Will a crackdown on zero-hours contracts harm the economy?

In sectors such as catering and retail, over fifty per cent of companies use them

Fast Food Rights campaigners and members of the Bakers, Food and Allied Workers Union protest against the rise of zero hour contracts, in London last weekend (Corbis)

Is the number of people hired on zero-hours contracts increasing? It’s a difficult question to answer, using the latest statistics. 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 in the past.

Still, the Office for National Statistics’ research does provide some important detail. These contracts are used much more frequently in some parts of the economy than others. Around 10 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. 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 part-time.

These facts should help researchers to answer the important question of whether a clampdown on these contracts would do significant harm to the wider economy.

Around a third of those on zero-hour contracts, according to the ONS, say they would like to work more hours. Broader measures of underemployment tell a similar story of people still wanting to work more hours than they can get, despite high employment rates.