Small Talk: Zero-hours contracts? Key for growth


Depending on whose figures you use, small and medium-sized enterprises account for between 60 and 70 per cent of jobs in the UK economy, and are behind as much as two-thirds of new job creation.

It’s not rocket science, therefore, to work out that any economic policy that makes it more difficult for SMEs to take on new staff is going to have a detrimental effect on unemployment. In an economy such as ours, with high levels of joblessness, particularly among young people, this is the last thing we need.

For this reason, we should be nervous about the growing clamour to ban zero-hours contracts. For while exploitative employers should be ashamed of themselves, such contracts can be a valuable tool for SMEs as they pursue growth – and the employment opportunities that this growth will create.

As they expand, many small businesses are confronted by a catch-22 dilemma. They don’t have the staff they need to take on new business, but they can’t afford to take on additional staff until that business is secured. They don’t have the financial headroom to risk having a labour force that is not fully employed at all times.

Zero-hours contracts are just one way that many SMEs are able to confront this dilemma. They suit, for example, the small catering business whose engagements are unpredictable and come in at short notice.

They work well for businesses where the demand is seasonal – the retailer whose customers multiply in the run-up to Christmas, say. They are ideal, in fact, for any small business that doesn’t yet have clear visibility about the level of consistent demand there will be for its products and services.

That is not to say zero-hours contracts should be a default option for a growing business. Nor is there any excuse for breaking the rules, which already prohibit employers from requiring those on zero-hours contracts to accept the work they are offered or from preventing workers accepting work from other employers.

It feels wrong that so many large companies appear to be making use of zero-hours contracts. Nevertheless, we must recognise that if you run a small business with only a handful of existing employees, taking on new permanent staff represents a big risk.

Reversing the process by shedding these staff is expensive and uncomfortable – as it should be, given the impact on the people losing their jobs.

The jury is still out on whether our economy is now in recovery mode, but it seems likely that growth over the next few years will be stop-start. In that environment, small businesses feel even less inclined to expand their workforces on a permanent basis.

Last week’s admission by the Office for National Statistics that it has under-estimated the number of Britons on zero-hours contracts was unfortunate – and though it has published a revised estimate, it clearly doesn’t have a handle on this data. That is fuelling the suspicions of trades unions and others who fear employers are opting for zero-hours contracts for exploitative reasons.

The announcement last month of a review of these contracts by Vince Cable was sensible: not only do we not have a clear picture of how many people really are being employed on these terms, but also, some of the nitty-gritty of their status in employment law is not properly defined.

Still, we should beware the rule of unforeseen consequences. One reason that many SMEs now make more use of zero-hours contracts is that the Agency Worker Regulations introduced in 2010 made it tougher to hire temporary staff.

By all means let’s clarify the legal status of zero-hours contracts and take action against those employers who abuse the rules. But let’s also recognise that there are people working for small businesses on these contracts who would probably otherwise be out of work. In time, here’s hoping those people will move on to permanent work contracts. But let’s not make it more difficult for small businesses to offer paid work by banning zero-hours contracts.

Oil exploration investment for AIM newcomer

Small Talk first featured Africa Oilfield Logistics ahead of its Aim float in June, since when its share price has drifted up by 10 per cent or so.

Now the business, run by the oil exploration veterans Phil Edmonds and Andrew Groves, is poised to make its first investment. It is buying a 49 per cent stake in Ardan Risk & Support. AOL is paying for the stake with $4m worth of its own shares, and has the exclusive right to buy the rest of the company over the next 180 days.

Ardan already has a presence in the Rift Valley, where businesses such as Tullow and Africa Oil are already operating – meaning opportunities to sell the logistical services that AOL and Ardan provide.

The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Rio Ferdinand returns for QPR
sportRio Ferdinand returns from his three-game suspension today
The Speaker of the House will takes his turn as guest editor of the Today programme
arts + ents
ebooksNow available in paperback

Watch the spoof Thanksgiving segment filmed for Live!
Billy Twelvetrees will start for England against Australia tomorrow with Owen Farrell dropping to the bench
rugbyEngland need a victory against Australia today
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
Tyson Fury poses outside the Imperial War Museum in south London ahead of his fight against Dereck Chisora
boxingAll British heavyweight clash gets underway on Saturday night
i100 Charity collates series of videos that show acts of kindness to animals
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game