WORK AND PENSIONS SELECT COMMITTEE: Labour market seminar: 26 TH February: ‘Trends in part-time working and short-term employment contracts and the impacts on benefit claims.’ Summary BILL WELLS: DEPARTMENT FOR BUSINESS, INNOVATION & SKILLS.
Jan 06, 2016
WORK AND PENSIONS SELECT COMMITTEE:Labour market seminar: 26TH February:
‘Trends in part-time working and short-term employment contracts and the impacts on benefit claims.’ Summary
BILL WELLS:
DEPARTMENT FOR BUSINESS, INNOVATION & SKILLS.
Whilst there are differences within and between the different working age benefit rates it remains true that only around 5% of
people receive a main rate of benefits of more than £150 per week.
5
1 1
23
58
2
10
10 1 1
21
68
14 4
15
0 02
15
8
50
910
0 1
11
35
5
32
6
0
10
20
30
40
50
60
70
80
£0 0-£20 £20-£40 £40-£60 £60-£80 £80-£100 £100-£150 £150 & Over
PE
R C
EN
T
DISTRIBUTION OF WEEKLY AMOUNT OF MAIN OUT-OF-WORK BENEFITS: MAY 2013: WORKING AGE BENEFITS: SOURCE: DWP TAB TOOL
JSA LONE PARENT & OTHER ON IS ESA/IB/SDA TOTAL
…with only around 15% of employees earning less that £150 p.w. and less than 10% earning less than £100 p.w.
GROSS AND NET WEEKLY WAGES: ALL EMPLOYEES: SOURCE ASHE 2013:NET WAGES = GROSS WAGES NET OF INCOME TAX AND EMPLOYEE NATIONAL INSURANCE CONTRIBUTIONS:
£0
£150
£300
£450
£600
£750
£900
£1,050
£1,200
£1,350
£1,500
£1,650
£1,800
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95
Percentile
Gross Weekly Wages Wages Net of Income Tax and NICs
Housing benefit add complexity and cost to the ‘Making Work Pay’ agenda. Some claimant have a supplement to the main benefit rate -
usually around £50-£125 p. w. it is generally people in receipt of housing benefit that need income supplements in the form of tax
credits whilst in work.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
IN RECEIPT OF:
HOUSING BENEFIT BY MAIN PASSPORTING BENEFIT AND SIZE OF AWARD: %: SOURCE: DWP HOUSING BENEFITS.
JSA LONE PARENT & OTHER IS BENEFITS ESA PENSION CREDIT TOTAL
The wider range of opportunities provided by the UK’s ‘light and even’ employment regulation system has helped to deliver not only a
high overall employment rate but also generally higher rates for all age and sex groups (except the oldest)…
0
10
20
30
40
50
60
70
80
90
100
PE
R C
EN
T
EMPLOYMENT RATES BY AGE AND SEX: 2012: OECD ESTIMATES
UK OECD AVERAGE
Employment is above its pre-recessionary peak. And as total hours have growth even faster there is, therefore, little sign of labour
hoarding due to involuntary part time working. Average hours are now at or above 2008 levels.
94
96
98
100
102
104
106
IND
EX
: A
PR
IL 2
008
= 1
00
MONTH IS MID MONTH OF THE QUARTER
EMPLOYMENT, TOTAL & AVERAGE ACTUAL HOURS WORKED: INDEX: APRIL 2008 =100: SOURCE LFS: SEASONALLY ADJUSTED
EMPLOYMENT TOTAL ACTUAL HOURS WORKED AVERAGE ACTUAL HOURS WORKED
The UK’s ‘light and even’ employment regulation has also helped the UK to show resilience during and since the recession. Those aged
25-64 and 65 & over are already above pre-recessionary levels…[But as there has been a population shift towards those aged 65 & over the overall
employment rate for all aged 25 & over are not quite above pre-recessionary levels.]
0
2
4
6
8
10
12
68
70
72
74
76
78
80
Per
Cen
t
Per
Cen
t
EMPLOYMENT RATES: AGES 25-64 & 65 & OVER:SOURCE LFS: SEASONALLY ADJUSTED
Aged 25-64 Years [LHS] Aged 65 & Over [RHS]
However, a major problem remains for young people leaving education. They are taking longer when they leave education to either move into
further/higher education or to move into work. Their experience differs from that of young people who have successfully entered the labour market – and had a job. Amongst this group the numbers are already
close to pre-recessionary lows.
0
200
400
600
800
1,000
TH
OU
SA
ND
S
WORKLESS UNDER 25 NON-STUDENTS: BY WHETHER HAD PAID JOB OR NOT: SOURCE LFS: AGE 16-24 EXCLUDING THOSE IN FULL-TIME EDUCATION: 4 QUARTER AVERAGE: BIS ESTIMATES
HAD A JOB (Inc. Missing Values) NEVER HAD A JOB (Inc. Missing Values)
Involuntary job losses rather than hours reductions was the main response to the fall in labour demand during the recession. However, subsequently, redundancies and other involuntary separations have
fallen back and total separations are now at pre-recessionary levels…
1.2
1.6
2.0
2.4
2.8
3.2
3.6
4.0
4.4
MIL
LIO
NS
JOB SEPARATIONS: ANNUAL FLOWS OUT OF EMPLOYMENT: AGE 16-64: LFS EXPERIMENTAL SERIES: N.S.A.
To ILO Unemployment To Economic Inactivity All Outflows
…and the type of jobs that fell during the recession - both (voluntary) part time workers and, particularly, full-time employees - are those most associated with falls in labour demand. Although there has
been strong growth recently, the job losses have not been recouped.
-1,200
-1,000
-800
-600
-400
-200
0
200
TH
OU
SA
ND
S
EMPLOYMENT CHANGE SINCE APRIL 2008: 'DEMAND TYPE' JOBS' LFS
SUM OF 'DEMAND TYPE' JOBS FT EMPLOYEES PT WORKERS WHO DIDN'T WANT FT
A rise in hiring is the main reason for the recent good employment performance. This rise was concentrated amongst people moving from ILO unemployment into a job. As this was during a period of low/no growth it suggests a supply rather than a demand effect…
1.2
1.6
2.0
2.4
2.8
3.2
3.6
4.0
4.4
MIL
LIO
NS
HIRINGS: ANNUAL FLOWS INTO EMPLOYMENT: AGE 16-64: LFS EXPERIMENTAL SERIES: N.S.A.
From ILO Unemployment From Economic Inactivity All Inflows
…but the recession seems to have increased the number of workers willing to take up ‘Second Choice’ vacancies rather than remain unemployed. It seems to have largely been their choice
rather than having been imposed on them by their businesses…
-200
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
TH
OU
SA
ND
S
EMPLOYMENT CHANGE SINCE APRIL 2008: SUPPLY-SIDE 'SECOND CHOICE' JOBS: LFS
Sum of 'Second Choice' Jobs PT Workers who Want to Work FT Second Jobs Self Employed
The growth in employment over more than two decades has been amongst workers who usually work more than 16 hours per
week…
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
TH
OU
SA
ND
S
MONTH IS MID MONTH OF THE QUARTER
EMPLOYMENT BY USUAL HOURS: CHANGE SINCE APRIL 1992: SOURCE: LFS: SEASONALLY ADJUSTED
0-6 HOURS 6-15 HOURS 16-30 HOURS 31-45 HOURS OVER 45 HOURS
…and the growth in the numbers of part-timers who would prefer to work full-time since the recession has been amongst workers
who usually work at least 16 hours per week…
PART TIME WORKERS WHO WOULD PREFER TO WORK FULL TIME:BY USUAL HOURS WORKED: CHANGE SINCE Q2 2008:
SOURCE LFS: NOT SEASONALLY ADJUSTED
-100
0
100
200
300
400
500
600
Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Th
ou
san
ds
Unknown Less than 16 16 - 30 Over 30
In terms of zero hours contracts it is the variability of the hours (and pay) on offer which is important rather than the precise nature of the contracts themselves. For example, ONS have indicated that the apparent doubling of such contracts in the last year is due, at
least in part to publicity raising awareness of this type of contract…
0
100
200
300
400
500
600
700
TH
OU
SA
ND
S
NUMBER OF ZERO HOURS CONTRACTS:SOURCE: LFS: OCTOBER TO DECEMBER: NOT SEASONALLY ADJUSTED
2013 ONS ESTIMATE ONS: 2000 TO 2012 BIS ESTIMATE 1997-1998
…but, because zero hours contracts are a very small part of overall employment zero hours/short hours are much more
prevalent amongst workers who are not on zero hours contracts than amongst workers who are…
0
500
1,000
1,500
2,000
2,500
3,000
No hours 1-4 hrs 5-9 hrs 10-14 hrs
TH
OU
SA
ND
S
WEEKLY HOURS ACTUALLY WORKED BY ZERO HOURS CONTRACT: 000sSOURCE LFS: OCTOBER TO DECEMBER 2013: NOT SEASONALLY ADJUSTED
ZERO HOURS CONTRACTS NON-ZERO HOURS CONTRACTS
In the labour market as a whole the numbers working less than usual hours because employers vary their hours have fallen over time. However, within
this total, there has been a growth of around 100-150 thousand in the number working zero hours.
0
50
100
150
200
250
300
350
400
3.8
3.9
4.0
4.1
4.2
4.3
4.4
4.5
4.6
TH
OU
SA
ND
S
MIL
LIO
NS
NUMBER WORKING LESS THAN USUAL HOURS DUE TO: VARIABLE HOURS:LFS: 4 QUARTER AVERAGE
Total [LHS] Worked Less than Usual Hours [LHS] Worked Zero Hours [RHS]
Variable hours contracts – including zero hours contracts – can provide opportunities for workers who are unlikely to be on benefits. For example, a quarter of zero hours contracts are taken up by students compared to less
than 10% of workers not on zero hours contracts…
18%
3%
7%
5%
75%
92%
0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
ZERO HOURS CONTRACTS NON-ZERO HOURS CONTRACTS
PROPORTION IN EDUCATION BY ZERO HOUR CONTRACT STATUS: SOURCE LFS: OCTOBER TO DECEMBER 2013: NOT SEASONALLY ADJUSTED
In Full-Time Education In Part-Time Education Not in education Unknown
However, there are also more signs of potential problems in zero hours contracts. There are more likely to want to work or need more
hours - 37% compared to 13% - including 16% who are actively looking…
10%
2%6%
1%
21%
10%
62%
86%
2% 2%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
ZERO HOURS CONTRACTS NON-ZERO HOURS CONTRACTS
NEED MORE WORK AND JOBSEARCH BY ZERO HOURS CONTRACT STATUS: %: SOURCE LFS: OCTOBER TO DECEMBER 2013: NOT SEASONALLY ADJUSTED
Need More Hours & Looking Prefer More Hours & Looking Prefer More Hours but Not Looking
Don't Need More Hours Unknown
CONCLUSIONS• The UK’s labour market system of benefits, employment regulation
and National Minimum Wage are all structured around providing universal basic minimum standards.
• And this combined with a long standing traditions of allowing workers and employers to determine their own terms & conditions is currently delivering a system where the majority of people are better off in work than on benefits; employment overall and for all age groups is high by international standards; and the employment record during and since the recession has been good.
• However, there is still more to do. Including:-– Helping young people make the transition from education to work more
easily and quickly; and
– there are a significant number who would prefer to work more hours both amongst those who usually work more than 16 hours a week – who have taken up a ‘Second Choice’ job rather than stay unemployed;
– and amongst workers whose variable hours – including zero hours contracts – mean that their hours are low or they are not working.