarantee of any work.  We would also stop zero-hours contracts that require workers to work exclusively for one employer and ensure that employees who want guaranteed hours can ask for a full time contract.  This would be underpinned with a code of practice.

There are instances where zero-hours contracts can work for employees and employers who want flexibility but, while they were once a marginal and niche element of the labour market, this government have made them a norm in parts of our economy.

Secondly, growth in our economy should be matched by a growth in wages.  Take the national minimum wage.  The Tories now claim to be supporters of it, having initially prophesised that it would cost millions of jobs – it didn’t do anything of the sort.  Low pay has got worse under the Tories with average wages have fallen in 40 out of 41 months since David Cameron took office and the value of the national minimum wage has declined by 5 per cent under his watch.

It will take a Labour government to take the next step and strengthen the minimum wage, in areas of enforcement and punishment.  The minimum wage needs to rise faster than it has in the recent past in order to catch up with where it was in 2010. If the minimum wage had increased in line with inflation over this period low paid workers would be earning £20 a week more.

And where have this government been in the living wage?  It’s been too busy giving tax cuts to millionaires to notice.  A living wage would give real security at work and government can take steps to incentivise business to take it up.  As Ed Miliband has set out, Labour will offer ‘make work pay’ contracts to employers all over Britain.  So firms that sign up to paying their employees the living wage,  in the first year of the next parliament will be offered a 12 month tax rebate of up to £1,000 for each individual worker that receives a pay rise.  Businesses that reward employees will win, sharing the benefits with Government.

Come May 2015, I believe people across Britain will make their voice heard that they won’t stand for insecure employment and poor pay and it is only a Labour government that can deliver fairness at work and better living standards for all.

 

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