Nikita Malik is Head of Work and Opportunity at the Centre for Social Justice
It was heralded as a ‘landmark moment’ for British workers’ rights. But the Government’s plans to “make work pay” published in its employment White Paper fall short of the major overhauls promised in the Labour manifesto.
Many of the 28 measures in the Bill are subject to further consultation with almost nothing expected to become law for another two years. Many promises have been left out, but will no doubt be shooed back in via government amendment.
No wonder the Federation of Small Businesses described the Bill as a “rushed job, clumsy, chaotic and poorly planned”. Indeed, perhaps its only achievement is to meet the election pledge to deliver a ‘New Deal for Working People’ within the first 100 days of a Labour government.
This may be no bad thing. Take zero-hour contracts. Despite the party having originally pledged to ban them completely, Labour sources recently amended language to state they will ban ‘exploitative’ zero-hour contracts instead, allowing employees to choose a zero-hour contract if they wish to do so. Workers on zero-hour or short-hours contracts will have to be offered a contract based on the hours worked in a twelve-week reference period, receive notice of shift patterns, and be entitled to payment for short-notice shift cancellations.
Good work matters. At the Centre for Social Justice (CSJ) it has always been at the heart of our pathways out of poverty. But are these changes needed? A new CSJ report Just a Job?, finds that zero-hour contracts (and precarious and flexible work in general) meet the needs of many employees and employers. For young people on these types of contracts – rather than banning them – there is demand for more work, a better understanding of employment rights, and guaranteed on-the-job training and progression.
Our research of over 1,000 young people between the ages of 16 and 34 with direct experience of what we call ‘precarious work’ found that they were overwhelmingly satisfied with their working conditions, with this result being consistent across the income spectrum. Most young people (54 per cent) were also happy with the level of notice they received in their shift cancellations and were confident voicing their concerns to their employers.
Instead, their main demand was for more work and therefore more income. On average 35 per cent wanted three to five more hours of work per week, and 29 percent wanted 10 or more hours per week. These young people could be classed as ‘underemployed’. The Office for National Statistics (ONS) has recently started using the Labour Force Survey to measure underemployment, but such measurements are limited around when people are available to start work.
Despite this, conservative estimates still predict underemployment in young people (16-34 years old) at 986,000 people. This age group makes up almost half (46 per cent) of all underemployed people.
These figures exclude people who want to work more hours but are unavailable to do so in the next two weeks. We have recommended underemployment figures to be published and used in key economic indicators and economic and fiscal outlooks to better understand the state of the economy. This way, targeted support can be provided to those sectors and geographical areas suffering most from underemployment issues.
Our study also found that over half a million 16-34-year-olds are on zero-hours contracts, part of more than 11 million young people in ‘precarious’ employment characterised by arrangements such as flexible hours working, annualised hours contracts, and other types of working arrangements. Young people on these types of precarious contracts comprise almost 70 per cent of the total age group of 16–34-year-olds nationally.
It is clear, therefore, that such contracts serve a purpose for young people. Especially for those from the most disadvantaged backgrounds, it can provide the first critical rungs on the employment ladder. One respondent from a charity we work with in Wales, for example, said that such a ‘micro-job’ served a purpose because “I wasn’t ready for full-time work but was keen to get some experience and grow over the summer”.
More broadly, almost two-thirds of young people wanted ‘micro jobs’ to act as a stepping stone to further their career – mentioning longer, full-time employment and career paths featuring progression and training as key reasons why they were attracted to this kind of work.
Findings from our research with young people suggest that banning zero-hour contracts is not what respondents are seeking, and that it could risk employers replacing one type of precarious contract with another. Employee rights implemented by the newly created Better Work Agency should encompass the precarity of all contracts, rather than focusing on banning zero-hour contracts. Employers should be encouraged to enhance the positive components of precarious work that young people accept and value, while seeking to remediate some of the negative aspects of precarious work illustrated in the responses and experiences of young people.
Instead of alienating employers with bans, new working rights should feature support integral to good employment (such as the supply of new uniforms, transport to work, careers advice, on-the-job training and mentoring, and guaranteed job progression). Moreover, it should be mandatory for employers to explain worker rights on their contracts to anyone under the age of 24.
There’s also no need to reinvent the wheel. Existing programs such as the Work Programme, the Work and Health Programme (WHP), and WHP Pioneer are the latest phases of the Department of Work and Pension’s Universal Support offer, targeted to offer personalised employment and upskilling for up to 15 months. As it stands, it is aimed primarily towards unemployed people not currently on any other contract, including zero-hour contracts.
We recommend that to tackle the prevalence of precarious work, universal support programmes, like the ones mentioned above, should be expanded to include referrals to young people who are underemployed or who can evidence that they are on precarious work contracts. Awareness should be increased amongst people on different types of precarious contracts to motivate and enable them to enter the newly combined Job Centre Plus and National Career Service centres, even if they already have a job.
Work coaches at the new National Jobs and Careers Service centres should also be rebranded as ‘job progression coaches’, and work with claimants or underemployed people to develop ‘Progression Plans’, setting out detailed steps to boost skills and progress. Payment by results can be used to incentivise advisers to achieve progression in jobs, rather than encourage repeat claims if jobs do not work out.
For example, progression coaches could claim a job outcome payment after a participant in the programme has been in a job for six months. After receiving a job outcome, providers can claim sustainment payments every four weeks when a participant stays at work longer. These payments can be claimed for up to one year, eighteen months, or two years, depending on how far the participant is from the labour market. These payments create strong incentives to help participants into sustained work and to continue to support people to stay in work for longer.
Banning any type of contract will not prevent bad employers from finding other ways to exploit young people. New laws must work for everyone, and our research shows that precarious work serves a purpose for many young people – as it does for many businesses. For many, especially those from the most disadvantaged backgrounds, it can provide the first critical rungs on the employment ladder.
