If public shame forced Sports Direct to change their appalling workplace culture, we need to do it more often

Better to put pressure on abusive companies than impose an outright ban on zero-hours contracts, which do suit some workers 

Ben Chu
Tuesday 06 September 2016 13:35
An astonishing 80 per cent of Sports Direct’s 27,000 workers have been employed on these contracts
An astonishing 80 per cent of Sports Direct’s 27,000 workers have been employed on these contracts

“Which side are you on?” asked Florence Reece’s great union anthem from the 1930s.

Zero- hours contracts (which allow firms to call on workers to supply as many or as few hours a week as the company requires of them) are an issue on which there is powerful pressure to pick a side.

Are you with their opponents for whom these contracts are tools of exploitation by a malevolent boss class? Or are you with their supporters for whom zero-hours contracts are a brilliant innovation, offering liberating flexibility not only to employers but to workers themselves?

Which is the right side?

The number of these contracts appears to be growing. The Office for National Statistics’ first stab at measurement, based on a survey of businesses, in April 2014 suggested there were about 1.4million. In its most recent estimate this had increased to 1.7million.

Sports Direct MPs report

Yet we must be careful about drawing firm conclusions about trends when the time series is so abbreviated and there is still technical debate and public confusion about what constitutes a zero-hours contract.

Official research certainly makes it clear these contracts are more common in some sectors than others, particularly hospitality, food processing and social care.

And there is little doubt there can be abuse. Today’s report on Mike Ashley’s Sports Direct showed an astonishing 80 per cent of the retailer’s 27,000 strong workforce have been employed on these contracts.

The company effectively conceded that this was not appropriate when it said it would offer casual staff on zero-hours contracts at least 12 guaranteed hours a week (although not those working in its factories employed by third party agencies).

Exclusivity clauses in zero-hours contracts – which could prevent workers from offering their labour to other employers – were self-evidently inappropriate and the Government was right to ban them.

Yet some surveys do suggest many employees like the work-life balance the contracts offer. It’s also not hard to see why students or pensioners might prefer them to weekly fixed-hour contracts. Remember that the flexibility works both ways: workers can turn down offered hours.

It’s worth bearing in mind that the overall flexibility of the UK labour market helped keep the unemployment rate down during the 2008-09 Great Recession and the halting recovery that followed, which helped protect overall living standards.

To focus on the contract itself might be missing the point. The underlying problem could be more a general failing of corporate culture in providing “good” permanent jobs to people who want them in their prime earning years.

There has long been a lack of training for long-standing staff and deficient investment in skills in British firms. Too many have relied on outside agencies to provide additional workers, rather than cultivating their own permanent staff or boosting their own payrolls.

And in recent years it seems some bosses have held off from investing in new machinery and equipment to boost capacity, preferring to meet new demand instead by hiring cheap and casual labour. This seems to have harmed national productivity growth.

The issue of zero-hours contracts gets mixed up with the relative lack of decent career opportunities for young people, who are forced into the casual or zero-hours workforce when they would prefer to be getting on. There is also the broad problem of stagnant wages, which have effectively not risen in real terms for almost a decade.

Zero hours contracts could be a symptom rather than a cause of the disease of the economy.

So how to treat the disease? Worker representation on company boards, as promised by Prime Minister Theresa May, might indeed help by dissuading managements from making false economies on staff training.

The Government might also redouble its efforts to encourage the mutual model of corporate ownership (where the firm is owned by its workers). It is notable that the mutually-owned department store chain John Lewis does not use zero-hour contracts.

Public stigma for firms such as Sports Direct that grotesquely abuse the terms of their social licence to do business – not just with zero hour contracts but through miserly pay and vindictive conditions – can also be a lever for improvement, as we have seen. It should be pulled more often.

It is better to put pressure on abusive companies than impose an outright ban on zero-hours contracts, which do suit some workers. The problem here is as much to do with power and productivity in the workplace as at is with the details of employment contracts.

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