by Professor Andy Furlong, University of Glasgow.
In the last few weeks there has been a lot of press coverage of young people and work. There has been a shift of emphasis from discussions of NEET and youth unemployment to a focus on working conditions: in particular, the insecurity created through the use of zero hours contracts, under which an employee agrees to to be available for work as required while the employer offers no guarantee of the number of hours they will offer (which may be zero).
Whereas less than 200,000 people were once thought to hold zero hours contracts, estimates now exceed a million. Firms like Sports Direct and McDonalds, both large employers of young people, retain more than 9 in 10 on zero hours contracts. Young people who work under these conditions are frequently unable to plan their lives from one week to the next and, with unpredictable wages, face the pressure of constant financial insecurity. To make matters worse, it is not uncommon for employers to use contracts that prevent their zero hours workers from working additional hours inother firms (even when they themselves are not providing any work).
Clearly firms benefit hugely from these arrangements, whereas under current conditions of high unemployment employees are at their mercy. One employer, writing in the Huffington Post, argued that zero hours contracts were ‘creating a positive tension in the workforce’. She went on to add that ‘zero hours contracts create an innate sense of competition that makes people hungry for work’ and that ‘zero hours contracts reduces employment provisions; notice periods and unfair dismissal can be avoided. Wages are driven down, pension and sickness benefits are limited’.
The Business Secretary expressed concern that there was ‘some exploitation’, but added that ‘it can work for the worker as well as the employer’, while the Unions would like to zero hours contracts outlawed.
Discussion around the issue of zero hours contracts and other forms of non-standard employment often makes reference to the fragile state of the economy, suggesting that employers need flexibility if they are to be able to help create growth. There has been a tendency to present the issue as temporary and as linked to the recession. In reality, the increase in precarious forms of work is a trend that long-predated the recession: it represents a new reality rather than a temporary episode.
McDonalds have been using zero hours contracts since the 1970s and we can trace their growth back to well before the current recession. Recent work by the economists David Bell and David Blanchflower (2011) has shown that underemployment is rife – far more people are underemployed than unemployed (they estimate that while the unemployment rate among 16-24 year-olds is 21%, a further 30% would like to work more hours than they actually work).
The fear is that now employers have realised how non-standard employment contracts increase their flexibility and profitability, they are not going to give them up. Why would they unless forced to do so through legislation?
Under such conditions the outlook for young people (as young people today and as adults in the future) is that the future looks bleak. Life beyond the recession will not be characterised by a golden age of new prosperity, but by insecurity and poverty. One only has to look at the state of the Japanese labour market two decades on from its last major recession: in contemporary Japan unemployment is relatively low, but around one in two young people participate in casual and insecure forms of employment.
References and further readings:
BBC News, ‘Cable warns of exploitation of zero-hour contracts’. 5 August 2013.
Bell, D. N. and Blanchflower, D. G. (2013) How to measure underemployment, Working paper 13-7, Pearson Institute for International Economics, Washington.
Furlong, A. Inui, A. Nishimuran, T. and ,Kojima Y. (2012) ‘Accounting for the early labour market destinations of 19/20 year-olds in England and Wales and Japan’, Journal of Youth Studies, 15 (1) pp.1-15.
Furlong A. (2008) ‘The Japanese hikikomori phenomenon: acute social withdrawal among young people’, The Sociological Review, 56 (2).
The Guardian. Neville, S. ‘Pressure mounts on Sports Direct over zero-hours contracts’. 29 July 2013.
The Guardian. Neville, S. ‘McDonald’s ties nine out of 10 workers to zero-hours contracts’. 5 August 2013.
The Huffington Post, Katie Hopkins, ‘Zero Hours Contract’. 5 August 2013.
Image attribution: Leo Reynolds http://www.flickr.com/photos/31474974@N07/4466211369/