Labour’s plan to outlaw zero-hours contracts is a ‘blunt tool’ that would be unpopular with business as well as many workers, a new study has found.
The Resolution Foundation think-tank said three-quarters of employers use ‘flexible’ contracts – including zero-hours as well as variable-hours and temporary staff – to help manage ups and downs in customer demand.
These can help keep costs down, firms argue, reducing prices for consumers.
And such contracts may also be popular among some workers, with a third of employers say that their staff prefer this type of arrangement.
But they can also result in lower wages and smaller pensions as well as bringing ‘insecurity and volatility’, the report found.
Labour’s plan to outlaw zero-hours contracts is a ‘blunt tool’ that would be unpopular with business as well as many workers, a new study has found (File Image)
The think-tank backed the idea of some form of ‘new rights to give workers a meaningful choice over their working arrangements’ but warned against outlawing such contracts entirely.
‘A blunt tool like outright bans would prove unpopular for many firms, and to a substantial subset of workers too, who continue to benefit from these contract types,’ it said.
It is the latest evidence that many businesses are uncomfortable with the plan to reform workers’ rights, fronted by Labour’s deputy leader Angela Rayner.
The reforms would see employees given rights from day one in new jobs as well as a crackdown on zero hours contracts.
Labour’s policies would also see it abolish all trade union reforms enacted since 2010, when it was last in power, and scrap Tory moves to restrict workers from going on strike.
M&S chairman Archie Norman is among those to have voiced concern while ad industry mogul Sir Martin Sorrell has described the plan as ‘Labour’s Achilles heel’.
Such contracts can also result in lower wages and smaller pensions as well as bringing ‘insecurity and volatility’, the report found
The Resolution Foundation study used a survey of 750 employers.
It found that around 3.8 million workers are on some form of flexible contract. And three quarters of employers – or around 1.7 million across the UK – use them.
More than half of firms reported using them for at least a quarter of their workforce, with the transport, retail and hospitality sectors among the sectors where they are most popular.
The report found that the main reason cited by firms using flexible contracts was to manage seasonal changes in how busy they are and other uneven demand – something that was cited by 51 per cent of companies.
That ‘reduces firms costs and can reduce prices for consumers’, it said.
Hannah Slaughter, senior economist at the Resolution Foundation, said: ‘Three-quarters of UK firms use flexible employment contracts – such as variable and zero-hours contracts – for a wide range of reasons, including because firms say that workers prefer them.
‘New workers’ rights, rather than outright bans, could help to stem over-reliance on flexible contracts – and the problems they can create for workers, while maintaining flexibility for workers and firms who value it.’