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Vince Cable urges right for staff on zero hours contracts to request fixed hours Vince Cable urges right for staff on zero hours contracts to request fixed hours
(35 minutes later)
Anyone on a zero hours contract should be given a statutory right to request their employer hands them a fixed hours contract, the business secretary Vince Cable has suggested. Anyone on a zero-hours contract should be given a statutory right to request their employer hands them a fixed-hours contract, the business secretary, Vince Cable, has suggested.
He made his proposals as he argued that there were now signs that the UK labour market had become "too flexible", leading to depressed wages and entrenched low productivity.He made his proposals as he argued that there were now signs that the UK labour market had become "too flexible", leading to depressed wages and entrenched low productivity.
His remarks, in a speech to the Resolution Foundation, are the most serious acknowledgement yet by a senior government figure that structural flaws in the UK labour market could be holding back living standards despite the economic growth. His remarks, in a speech to the Resolution Foundation, are the most serious acknowledgement yet by a senior government figure that structural flaws in the UK labour market could be holding back living standards despite economic growth.
He said: "The recession has brought to light problems that we need to resolve. We have to confront the possibility that labour markets may be becoming too flexible. Too much flexibility, and we undermine the incentive to be more productive." Cable said: "The recession has brought to light problems that we need to resolve. We have to confront the possibility that labour markets may be becoming too flexible. Too much flexibility, and we undermine the incentive to be more productive."
In a proposal that has not been cleared with the entire government, Cable suggests that those on zero hours contracts should have a statutory right to request a fixed term contract. In a proposal that has not been cleared with the entire government, Cable suggests that those on zero-hours contracts should have a statutory right to request a fixed-term contract.
The right is analogous to employees' existing rights to ask employers to grant flexible working. If an employer is unreasonable in rejecting the request, an industrial tribunal can find against the employer.The right is analogous to employees' existing rights to ask employers to grant flexible working. If an employer is unreasonable in rejecting the request, an industrial tribunal can find against the employer.
Criticis will claim that the sanction is relatively limited, and few employers will easily abandon what can be an exploitative contractual relationship. Critics will claim that the sanction is relatively limited, and few employers will easily abandon what can be an exploitative contractual relationship.
But business despartment sources said the right could act as an effective incentive for employers to improve the organisation of their workforce. But business department sources said the right could act as an effective incentive for employers to improve the organisation of their workforce.
They added that Cable wanted to take a balanced approach and recognised that some employees did like zero hours contracts. They added that Cable wanted to take a balanced approach and recognised that some employees did like zero-hours contracts.
The business secretary has rejected a Labour proposal that would require an employer to provide a fixed term contract after a year on zero hours. The business secretary has rejected a Labour proposal that would require an employer to provide a fixed-term contract after a year on zero hours.
He said he also still opposed zero hours contracts that restricted staff to working for only one employer. He said he also still opposed zero-hours contracts that restricted staff to working for only one employer.
Cable said: "There is a lot of evidence of abuse, with some employers taking advantage of a weak labour market to impose poor, insecure, conditions with minimal commitment or training." Cable said: "There is a lot of evidence of abuse, with some employers taking advantage of a weak labour market to impose poor, insecure conditions with minimal commitment or training."
He added: "The question now, as growth strengthens, is how to improve the labour market – so that we continue to have an economy that creates jobs and can respond to change, but allows real wage growth. We do not want to reproduce the American experience, where, over a decade, wages have stagnated, even in a period of economic growth." He added: "The question now, as growth strengthens, is how to improve the labour market so that we continue to have an economy that creates jobs and can respond to change, but allows real wage growth. We do not want to reproduce the American experience, where, over a decade, wages have stagnated, even in a period of economic growth."
He conceded that government policy had played a role in creating a flexible labour market, leading to a flood of labour with people willing to work for very low wages.He conceded that government policy had played a role in creating a flexible labour market, leading to a flood of labour with people willing to work for very low wages.
"Wage growth has been under pressure because of a quite astonishing increase in labour supply. The total workforce has been growing at around 1% a year, and there has been an ever-growing willingness of people to work at lower wages."Wage growth has been under pressure because of a quite astonishing increase in labour supply. The total workforce has been growing at around 1% a year, and there has been an ever-growing willingness of people to work at lower wages.
"The combination of benefits reforms, our cutting taxes on labour through raising the threshold, and other reforms, like abolishing the default retirement age, means that the incentives to work, particularly in low-skilled jobs, have never been sharper."The combination of benefits reforms, our cutting taxes on labour through raising the threshold, and other reforms, like abolishing the default retirement age, means that the incentives to work, particularly in low-skilled jobs, have never been sharper.
"But when this coincides with firms not yet investing strongly, the outcome could be an entrenchment of low-productivity jobs.""But when this coincides with firms not yet investing strongly, the outcome could be an entrenchment of low-productivity jobs."
Cable also questioned the trend for self-employment. He said: "Self-employment accounts for 80% of the remarkable increase in employment since 2007. According to Morgan Stanley, half of those gains are part-time (though, in the last year, job growth has been in full-time employment), and there has been a huge boost from older people working beyond retirement age. Cable also questioned the trend for self-employment. He said: "Self-employment accounts for 80% of the remarkable increase in employment since 2007. According to Morgan Stanley, half of those gains are part-time [though, in the past year, job growth has been in full-time employment], and there has been a huge boost from older people working beyond retirement age.
"Closer examination suggests that these jobs are becoming lower paid, and that the numbers of self-employed firms that actually hire staff has declined."Closer examination suggests that these jobs are becoming lower paid, and that the numbers of self-employed firms that actually hire staff has declined.
"There is a barely remarked upon transformation in the basic shape of the recovery we expected, and one that is less favourable for living standards across the income distribution.""There is a barely remarked upon transformation in the basic shape of the recovery we expected, and one that is less favourable for living standards across the income distribution."
He pointed out that following the 2008-09 financial crisis there was lower growth in wages and faster growth in prices. " At the beginning of this government, the Office for Budget Responsibility forecast that the situation would ease over the next few years. But instead of wages outpacing RPI inflation by 2%, as they earlier forecast, they are now barely expected to keep pace." He pointed out that following the 2008-09 financial crisis there was lower growth in wages and faster growth in prices. "At the beginning of this government, the Office for Budget Responsibility forecast that the situation would ease over the next few years. But instead of wages outpacing RPI inflation by 2%, as they earlier forecast, they are now barely expected to keep pace."