Labour’s crackdown, marked in address to TUC, comes as UK languishes near bottom of G20 pay league
Ed Miliband will put forward plans on Tuesday to outlaw the exploitative use of zero-hours contracts, as new figures show Britain has suffered the second biggest fall in wages of any G20 country since the coalition took office.
In an address to the TUC, Miliband will set out proposals to tackle the spread of zero-hours contracts, now believed to affect millions of workers and which have become the symbol of a post-recession economy built on job insecurity and exploitation.
Miliband’s commitment stops short of an outright ban on the contracts but will be welcomed by unions demanding he shifts focus from union-Labour reforms to proposals to help working people. Research published by the Unite union this weekend suggested as many as 5.5 million people could be on zero-hours deals offering little or no guarantee of work and pay.
Labour officials said it was likely the proposals would include giving anyone working for a single employer for more than 12 weeks on a zero-hours contract the automatic right to a full-time contract based on the average time worked in the 12 weeks.
The scale of the living standards crisis, in part created by demands for greater labour market flexibility, is underlined in the new figures from the Commons.
A combination of high inflation and a clampdown on wages by UK employers has meant that workers in France, Germany and Canada have seen their pay packets relative to inflation recover since 2010 while the average British worker is £1,500 worse off. Only Italy has performed worse.
The gap between inflation and wage rises mean average wages adjusted for inflation in the UK fell 2.6% from 2010 to the end of 2012 compared with a rise of 0.5% in France, 2.7% in Germany and 3.4% in Canada.
Miliband, who is likely to face a difficult audience at the TUC conference in Bournemouth as relations are strained by the Labour leader’s reform efforts, will say any economy that works for working people must have security as one of its foundation stones.
He will pledge to “ban practices which lead to people being ground down”, adding that “an unequal recovery won’t be a stable recovery. It won’t be built to last”.
In a competing speech on Monday, the chancellor, George Osborne, will claim the economy has turned the corner, suggesting the recovery under way is sustainable and proof that he was right to reject Labour calls to abandon spending cuts.
A bullish Osborne will say the best way of safeguarding living standards is growth but also promise the proceeds will be shared fairly.
Miliband will propose three specific measures to reduce the use of zero-hours contracts:
• Banning employers from insisting zero-hours workers be available even when there is no guarantee of any work.
• Ending zero-hours contracts that require workers to work exclusively for one business.
• Ending the misuse of the contracts where employees are, in practice, working regular hours over a sustained period.
Miliband has asked Norman Pickavance, former director of human resources at the supermarket chain Morrisons, to chair an independent consultation with business groups and others on how the measures might work.
In particular, he will investigate options to ensure that workers who are actually working regular hours week in week out cannot simply be left on zero-hours contracts without their consent. They include the assumption that workers will move on to a regular contract after a specific period of regular employment.
He will also be asked to work with business to investigate whether other measures should be considered and whether additional legislative steps should be taken.
Miliband will tell the TUC: “We must stop flexibility being used as the excuse for exploitation.”
He will continue: “Of course, there are some kinds of these contracts which are useful. For doctors, or supply teachers at schools, or sometimes, young people working in bars. But you and I know that zero-hours contracts have been terribly misused. This kind of exploitation has to stop.”
The business department is conducting a review into the scale of the zero-hours contract economy, but Miliband’s plans are the most specific proposals to reform so far.
The figures on wages, which also showed that the G20 countries Mexico, Turkey, Russia and South Africa saw bigger rises in real wages, were produced by the OECD and analysed by House of Commons library staff for the Labour party.
The figures highlight the problem faced by Osborne and the Bank of England as they try to sustain a recovery that has accelerated since January, but many economists fear could soon run out of steam.
Critics of the government believe persistently high inflation will undermine the benefit of rising wages and force workers to continue digging into their savings or adding to their already large debts to maintain consumer spending. But Osborne will insist the recovery is sustainable because consumers are also unloading debt.
Miliband will say: “Living standards have now fallen for longer than at any time since 1870. You know what that means. People not knowing how to make ends meet at the end of each month.
“After over three years of this government, with our economy still smaller than it was before the financial crisis, the rewards in our economy are going only to the few at the top. And that’s not just unfair. It’s bad for our country.”
The speech comes as a time when Unions are demanding concrete signs of Miliband’s responsible capitalism agenda. But his aides argue it is not a sop to sceptical unions since insecurity at work affects most people. In addition, most people on zero-hours are not in unions.
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