How much of an impact do zero hour contacts have on the improving rate of unemployment?

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Following yesterday’s promising unemployment figures, Julia Macfarlane (producer/reporter for the BBC) posed an interesting question on Twitter.

How do these figures look with the context of zero hours contracts included?

From our direct experience in the labour market, zero hour contracts are the minutia of our business, not equating to 0.1%. We decided to take a look to see if this was commonplace in the market or if it was a reflection of our client’s company size, or perhaps industry. Firstly, a recap of yesterday’s stats.

  • Unemployment fell by 37,000 to 1.6m for Q3
  • The total number of people in work is at a record high of 31.8 million
  • Unemployment is now at it’s lowest rate since September 2015

The number of people in zero hour contracts, or contracts without guaranteed hours is reported on biannually via the ONS. The last data set we have is from November 2015 and this reports:

  • In November 15 the ONS reports that 6% of contracts are without guaranteed hours.
  • 9% of companies with 0-9 employees use zero hour contracts
  • 44% of companies with 250 or more employees use zero hour contracts
  • The percentage of companies using 0 hour contracts is reducing for companies with less than 19 employees
  • The percentage of companies using 0 hour contracts is increasing for companies with more than 19 employees

Certainly our initial perception is indicative of our ‘typical client’ being <250 employees. Let’s take a look at how broadly zero hour contracts are used across sectors and how, if at all, that is changing.

The most commonly reliant industry, for contracts without guaranteed hours is Accommodation and Food Services, with 26% of companies electing to use zero hour contracts. This was a significant reduction however from the 38% reported earlier in May 2015. This sector is part of the leisure and hospitality supersector and is an industry we have a considerable interest in along with a dedicated partner through Over the last three months, we have noticed a 38% increase in clients advertising a catering job and a 47% increase in enquiries relating to catering and hospitality jobs. The most sought after vacancies being:

  • Chef jobs
  • Chef de partie jobs
  • Sous Chef jobs
  • Kitchen porter jobs

Transport & Storage and Entertainment is the second most commonly reliant industry, demonstrating a significant change from 9% to 17% of businesses.

It’s really interesting to see the swing in reliance on zero hour contracts through size of company, industry and seasonality. Whilst the ONS data is too old to build into yesterdays figures for comprehensive context, the positive news is that the average zero hours contract worker works over 26 hours per week. Which, built back into the unemployment figures will still represent an increasingly positive number of the population being economically active, we predict this figure will continue to grow for the next set of figures.