Thursday, 2 April 2015

Zero-Hours Contracts

Julia Hartley-Brewer in the Spectator:-

And this is where we get to the truth. Because not only does an employer enjoy far lower bills for holiday and sick pay entitlements, as well as pension contributions, for zero hours and part-time employers, they enjoy other benefits too. The employer’s National Insurance contribution liability doesn’t kick in until an employee earns £156 or more per week, so many companies now ensure they limit employees’ hours to below that threshold. When extra hours are available, instead of offering more hours to existing part-time staff, some of whom are desperate for full-time work, these companies simply hire more zero-hours or part-time staff.

And what's her solution?

If Ed Miliband or David Cameron really want to tackle the dark side of zero hours contracts, they should pledge to impose a legal limit on the percentage of staff that any company can employ on zero hours contracts. That maximum should not exceed 10 or 20 per cent, which allows ample room for flexibility. After all, when companies pay less in tax and NICS, the Treasury loses out on vital funds. And when people can’t get the full-time work and job security they want, it is taxpayers who end up footing the bill for their tax credits and housing benefit to make ends meet. That means less money going in to Treasury coffers and more money going out.

Why so complicated? Apart from the fact that cafes and cinemas have a lot of "peak" staff and a few staff with regular hours, why not just scrap employer's NI and just stick it on income tax? Or worse, set the floor to £0.

13 comments:

Dinero said...
This comment has been removed by the author.
Lola said...

It does me 'ead in. Don't they realise the fundamental stupidity of what they are saying / writing?

Dinero said...

Its not an unreasanble notion that zero hour contracts may be a response to the minimum wage.
If an employees productivity averaged over active times and down times is less than the mw than you pay them only for the active periods, instead of paying them a low hourly wage and employing them for the for the whole day .Hence zero hours contracts.

I'm not commenting on the morality of it but the proposed policy does have an amusing angle to it as it would be telling employers explicity to employ people to in fact do nothing. Which would put the governmentt in an awkward position.

As for her observation that the zero hours contracts reults in sharing work over extra employees - I would have thought that was a good thing in the context of unemployment and employment in the modern economy.

The Stigler said...

Dinero,

It sounds more like it's a tax dodge than a minimum wage thing. There's no problem paying people for a tiny number of hours at min wage (e.g. bring more people in on Friday night at the cinema).

mombers said...

NI is terrible in so many ways. My wife got hit with it even though she only made £3500 in the whole year. HMRC didn;t want to know when we requested a refund.

Mark Wadsworth said...

It's nonsense. Zero-hours contracts are a symptom and not a cause. Treat the cause, not the symptoms.

Mark Wadsworth said...

Oh, yes, and good point about marginal tax rates. Yet another argument for a flat tax.

Random said...

Dinero, zero hours contacts started before min wage I think?

Random said...

"housing benefit to make ends meet."
How will BTL landlords make ends meet? Oh no.

mombers said...

Why not stick it on income tax? Well because that will bump basic rate up to 29.7% and expose the shocking burden on labour... It would widen the tax base somewhat so could be less and still raise the same, but that's not really what the Tories want...

Physiocrat said...

Why not scrap NI and PAYE income tax and replace them by a payroll tax based on the total wage bill? Functionally it would amount to the same thing.

Net take-home pay would equal gross pay and the payroll tax would be a chunk on top.

Random said...

Why not scrap all taxes and replace with land value tax? ;)

Physiocrat said...

Random - because the politicians believe people will not vote for them if they suggest it.