Zero security?

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There are two conflicting accounts of what has happened in the labour market since the onset of the Great Recession. It will amaze Socialist Review readers but there is a story doing the rounds that we are in the middle of a "jobs boom".

From FT journalists to government statisticians there is a view that employment levels are now higher than at any time since the collapse of Lehman Brothers. They claim that 584,000 jobs were created in 2012 and that unemployment is 7.5 percent, which some have called the "productivity paradox" while others inelegantly describe this as "growthless jobification". They even go on to say that the shape of the UK labour market is changing, led by professional occupations, including lawyers, accountants and, heaven help us, management consultants.

Conversely there is a second account that from comes from left field, from some Financial Times and Guardian columnists and notably from Guy Standing, author of The Precariat. They argue that unemployment has been masked by underemployment, by the growth of involuntary part-time employment with the more recent buzz around the idea of "zero hours contracts".

There are grains of truth in both accounts, but both greatly exaggerate structural change in the labour market. In the first instance it is true that unemployment has hovered around 7.5 percent which is remarkable given that this is the deepest recession since the 1930s. If the unemployment rate matched the 1930s or even the 1980s impact on the labour market we should be looking at unemployment rates of 15 percent plus, and more than 5 million on the dole. However, to say that employment levels are back to the status quo before the crisis is an exercise in wishful thinking. Just to be clear, the employment rate is down, particularly for men (78.8 percent in 2007 to 76.3 percent 2012) and the contribution of part-time jobs to recent employment growth (42 percent) is disproportionately high.

This clears the ground for those who emphasise underemployment and zero hours contracts. Involuntary part-time employment, ie those who would prefer a full-time job, accounts for about 17.7 percent of the part-time workforce, which naturally means that 82.3 percent of part-time workers don't want to work full-time. Before the recession the proportion of part-time workers who wanted a full-time job was 10.3 percent so it has increased by 640,000, but this cannot conceal the additional 2.5 million out of work that previous recessions would have predicted.

A zero hours contract is where a person is not contracted to work a set amount, but rather is only paid for the work they do. Recent press interest gave rise to headlines about the doubling of the numbers between 2004 and 2011 and a 50 percent increase in 2012 (according to Standing). The contracts are most commonly found in hotels and restaurants but are spreading across other sectors. The FT reported in April that there were 100,000 zero hours contracts used in NHS hospitals, a 24 percent increase in two years.

Avoiding the glare of the headlines we should get the trends into perspective. Firstly, the numbers involved are really small. The last quarter of 2012 saw a spike in the numbers to 200,000 on zero hours, but the annual average for 2006 to 2012 is 118,000. No wonder when set against the UK's 30 million employed workers, the Employment Relations Survey remarked that zero hours contracts "remain relatively unusual". Moreover to claim that there are 100,000 zero hours contracts in the NHS does not mean that there are 100,000 workers employed on zero hours. For instance, you can be employed on a mainstream NHS contract and also on an additional zero hours contract. It should also be pointed out that these contracts in the NHS will also qualify for holiday and overtime pay.

Zero hours have also attracted attention because it is too expensive to employ agency staff and they offer a cheaper way of meeting temporary labour demand. But they also offer uncertainty both for workers and employers which is hard to reconcile with sophisticated staff scheduling. If one remembers the "humiliating shambles" of G4S staff recruitment at the Olympics then the naivety of assuming people are prepared to wait on standby for the call to work is all too obvious.

There is another explanation for the low level of unemployment which is rooted in a broader understanding of the effects of the crisis and austerity. The novel feature of this recession is that it is not confined to job losses, but to a wider assault on pay, occupational and welfare benefits, pensions and the raising of the retirement age. The offensive is waged at the mainstream and not the margins of the labour market.