April 2019

IZA DP No. 12291: Zero Hours Contracts and Their Growth

Egidio Farina, Colin Green, Duncan McVicar

This paper studies the prevalence and nature of zero-hours contracts (ZHCs) in the UK labour market. The headline count of ZHC workers based on the Labour Force Survey has long underestimated and continues to underestimate the number of workers in ZHC or ZHC-like jobs. ZHC jobs and workers are heterogeneous, but ZHC jobs have become increasingly concentrated among young workers, full-time students, migrants, black and minority ethnic workers, in personal service and elementary occupations, and in the distribution, accommodation and restaurant sector over time. Compared to other forms of employment, median wages in ZHC jobs have also fallen over time. The most common prior labour market state for ZHC workers is non-ZHC employment, particularly part-time employment, and we cannot reject that part of the reported growth in ZHCs has been driven by reclassification of existing employment relationships. Similarly, we cannot reject that growth in public awareness of ZHCs contributed substantially to recent growth in reported ZHCs, particularly over the period 2013/14.