Zero hours, infinite rows: Is job growth stagnating or recovering? A look at Britain's labour market

Tim Wallace
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There has been a massive fall in unemployment

Expect a screaming match this Friday – the jobs numbers are out. It isn’t every day that official statistics generate this much excitement, but we are in the middle of an election campaign.

Economists expect another fall in unemployment, a decent rise in the number of jobs and another month of wages rising faster than inflation.
Good news for the government, you might say. But any minister who tries to welcome this will be shouted down by critics who claim that they are all zero-hours jobs with terrible wages.
Certainly the public imagination has been caught by the idea that we are in a post-crash stagnation, rather than the rapid recovery which the government is trumpeting. So who is right?


First up, there has been a massive fall in unemployment.
Despite an unprecedented squeeze on public sector jobs, there are more Britons in work than ever before.
Back in May 2010, employment stood at 29.1m and joblessness at 2.5m. That has swung around dramatically since, with almost 31m now in work and unemployment down to 1.86m.


This is a tricky one to measure – the term “zero-hours contract” (ZHC) really came to prominence in 2013.
First things first: the definition. A ZHC is one where a worker is not guaranteed any work at all in a given week.
Typically they provide an average of 25 hours per week, but that overall number can mask enormous fluctuations and uncertainty.
Many people working a ZHC before 2013 were unaware of the term itself, and of the political row ahead. As a result, few told official statisticians that they were working such contracts.
At the end of 2014, officials estimated that 697,000 workers were on ZHCs, or 2.3 per cent of all those in employment. One-third of those want to work more hours, indicating that the contracts suit most of those who work them.
But this compares poorly with other jobs – only 10 per cent across the rest of the labour force want longer hours.
There certainly was a surge in part-time work in the years after the financial crisis. In 2007, 698,000 part-time workers wanted a full-time job. By mid-2013 this hit a peak of 1.67m. But conditions have got a bit better since – at last count, 1.32m part-time workers were unable to find a full-time job.
But overall, it is clear that most new jobs now are full-time.


The pay is typically worse in those new jobs than it is for the established workforce. Partly that is because new entrants to the labour market are typically young, and so at the bottom end of the pay scale. And anyone who has been unemployed for a long period is less likely to land a high-paid job.
The economy-wide pay data makes it look as though the whole country has been through a tough squeeze as wages stayed flat when prices rose.
Average wages rose by less than inflation in each year from 2009 to 2014, and are only rising in real terms now because inflation has collapsed on the back of diving global oil prices.
But again, this hides important variations. Those in work for the whole period saw wages rise strongly each year except for 2011. So as those with jobs become better off, and those out of work move into work, households are better off – something we see increasingly in consumer spending numbers.


The Conservatives are pushing the data hard – quite simply, more people are in work. The Lib Dems promote their tax cuts for the low paid, offsetting the impact of weak wages.
But despite the numbers, Labour’s campaign seems more powerful – the idea that this is a zero-hours recovery has caught on. Enough voters feel squeezed to give Labour’s promises to boost the minimum wage and crack down on ZHCs substantial momentum.
Expect this row to go right down to the wire at next month’s election.


At the last count, 1.32m part-time workers were unable to find full time work. Yet this is down from 1.67m back in the middle of 2013.

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