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McJobs and zero-hours contracts

Penny Brooks

2nd June 2017

The term 'McJobs' is not a new one - the Washington Post first used it in 1986 and the Oxford English Dictionary has a formal definition for it, as "unstimulating, low-paid jobs with few prospects, especially ones created by the expansion of the service sector". The concept has more recently been linked to zero-hours contracts, which offer no guaranteed work -in the UK the number of people working those has grown from 143,000 in 2008 to over 900,000. Over the same period, 45% of the 'new' jobs in the UK have been self-employment rather than people working in traditionally employed full-time roles. Many of those will be working in the 'gig economy' where they are often classed as self-employed even though they may be regularly working for one company. What are the advantages and disadvantages of more flexible employment?

Well, it depends. As practice for evaluation questions, you could look at this from the perspective of different stakeholders, and use the evidence given in a couple of articles written by Kamal Ahmed of the BBC - one from a week ago about a Government Review of zero-hours contracts and flexible working, and one from this week questioning whether that might result in McJobs becoming 'history'. It seems likely that the government enquiry will result in giving employees a "right to request" fixed hours which will be similar to the present right to request flexible hours - after having a child for example. 

Looking at the perspective of the employers, the CBI approves the idea of giving people the opportunity to have a written statement of their terms and conditions. Zero hours contracts allow employers to respond quickly to demand for their output, and to keep costs as low as possible. Using staff who are classified as self-employed contractors means avoiding costs of employment such as National Insurance, holiday pay and maternity leave. This means they can be more competitive and offer lower prices to customers. Also, not all flexible contracts deny workers any rights - for example, McDonalds offers its zero-hours workers rights to sick and holiday pay. On the other hand, as Kamal Ahmed says, such practices have a reputation for allowing some firms to keep people in insecure work, depress wages and deny people their full employee rights - Sports Direct and Uber have been accused of this, and may result in gaining a poor reputation both with customers, possibly resulting in a loss of sales, and with potential employees, who will lose motivation and be less productive. So whether it is a good thing for the employer may depend on the way in which they are dealing with their staff.

So, from the employees perspective, the disadvantage of zero-hours and self-employed contracting focus particularly on the uncertainty over available income. Both leave employees at the beck and call of employers, not knowing which days or hours they will be working, and with few of the legal rights and protections available to workers with contracts. If workers suffer an absence of motivation and job satisfaction as a result, that is no surprise, and that is to the disadvantage of the worker just as much as to the employers. The absence of an employment contract limits lifstyle choice; McDonalds staff told the company that they needed some form of contracted hours because they wanted to get mobile phone contracts, car loans and - as they got older - mortgages to buy houses. However, flexible working can be an advantage for some. It suits many people to have some choice over when and how much they work. McDonald's responded to its staff by offering all of its workers on zero-hours contracts the opportunity to move to fixed contracts - and only 20% of them took the opportunity. For the rest, they say that "...we have students that want flexibility when they are studying, we've also got mums and dads that want flexibility around child care and grandparents that are earning a bit of money while looking after their grandchildren and they want to be off in the school holidays."

Therefore, it must be concluded that flexible working can be an advantage to both employers and to workers, if it is not forced upon workers, is implemented in a way that allows workers some choice, and offers them at least some of the advantages available to contracted staff to compensate them for lack of full protection. To ban such contracts would actually be to remove choice from some workers, but to enforce some rights which employers have to recognise would offer protection to employees, and potentially improve motivation and productivity as well. 

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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