Can flexibility be made to work for workers?

Insecurity over working hours and what to do about it


As the nature of work evolves then, sooner or later, so do the constraints and expectations that society eventually places upon employers. 19th century industrial politics were peppered with conflicts over factory conditions and the length of the working day, resulting in the Factory Acts. Much of the 20th century was shaped by the rise of collective bargaining and then attempts to curtail it. Over the last few decades low-pay, and the state’s role in addressing it, have come to the fore.

The latest chapter of this ever-changing story concerns the rise of, and reaction to, unpredictable working hours. Traditional studies of working time — do people undertake more or less hours than they’d like? — often overlook the sheer uncertainty many workers face. Zero-hours contracts may be the emblematic example of this but the reality of insecure shift patterns extends well beyond the near million workers who approach each week without a guarantee, quite literally, of a single hour’s work. Indeed, the understandable focus on this particular category has in some ways obscured the wider issue.

‘Just in time’ working, as the Americans call it, is not new but it has spread in the post-crisis jobs market, powered by the automated scheduling software deployed by many HR departments. It is estimated that one in six of the US workforce have some form of unstable work schedule including a clear majority of all those working in vast sectors like retail and fast-food (good data in the UK is hard to come). The reality of the zig-zag pattern of hours undertaken by these workers often comes as a shock to those who live by a regular working week. The grind of cancelled shifts, feeling constantly on-call and being sent home early can take its toll. No surprise, then, that the rise of last-minute-labour is generating a counter-reaction which, in the US, comes in the form of the growing ‘fair scheduling’ campaign.

The American tradition is different to ours. For 80 years, since the time of FDR, the federal state has seen it as its business to tell business the extra compensation that workers must receive for certain non-contracted hours. It mandates that over-time rates of at least ‘time-and-a-half’ be paid to those on low-wages working more than 40 hours a week. In the mid-1970s two out of three of all salaried workers fell within the scope of this provision, falling to one in ten today. But it remains a live political issue not a regulatory relic. President Obama proposed greatly expanding its scope to encompass all workers earning up to $47k (as opposed to the current $23k limit) — an idea that the Trump administration may reverse.

Many US cities and states, buoyed by their success in raising local minimum wages, are developing their own approaches to working hours (over and above national over-time rules). New York City has voted to force fast food restaurants to agree work schedules two weeks in advance or pay higher rates for any change in hours. Oregon is about to become the first state to ensure that those working for large employers get a week’s notice of their schedule, rising to two weeks in 2020. Other states and cities — from California to Connecticut — are eying similar proposals. Major employers, like Starbucks and GAP, stung by adverse publicity, have already sought to get ahead of these pressures by overhauling their approach to scheduling. Nor is America alone — Australia has long established sectoral agreements that mandate higher rates of over-time pay.

It’s a debate that already exists in the UK but is set to grow louder. Some employers are changing practice in part due to employee pressure. Ikea recently moved to a system of four week notice for work-rotas reflecting practice in other EU countries. Their Head of HR told me that they want this to be staging post to moving to a 16 week system.

The question as to whether scheduling is an issue that UK policy-makers should be concerned with has been thrown open by Matthew Taylor’s recent report on employment rights that he undertook for Theresa May. Flexibility is vital to the UK jobs market, it argued, but all too often it is purely ‘one sided’: benefitting employers, not workers. After assessing a range of potential responses he proposed the Low Pay Commission (LPC) be tasked with setting a higher rate of the minimum wage for non-contracted hours. Think of it as a premium rate to encourage employers to offer the low paid more guaranteed hours and fewer last minute shifts.

In the UK context this may sound like a novel idea but it has some heritage. The old Wages Councils saw it as their job to set over-time rates, as well higher pay for anti-social hours, across a range of low paying sectors up until 1992. Over the intervening generation all manner of economic and political forces have shifted power further towards employers. A 21st century wage-premium for non-contracted hours worked would be a rare attempt at a tilt in the opposite direction. Odd, then, that it was almost entirely overlooked in the reaction to the Taylor report (though not by Torsten Bell).

What, then, might it mean? Assume for a minute a proposal roughly along these lines was accepted and, with a nod to the US experience, a premium rate is introduced at ‘time-and-a-half’ (of the national living wage). That would be a big deal: a very large number of workers could, potentially at least, be eligible. More than four in ten of all UK employees — around 11 million people — earn less than one and a half times the national living wage. (Even if we look at a lower threshold, say ‘time-and-a-quarter’ of the legal wage floor, this still encompasses three in ten employees). That said, the numbers actually affected will be much lower than this. Most of us don’t do any paid over-time hours and the details of Taylor’s proposal — which allows employers to average hours worked over a longer reference period — would likely reduce eligibility.

We don’t know, of course, exactly what effect this premium rate of the minimum wage would have on the hours of work offered — though, to state the obvious, less over-time would be a feature not a bug. As with most significant proposals there would likely be losers as well as winners. Those workers happy to be available at short-notice and pick up extra shifts as and when they arise may find themselves working fewer hours in total. Many others would clearly gain from greater certainty over their working life.

The very principle of extending the role of the state in pay-setting will offend some, while the uncertainties and trade-offs will spook others. There is certainly much to be weighed and different ways the idea could be developed. But it should be honed, not dismissed.

Because it represents a step, if not a leap, into the dark some caution is merited. There’s a lesson to be learnt from the way in which the LPC successfully fused radicalism with incrementalism in the late 1990s. The notion of the legal regulation of poverty-wages was a bold break with the past, yet the wage-floor was deliberately set at a modest level from which it steadily rose. A similar approach — confidence in asserting the public interest in encouraging greater hours-security coupled with pragmatism in how this is achieved — is likely to serve us well.

The principle that employers should think hard, and if need be pay a bit more, before transferring ever more risk onto low-paid workers is a reasonable one. Some firms in fast-moving sectors have shown they understand that the low road isn’t the only route to workplace flexibility. Others may need a well-judged nudge, or indeed a jolt, to help them get there. As the nature of work continually evolves, so too must our approach to shaping it for the better.

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