Zero-hours contracts: What the figures mean

The ONS' research on this subject provides us with some important detail about this controversial corner of the labour market

Is the number of people hired on zero-hours contracts increasing? It's difficult to use the latest statistics to give an answer to that question. Yes, the headline numbers are up over the past year, but the figures are based on surveys and more people might now recognise the "zero hours" tag than did in the past thanks to a step-up in media coverage, twigging they are themselves employed under those ultra-flexible terms.

Still, the Office for National Statistics’ research on this subject does provide us some important detail about this controversial corner of the labour market. The ONS’s work makes it clear these contracts are used much more frequently in some parts of the economy than others. Around ten per cent of all firms use them. But in sectors such as catering and retail the rate rises above 50 per cent. Big firms use them much more often. Half of companies with workforces of more than 250 use them, against 10 per cent of all firms. There’s a clear gender disparity too. Women are more likely to be on zero hours contracts than men. The young are also more likely to be employed on these terms. Most zero hours workers are also part-time.

These facts will help to inform the political debate over whether companies are abusing these contracts or not. The data should also help researchers to answer the important question of whether a clampdown on their use would do significant harm to the wider economy.

Finally do zero hour contracts signal underemployment, or "slack" in the labour market, something that could incline the Bank of England to keep interest rates on hold? Around a third of those on zero hour contracts, according to the ONS, say they would like to work more hours. In one sense this doesn’t help monetary policymakers that much given people hired on such contracts represent only around 2 per cent of the country’s 31 million strong work force. Yet broader measures of underemployment tell a similar story of people still wanting to work more hours each week than they can get despite the UK’s record employment rates.