Number of people on zero hours contracts increases by over 100,000 in last year

From the ONS:

  • Number of people employed on a “zero-hours contract” in their main job was 697,000 for October to December 2014, representing 2.3% of all people in employment. In the same period in 2013, this was 1.9% of all people in employment (586,000).
  • The number of people saying they are employed on “zero-hours contracts” depends on whether or not they recognise this term. It is not possible to say how much of the increase between 2013 and 2014 is due to greater recognition rather than new contracts.
  • Number of contracts that do not guarantee a minimum number of hours where work was carried out was 1.8 million for the fortnight beginning 11 August 2014. The previously published estimate was 1.4 million for the fortnight beginning 20 January 2014.
  • The two estimates of contracts should not be directly compared. They cover different times of year so changes in the numbers may reflect seasonal factors.
  • On average, someone on a “zero-hours contract” usually works 25 hours a week.
  • Around a third of people on “zero-hours contracts” want more hours, with most wanting them in their current job, compared with 10% of other people in employment.
  • People on “zero-hours contracts” are more likely to be women, in full-time education or working part-time. They are also more likely to be aged under 25 or 65 and over.
  • Over half of businesses in Accommodation and Food Services and a quarter of businesses in Education made some use of no guaranteed hours contracts in August 2014.

Are the ONS gaming the unemployment figures?

No. No they are not.

The ONS provide a full explanation of how they come up with the numbers. They are compiled via the Labour Force Survey, which adheres to international definitions of employment and unemployment. There is a lot more information contained in the link above, but the TL/DR version is they ask a lot of people – enough people to be able to make strong estimates for the whole economy – questions about their employment status. The results are then reported as the official numbers. They take account of people taking part in workfare-style schemes and people who have been sanctioned off JSA.

Unemployment is still falling. There are a lot of good questions to ask around the quality and duration of the new jobs being created, but the figures as published are right (or at least as right as they has ever been). There is no conspiracy* between the ONS and the government.

*As an aside, if there is a conspiracy, it’s to make the ONS website the most un-user friendly on the web. It’s horrendous!

The UK’s budget deficit creeps back up.

Figures released today by the ONS show that for the first 6 months of this financial year, the government’s budget deficit has increased by 10% over the same period last year. But should we care? Labour certainly thinks so. Shadow Treasury spokesman Chris Leslie said:

“These figures are a serious blow to George Osborne. Not only is he set to break his promise to balance the books by next year, but borrowing in the first half of this year is now 10% higher than the same period last year. As the [Office for Budget Responsibility] said last week, stagnating wages and too many people in low-paid jobs are leading to more borrowing.”

Chris Leslie is probably right in the sense that the figures are a blow to George Osborne – at least in the minds of those in the media bubble who think the deficit is the all encompassing issue for the General Election. For most people though, other factors like jobs, housing and wages are likely to be more important factors for floating voters.

In a way we should be glad the deficit remains high. For all the talk, and while certain sections of society have been clobbered by austerity measures, overall, government spending continues to make a positive contribution  to growth. George Osborne has failed utterly to meet the targets for deficit reduction he set himself, but we should be thankful for that. If he had succeeded, we’d probably be failing down a pretty deep hole right now.

There is another sense that Leslie is correct though. While the size of the deficit doesn’t really matter (at least at the moment anyway), the fact the tax receipts are weak could be an indication of poor wage and productivity growth, which is definitely something Labour should be banging on about (but preferably only when they have a proper policy of their own to address the problem).


ONS provides new estimate for numbers of people on zero-hour contracts

There have been a rash of data releases by various Government departments over the last week. I’ve put up blog posts already this week on housing benefit and universal credit stats, and here is another one, this time on zero-hours contracts (ZHCs). 

Before I start, I should say that I have had a job where I was on a ZHC, and it worked very well for me. Whilst at university, I worked in a bar. I was required to commit to three shifts a week, including one at the weekend, but was not guaranteed to get any work. For me this was great because I was reasonably well liked by the management so was always offered plenty of hours, while at the same time being able to pick and choose when I worked. Others were not so lucky, and were given few hours at quiet times. As the job was just to top up my student loan, if I didn’t get any hours one week, it was not the end of the world. So I am not wholly against ZHCs and think there may some limited cases where they have a place. 

Now to the latest data release. This comes from the ONS. After the uproar over ZHCs of the last couple of years, the ONS have tried to get a grasp of exactly how many people are on these types on contracts. They are still not quite there, but are now asking the question as part of the quarterly Labour Force Survey. For April-June 2014, they say there are 622,000 people on zero-hour contracts. Similar surveys asking businesses how many zero-hours staff they have suggests the figure could be as high as 1.4 million though. 

It is good that the ONS are starting to publish these statistics, which over time will mean it will be possible to get a feel for the trend, i.e. whether ZHCs are becoming more or less common. 622,000 sounds like a lot of people to be working for no guaranteed hours. 1.4 million even more so. The real issue is around choice. If the people working ZHCs are like I was at university, then ZHCs may be appropriate. If not though and people are being forced into them because no other work is available, it is very worrying, and it seems unlikely that all those (or even most of those) on ZHCs are happy with the arrangement. This new data and future updates will help us understand what we’re dealing with. 

Is free movement of labour within the EU a good thing?

This is my third post in a series of pieces on Britain and the EU. In the last, I examined some economic consequences of Britain’s EU membership, and in this post, I want to look at another consequences – free movement of labour. Studies looking at the first wave of immigration from A8 countries after 2004 find a positive impact on the economy as a whole. These macroeconomic effects mask the ‘distributional’ impacts however.

There are winners and losers from free movement of labour. The thinktank Open Democracy published a report in 2012 which looked at this issue. Here are a few stats it draws out on immigration to the UK from A8 countries:

There are some aspects of this that could be seen as positives. We have an ageing population, so an influx of young, skilled migrants could help ease some of the issues and ageing population brings. Those skills could improve the productivity of the UK economy, supporting vital services.

In other regards though, the effects of these factors on the low-skilled end of the labour market are likely to be significant (even if the overall impact on the economy is positive). While A8 migrants are relatively higher skilled, they are often not doing work commensurate with their skills. People argue they are doing jobs Brits won’t do, but  we are supposed to believe in supply and demand. If Brits won’t do a particular job, the employer should either increase the wage offered or invest in capital equipment to reduce the requirement for labour. If it can’t or won’t do either of these things, the job probably shouldn’t exist.

An influx of young workers is also likely to place pressure on particular services in certain parts of the country. Schools, housing and health all face greater pressures due to immigration from the EU, although the magnitude of the impact is not equally spread throughout the country. This can be dealt with if the government has the ability and the will to increase provision of these things, but housing, schools,  medical facilities and the relative professionals to staff these things take a long time to build and to train, while planning is difficult when you don’t know how many people will come and where they will settle.

Migration to the UK from Eastern Europe is related to the unemployment rate in the home nation. When unemployment is high, people emigrate. While a period of high unemployment on the continent may coincide with a labour shortage in the UK, equally, it may not, so the numbers coming and their timing is largely based on the performance of economies elsewhere.

Other countries use a points-based system to determine who they want to allow into the country, and they can loosen or tighten the points criteria as needs change. In the UK, we have a visa system for those wishing to come to the UK from outside the EU, but cannot impose restrictions on those coming from the EU itself. Even if you believe immigration is a positive thing (and I broadly do), the idea you would not be able to impose any restrictions of those seeking to come from certain parts of the world – regardless of your national interest – just doesn’t sit right with me. This is one area that would need significant reform before I could be convinced the continued UK membership of the EU is desirable.