From the TUC

Zero hours and beyond: how new technologies drive labour market flexibility

01 Nov 2013, by in Labour market

Zero-hours contracts (ZHC’s) are making headlines. But they are only part of a trend in which employers can use new technologies to deploy workers in ways that, superficially, can seem very efficient.

As many as one million British workers are on a ZHC; tied to an employer who can decide if they are required day-to-day. At times they are not required they wait, unpaid, for the next summons. A government review of the proliferation of zero hours contracts, led by Vince Cable, is expected in early 2014.

ZHC’s can be particularly effective for employers because sophisticated scheduling software is able to allocate workers in line with so many parameters. Ten years ago a factory would typically have a shift rota with overtime slots published for sign up. Now, a high volume employer such as a call centre will typically plot exact headcount required hour-by-hour. 

To do this, the software will draw on data from marketing systems, call flow predictions and even weather forecasts to assign an optimal number of agents at any point. Then it can break down individual contractual obligations, leave entitlements and past work patterns to assign the individuals who will fill those seats as cost effectively as possible.

The benefits of this flexibility are all one way. It allows an organisation to respond precisely, very cheaply, to business needs. But staff shoulder the potential inconvenience and income fluctuations. The personal impact on people who find themselves on zero hours – or limited guaranteed hours with zero hours on top – employment is beginning to be studied. For some individuals a ZHC works; they get the hours they want, for the time being at least. But as-needed employment reliant on one organisation is inevitably precarious.

Experiments in other countries show how damaging one sided flexibility can be when supported by new technologies. The jobdumping website set up in Germany created a downwards auction among workers forced to specify the lowest salary they would accept. The most desperate won. German unions united to fight the concept and the site is no more.

Pressure for flexibility

Two government initiatives will increase pressure for UK workforce flexibility in the next few years. Firstly, the vast, and growing, homecare sector is being moving towards increased choice and control for service users. This is laudable. Tales of vulnerable elderly citizens not having lunch until 5.00 because that is when a worker is available are concerning. But allowing each individual to receive care where and when they want it is only possible if hundreds of thousands of already low paid workers can be constantly marshalled according to customers’ day-to-day requirements.

Secondly, changes to the benefits regime will introduce “in-work conditionality”. Many people in the UK have some work, but not enough to lift them above the threshold for benefits. Currently they simply receive tax credits, a top-up payment from the state to bring them to the official minimum income level for their circumstances.

As the Universal Credit is rolled out, tax credits will be replaced by a regime that requires those deemed underemployed to seek extra hours to fit around their existing work. If they can’t find it they may be told to start looking for a conventional job instead. Again, there is a logic to this change. At present, people on benefits are too often penalised for doing a few hours work. That limits their chances to build earnings, experience and employer relationships. But in-work conditionality is likely to bring a flood of individuals needing flexi-work into employers’ scheduling systems.

With more people available, and growing demand for flexible provision, scheduling systems will be able to further squeeze every last penny of cost out of delivering the most responsive service levels for customers. But is this really efficiency?

Zero hours contracts tend to diminish the worker; defining them as a resource to be pulled off the shelf only as it suits the organisation. However, these workers are often frontline: retail assistants, service personnel, salespeople, care workers, contact centre agents or hospitality staff. Commoditised by the organisation, they are unlikely to make the best brand ambassadors or feel like a stakeholder in their employer’s success. A devalued workforce may be a false economy.

Two-way flexibility

Labour market flexibility can be healthy. There is always need for fluid employment on the supply side. Many people badly need work that can fit around caring, medical issues, childcare, starting a home business, studying or other commitments. But they can’t be at an employer’s beck and call, the flexibility has to be reciprocal. That requires pools of people with irregular availability being easily accessible to employers in their locality.

Two-way flexibility is only viable if underpinned by sophisticated technology. The overheads and uncertainty are too great otherwise. There are websites for ad hoc tasks performed on a freelance basis when providers choose to be in the market: taskrabbit, taskpanda, oDesk,Peopleperhour and Gigwalk are possibly the best known. 

For years the UK government has quietly been funding development of ambitious technology specifically for fluid, multi-employer, working in the context of formal employment. The result is UltraFlexi: a system specifically for flexible workers to be deployed among multiple employers in line with each individual’s availability, personal preferences, training and track record of reliability.

Creating a humane alternative to zero hours, however, isn’t really about the technology. Our challenge now is convincing large employers to adopt two-way flexibility rather than the command-and-control mentality that so often underpins zero hours workforces. Those pioneers of large scale ultra-flexi working could be public or private sector.

GUEST POST: Wingham Rowan is the Director of the UltraFlexi social business and has written extensively about the potential of new technologies to create new forms of work.