Zero-hours contracts: the battle between flexibility and ethical management at McDonalds

Zero-hour contracts have become a trending issue as companies such as McDonalds balance efficiency against corporate social responsibilities

As happens, one firm is picked on in the media to illustrate a broader issue. In the case of zero-hours contracts, this week [August 2013] the firm is McDonalds.

The article in The Independent notes:

McDonald’s has admitted 90 per cent of its UK employees are on zero-hours contracts. The admission indicates the fast-food chain is potentially the largest zero-hours employer in the UK’s private sector, with 82,800 contracted staff not guaranteed work or a stable income.

The controversial practice requires employees to be available for work when it is required but, as they are contracted for 0 hours a week, employers are under no obligation to use them or pay them a set wage. This allows businesses not to pay staff during quiet periods, but ensures they are available to work at short notice when required.

UK Politicians have reacted to McDonald’s admission by calling for it to offer affected staff a new contract with a minimum hours guarantee.

The concept of a zero-hours contract appeals as an efficiency device. Organizations are able to pick and choose workers and avoid paying for slack times. Indeed, the notion of slack is worth considering. Economists have argued that slack is unproductive time, the enemy of efficiency. Innovation theorists in contrast have argued that slack time is vital for innovation. How can an organization develop a creative culture without time to ‘play with the future’. The appeal of Taylorism is that slack-time is reduced, even eliminated, in theory. Fordism, became its exemplar. Thus, modern management from its inception may be seen as approving the principle of zero-hours contracts.

From a different perspective

From a different perspective, behavioural scientists have long concluded that worker dissatisfaction eventually contributes to other losses in productivity through demotivated workers, militancy, and an increased tendency towards that economic sin, free-riding or exploiting fellow-workers to minimize personal effort.

Zero-hours contracts became politically interesting in the UK this year [2013] as a survey by The Chartered Institute of Personnel Development claimed that a million workers, around four percent of the working population could have such working arrangements.

Interesting, the practice is more common in the voluntary and public sectors than in private industry.

Zero-hours contracts were initially introduced in hotels, restaurants and shops, but their use has spread to the public sector because of spending cuts. The number has reached almost 100,000 in the National Health Service, while new figures show more than 270 government staff are on such contracts. Unison, Britain’s second biggest union, called for them to be outlawed. Its general secretary, Dave Prentis, said: “The vast majority of workers are only on these contracts because they have no choice. They may give flexibility to a few, but the balance of power favours the employers and makes it hard for workers to complain. Not knowing from week to week what money you have coming in to buy food and pay your bills is extremely nerve-wracking.”

Good or bad for workers?

It has been argued that the arrangement suits some individuals. I am less convinced the argument can be extended, as it has become, to entire categories such as students.

Good or bad for employers?

The greater enthusiasm shown in the public sector figures suggests that private organizations are more cautious about the arrangements. I found this unexpected at first sight. Are for-profit outfits more concerned about their workers? Or might it be they are more aware of hidden responsibilities owed to the zero-hours employees, yet to be tested in law.

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3 Responses to Zero-hours contracts: the battle between flexibility and ethical management at McDonalds

  1. It is a bit like consulting really, you don’t know if or when the next pay cheque is coming!

  2. Liam says:

    For me the root of the issue is this…

    Do we want a healthy economy, to the limit that the population will tolerate it

    or…

    Do we want a healthy society to the extent that the economy will support it.

    We can argue about what constitutes a healthy society, or a healthy economy, but the for me policy is driven by the trade off between these two aspects of modern life.

    The zero-hour contracts are just the latest manifestation of the pendulum swinging toward the healthy economy view.

    A secondary aspect is that companies are moving aggressively to off load risk, though a better example is how pensions are now becoming provided; in that companies are less inclined to provide a pension, and now participate in a savings scheme. This risk that the savings will provide a pension are being off-loaded on the individual.

    This gives me the willies, and I am glad that I will be long gone before the consequences materialize.

  3. at the same time, large corporations in the private sector are employing permanent people to work 37.5h/w with an expectation that office employees are flexible and will work xx hours more a week to deliver the targets without reporting overtime.

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