Zero-hours contracts are just one part of the UK’s in-work poverty problem

Although they have become a totemic issue, zero-hours contracts are just one of the problems created by the low-pay, low-skill economy that currently traps 6.7 million people in working poverty, the independent Joseph Rowntree Foundation (JRF) said in response to figures released by the ONS today.

The ONS said 1.4 million employees are on contracts that do not guarantee a minimum number of hours. 

It comes as JRF also publishes a new report – Rewarding work for low-paid workers, written by the respected labour market economist John Philpott – which sets out the positive business case for employers to reduce poverty among their workforce and how this could be achieved.

The report suggests as well as well as paying the Living Wage, employers should provide clear and structured career progression pathways, training to facilitate job progression, and offer flexible working and fringe benefits to help with the costs of living - such as discount voucher schemes - and help with childcare and travel costs.

The problem needs addressing because the UK has a growing in-work poverty problem: more than half of households in poverty live in families where someone works – some 6.7 million people.

Responding to today’s figures, Katie Schmuecker, Policy and Research Manager at JRF, said:

“Zero-hours contracts are just one aspect of the UK’s problem with in-work poverty. We have workers unable to get enough hours to lift themselves and their families out of poverty, and not being offered training and development by their employer, leaving them stuck in dead end jobs.

“Tackling in-work poverty requires the nature of jobs at the bottom of the labour market to change, alongside reform to the welfare system.”

John Philpott, director of the Jobs Economist consultancy and author of the report, said: 

“In low wage Britain, the ready supply of workers for low-paid, low-skilled jobs means employers are able to operate on a business model that has a high turnover of staff and compete on low cost and low value. But this business model is holding back productivity and the economic recovery.

“Both workers and businesses can benefit from better rewarding their lowest paid staff. For businesses, better employment practice can help boost productivity and staff loyalty, while reducing the cost of staff turnover and absenteeism. 

"Many employers are only vaguely aware – if at all – of the problem of poverty among their workforce. But business has a vital role to play in stemming the UK’s growing in-work poverty problem and much can be achieved by practice which is good for both the employer and the employee.

“No boss wants to see poverty in their workforce – we need to see firms take a lead in promoting good jobs.”