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Are zero hour contracts behind record employment levels?

16/09/2018Charles Törnros

The UK employment rate is at its healthiest since records began, hitting a record high of 75.7 percent, according to data from the Office of National Statistics. However, we all know what Benjamin Disraeli thought about statistics, so it is worth taking a little look behind them to see whether this number is more a reflection of the changes in 21st working practices than being due to us going through a golden age in the UK job market.

An explosion in zero hour contracts

 The number of zero hour contracts has gone up by more than 250 percent over the past six years. In 2012, there were 250,000 people working zero hour contracts, and today, that figure stands at 900,000. This, in itself, represents some 2.8 percent of the UK’s workforce.

Over the same period, the overall number of people in employment has risen from 29.7 million to 32.2 million. In other words, those zero hour contracts constitute about 27 percent of the overall employment growth. It seems that much as the government might be eager to sing the praises of the job market, their enthusiasm needs to be viewed in context.

The growing gig economy and the rise of entrepreneurship

 Another factor to keep in mind is the record number of new business startups over the past five years, along with more people choosing to go it alone as sole traders and freelancers. This latter sector, often referred to as the gig economy, has been a significant contributor to employment growth.

The latest figures suggest that around 2.8 million people work in this way. Economists define the gig economy as the “exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis.” According to this definition, then, this is a sector that encompasses most freelancers, part-time workers, contractors and, of course, those on zero hours contracts.

It is a sector that is continuing to grow at a rapid rate. In the UK job market alone, there are currently 225,000 gig vacancies being advertised, comprising 143,000 temporary contract roles, 6,800 freelance opportunities and 75,000 part-time vacancies.

The interesting point is that in the new jobs landscape, people are no longer looking at employers, but at apps and platforms. Upwork, Fiverr, Uber, Deliveroo and PeoplePerHour are currently the top five websites offering gig employment.

The new employment dynamic

 The fact that there are more people in employment than there have ever been before is something to be celebrated, but it needs to be viewed in the context of the new, flexible jobs market of the digital era. Greater flexibility is good news for those who need it, for example working parents, students and the elderly. However, at the same time, the government needs to monitor this new dynamic and take steps to ensure that this flexibility does not come at too great a cost in terms of financial security.

 

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