There is an “indisputable case” for introducing measures to provide greater certainty and security for people on zero-hours contracts, but it may be too early to move towards an outright ban, according to a report by the Resolution Foundation.
The independent thinktank’s review of the use of zero-hours contracts across all sectors identified concerns around the impact on staff turnover, morale and the quality of services.
But it said a minority of employers and some groups of workers valued the flexibility of such arrangements, meaning it was difficult to argue in favour of an outright ban.
It is estimated that 150,000 home care workers are currently employed on zero-hours contracts, under which employees are not guaranteed a set number of working hours.
The Resolution Foundation said high turnover and poor quality resulting from the use of such contracts was “a particular cause for concern in sectors such a social care, where professional standards are essential”.
Business secretary Vince Cable’s announced earlier this month that he is undertaking a “fact-finding” review of zero-hours contracts. The Resolution Foundation said it would set out its recommendations in the coming months.
The use of zero-hours contracts has risen sharply in recent years. According to the Office for National Statistics, the number of people employed on this basis rose from 134,000 in 2006 to 208,000 in 2012.
The Resolution Foundation’s report said this was likely to be a “substantial underestimate” of the true scale of the use of zero-hours contracts across the UK, possibly due to underreporting.
Its authors noted that many private sector employers are becoming more reliant on zero-hours contracts to manage their businesses through the difficult economic period, while public sector employers also search for ways to reduce costs.
“This is perhaps most marked in the social care sector where reductions in formula grant from central government have seen local authorities drive down unit rates for care, at the same time as they have been shifting away from purchasing guaranteed volumes to spot purchasing through framework contracts.
“In removing guaranteed block volumes of paid care to providers, framework agreements incentivise the use of zero-hours contracts among providers as a means of managing risk. As a result there is strong evidence to suggest that the use of such agreements is an important factor in ensuring that 56% of all domiciliary care workers are now employed on zero-hours contracts.”
Those employed on zero-hours contacts receive lower gross weekly pay (an average of £236 per week) than those who are not (£482 per week), the report found. It described life for many employees on these contracts as one of “almost permanent uncertainty”.
However, it also noted that the contracts may suit some groups of workers, such as older workers who wish to reduce their hours as they progress towards retirement.
“It may be too early to move toward an outright ban of zero-hours contracts given that a minority value the flexibility and choice they provide,” the authors concluded.
“But there is an indisputable case for preventing the unacceptable aspects of their use and for introducing measures that provide greater certainty and security to those working under them.”
Crisis summit looks at how to improve the home care system for staff and service users