I have had quite a lot of response to the zero hours post. A number of additional questions have been raised by people regarding the impact of these contracts and I thought it would be useful to aid debate if I presented some of these questions as an addendum to my original post.
- How do zero hours contracts affect employment statistics?
- Why aren’t people paid at least a retainer for being on the books of a company?
- How does such a contract affect their NI contributions?
- How do lower NI contributions from people on zero hours contracts affect the overall NI pool and the ability of this pool to fund current and future pensions?
- Do people on zero hours contracts pay income tax?
- Do zero hours contracts mean that skills aren’t built up and there is a larger pool of low-skilled workers?
- If employers make more profit because of the use of zero hours contracts, do they pay more corporation tax?
- Do the same companies also avoid paying tax by operating in low-tax countries?
- Are higher level managers in these companies paid on a self-employed basis in order to avoid tax and NI liability for the employer?
- Will zero hours contracts lead to more people in the future having minimal pension provision and therefore being dependent on social security benefits?
All very interesting questions. Some of them have rather obvious answers such as: if you are below the NI threshold you don’t pay NI and you don’t accumulate the benefits arising from such payments; if you are below the tax threshold you don’t pay tax; you might even get working tax credits or whatever has replaced them. Other questions are more an opening of a debate; so I’d love to hear your views.
The bottom line though is: zero hours contracts are exploitative and have a detrimental impact on society as a whole.
Low wages and the resulting low incomes benefit employers and cost the tax payer.
The argument that they create and sustain jobs is as indefensible as it was to say that slavery was essential for the economy, or that child labour was essential for the economy, or that the prohibition of Trade Unions were essential for the economy.
Jobs that don’t pay, that don’t allow those who do them to support themselves and their families, that mean that people are not registered as unemployed despite the fact that they don’t have enough work or enough income, are not the kind of jobs we need. It’s a way to improve the statistics. Don’t be fooled by it.