Ed Miliband and Vince Cable have promised to do something about the abuse of zero hours contracts. As ever, though, political soundbites are easy. Coming up with workable legislation is likely to be more difficult, as Darren Newman explains.
[T]here is the small problem of what kind of contract will be defined as a zero-hours contract. We can broadly say that a zero-hours contract is one which does not guarantee a minimum amount of work per week. But what if the employer guarantees one hour? Would that be enough to escape the three measures that Ed Miliband is proposing? If you take action against zero-hours contracts, how do you stop employers coming up with contracts that are just the other side of the definition but every bit as exploitative?
Also, if you happen to be happy to work on a zero-hours contract (and some people are), would you have the right to opt-out of the minimum number of hours the law would require your contract to specify? Surely the law would have to provide for that. And if it did, how would you stop it becoming a semi-automatic opt-out like we have in Working Time? All workers have the right to refuse to opt-out of the 48 hour week, but how many vulnerable workers are really in a position to assert that right?
Vanessa James makes a similar point:
The most obvious route open to an employer seeking to continue ‘abusing’ staff contracts after a ban would be to engage staff on a part-time contract for a nominal amount of hours. Then the employer could, presumably use an overtime arrangement for any additional hours, still offering no guaranteed overtime. This is impossible to police or legislate against.
As I’ve said before, I’m not convinced that this is a problem that can be solved by legislation. The abuses happen because some employees are in a weak bargaining position. Zero hours contracts are simply the most recent manifestation of this power imbalance. Ban them and exploitative employers will find other ways of squeezing their workers.
A number of people have suggested that stronger unions might be the answer. As Chris Dillow says, collective bargaining is a better way of protecting workers than the law. Countries with strong unions, like the Scandinavian countries, have less employment law than those with weaker unions like Greece. The Nordic countries have no minimum wage legislation because they don’t need it.
Writing in the Guardian, Labour law professor Alan Bogg called for the next government to strengthen collective bargaining. “Labour law reform will be at the heart of the next general election,” he said, though his piece was frustratingly short of detail about the form any legislation might take.
This is perhaps because, just as it is difficult to legislate against zero hours contracts, there is also a limit to how far the law can be used to remote collective bargaining.
Advocates of stronger collective bargaining usually cite the Scandinavian model. After all, these are countries that have combined high wages with high levels of competitiveness and economic growth. Yet the Scandinavian systems are relatively light on legislation. Collective bargaining is based on cultural custom and practice rather than legislation.
In Denmark, for example, it goes back to an agreement between the main employers’ and trade union bodies, equivalents of our CBI and TUC, in 1899. The grievance procedure that still covers most employees came not from legislation but from an agreement between the two bodies in 1908. As this fascinating report from Copenhagen business school points out, there is considerable resistance in Denmark to the state’s involvement in industrial relations. One of the reasons for the persistence of the collective agreements, which cover 90 percent of the workforce, is that both employers and unions wanted to keep the government out. What better way than to work together put your own house in order first?
In Sweden, the collective agreements have a similar history. The agreements are legally enforceable but only for those who have agreed to participate in the first place. Non-organised employers and workers are not automatically covered. And yet 91 percent of Swedish employees conditions are subject to collective agreements. The situation is similar in Norway. Finland is slightly different in that a state commission enforces the applicability of collective agreements.
On the whole, though, Scandinavian workers and employers don’t do collective bargaining because the state tells them to, they do it because it is deeply rooted in their culture and has been for the last 100 years.
Left-wing politicians, trade unionists and even some employment lawyers and HR professionals are quick to call for legislation to improve working conditions and shift the balance of power back towards the employee. But how far can the law be used to mitigate the effects of economics and of social norms? Can legislation prevent the abuses associated with zero hours contracts or will they just appear in a different form? Could the law be used to drive a return to more widespread collective bargaining, as Alan Bogg seemed to imply, or would such a legislative framework be too cumbersome for the modern age?
As you might infer from the tone of this piece, I am sceptical about the extent to which the law can protect workers from all but the worst excesses by the worst employers. Any more than that requires something like the powerful countervailing forces and strong cultural norms that are a feature of the Scandinavian systems. In any country, employment relations are determined as much by social and economic factors as legal frameworks. The law can’t do much more than tinker around the edges.