UK workers would take pay cut to avoid fixed hours 

Zero-hour job adverts attract around 20% more applicants than similar fixed our roles at the same employer, new government published research shows. The research forms part of an ongoing consultation on zero-hour roles in the UK which closes at the end of August.

The research shows that jobseekers applying for service sector roles would actually accept 4% less pay for a zero-hours contract rather than a fixed-hours one, equivalent to 44p an hour at the average wage.

Notably, only 15% of zero-hour workers ever apply for fixed-hour roles, despite those roles coming up more regularly. Raising fixed-hour pay by £1 an hour relative to zero-hour pay lifts the application rate by around 45%.

The data shows that male workers respond more strongly to pay differences when switching between contract types. Female workers respond less, which the paper suggests points to stronger preferences for non-wage features such as flexibility. Some of these estimates carry limited statistical power.

Around 12% of zero-hours workers hold a fixed-hours contract at the same time, close to Labour Force Survey estimates that about 10% of of zero-hours workers.

Increased burden on businesses

The Government’s Impact Assessment of its proposed changes to the rules around zero hours contracts shows that businesses will bear heavy costs, with the risk of pushing up unemployment and narrowing pathways into the workforce, warned the Small Business Federation.

Commenting on the Government’s new impact assessment which suggests a £3 billion cost to businesses from zero hours reforms, Tina McKenzie, interim National Chair of the Federation of Small Businesses (FSB), said the government risks the soaring unemployment if it carries on ‘the same old chaotic approach to employment reform’.

“With more than 150,000 fewer people on payrolls than when Labour came to power, small businesses have been hoping that the new Government would follow the Prime Minister’s lead and start a more positive conversation with businesses – not sneaking out a multi-billion pound cost to business without even bothering to quantify the number of people who will be left out of work claiming benefits as a result of policies that make no sense,” she said.

“The Government needs to recognise that employers having people on their books – without guaranteeing a set number of hours – is part and parcel of how many people enter work.”

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