How alternative employment contracts affect low wage workers

a post by Nikhil Datta (University College London, UK and Centre for Economic Performance, London, UK), Giulia Giupponi (Institute for Fiscal Studies, London, UK) and Stephen Machin (London School of Economics, UK and Centre for Economic Performance, London, UK) for the OUP blog


Eggtimer by Storkman. Public Domain via Pixabay.

Contemporary labour markets are characterised by more atypical or alternative work arrangements. Some of these – like independent contractors – have emerged in the context of self-employment, while others – like zero hours contracts and temporary work – are evolutions of traditional employment contracts. Irrespective of its form, the increase in atypical work has led to discussions of a trade-off between the potentially desirable flexibility it offers and the emergence of low-wage, dead-end jobs, characterised by considerably fewer employment rights and less job security than conventional forms of employment.

The rise of atypical work has been a key feature of the labour market of the United Kingdom in recent years.. One kind of alternative work arrangement that is increasingly common in the UK are zero hours contracts. Under such contracts, employers are not obliged to guarantee hours or times of work, and workers are – at least in principle – not obliged to accept work offered and are paid only for the work carried out. Almost a million people in the UK work like this today, compared to only two hundred thousand at the turn of the millennium. Many of these contracts are prominent in low-wage sectors of the economy, such as hospitality and social care.

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