Young people's experiences of precarious and flexible work – Evidence Review

Chapter 1: What constitutes precarious working conditions?

This part of the review refers to Research Question 1 (RQ1): What are the range of potentially precarious or flexible working conditions experienced by young people in Scotland?

Although there is no universally accepted definition of precarious working, the European Parliament’s 2017 resolution on working conditions and precarious employment defines it as ‘employment which does not comply with EU, international and national standards and laws and/or does not provide sufficient resources for a decent life or adequate social protection’ (Eurofound, 2018).

Benach et al. (2016) describe three approaches to defining precarious working common in existing research: (1) defining precariousness as relating to certain sectors of the labour market; (2) defining it as referring to any non-standard work type such as zero hours (i.e. any employment that is not through a permanent, full-time contract); and (3) defining it in relation to the attributes of a job, taking into account various aspects of the employment context. 

The third definition implies the potential for precariousness in any employment and leads to the identification of indicators for precariousness. Benach et al. (ibid) cite employment insecurity (often related to contract type), an unequal power balance between employers and individuals, low wages, limited rights/protections, and the powerlessness to exercise legally granted workplace rights, as indicators of precarious employment.

A study for the European Parliament’s Employment and Social Affairs (EMPL) Committee similarly adopts a multi-dimensional understanding of precarious employment based on a range of risk factors:

“The most relevant indicator for individual risk of precariousness is in-work poverty and low pay, though interpretation needs to be cautious, as in-work poverty is the result of multiple factors in addition to low earnings, such as levels of working hours, the labour supply, jobless households, household size, means-tested social benefits, and poverty thresholds. Other indicators are social security, labour rights, stress and health, career development and training, and low levels of collective rights.” (Broughton et al., 2016, p.10)

The EMPL Committee report identifies informal or undeclared work and zero hours contracts as being the type of employment relationships with the highest risk of precariousness. In the UK it regards the main risks of precarious employment as being found in zero hours contracts (considered most likely within the retail and hospitality sectors) and in part-time work; with the UK singled out as having above average levels of marginal part-time work (less than 20 hours per week) in comparison with other EU countries. Risk of precarious employment is also identified in standard employment (defined in the study as full-time, open ended employment) in some sectors, due to the risk of low wages within these; specifically within the cleaning, care, hospitality, security and construction sectors.

Research and articles reviewed describe a range of specific types of employment experienced by people across the UK, including Scotland, which are considered at risk for precariousness:

Zero hours contracts: (where there are no guaranteed hours of work in a given week, ONS, 2018) are often held by young people aged 16-24 (Taylor, 2017) and are considered high risk for precariousness. Risk increases if employees need a regular income and may not feel able to refuse work, meaning the flexibility is not truly reciprocal but instead benefits disproportionately, or only, the employer. Zero hours contracts are also considered to be high risk for precariousness as they may involve unpredictable and irregular working hours (including on-call working), leaving workers less able to plan ahead and resulting in variable earnings which may affect benefits entitlements. Those on zero hour contracts also have fewer employment rights than those on traditional contracts, for example in relation to sick pay, maternity pay and bonuses, as well as a limited pension entitlement. According to a report for Co-operatives UK, those on zero hours contracts are likely to be lower earners (earning £3.80 per hour less than the average employee in 2016), suggesting there may also be a higher risk of in-work poverty for those in this type of employment (Conaty et al., 2018). According to the Labour Force Survey, 7.4% of people aged 16-24 in employment in Scotland were on a zero hours contract between October and December 2018, which compares to 2.6% of all those in work (ONS, 2018).

Marginal part-time work: (part time work of less than 20 hours per week, often within health and education, retail and trade and other service sector employment, Broughton et al., 2016) is also identified as potentially precarious, with risks associated with this type of work considered to be low levels of job security, fewer career opportunities and less training investment from employers. The Taylor Review of Modern Working Practices (2017) advises that 12.4% of all part-time workers in the UK are in part-time employment because they cannot find full time work and research by the UWS-Oxfam Partnership (2016a) notes that in 2015 9.2% of the workforce in Scotland were underemployed. Part-time workers who are in a contract with less hours than they need/want may be experiencing in-work poverty or financial pressures that make them more likely to accept undesirable working conditions. Both marginal part-time workers and those on zero hours contracts are also considered to experience lack of representation and little access to HR policies, which may contribute to a limited understanding, or confusion around, employment rights (Koukiadaki et al., 2017).

‘Bogus’ self-employment: (where individuals do the same work as formal employees but have a self-employed status, Hudson-Sharp et al., 2017) is associated with risks of not being paid social security and limited access to labour rights. According to the Precarious Employment: Patterns, Trends and Policy Strategies in Europe report those in ‘bogus’ self-employment have the lowest incomes of all categories of workers. The report describes ‘bogus’ self-employment as: 

“a relationship that is, in all but name, a dependent employment relationship….Individuals who are working in such a way that could be classed as ‘bogus’ self-employment would be classed as workers even though they are acting as employees. Employers use ‘bogus’ self-employment as a way of avoiding the payment of social security charges for these individuals, which limits access to benefits that are dependent on social security contributions.” (Broughton et al., 2016, p. 94)

Fixed term contracts: (employment where there is a predetermined end-date or an agreement that work will end after a particular task has been completed, Hudson-Sharp et al., 2017) can also be high risk for precariousness. The risk of precarious employment within fixed term contracts is considered particularly high for seasonal workers due to the low pay typically associated with this type of work, and seasonal work often involving irregular working hours (Koukiadaki et al., 2017). Those undertaking seasonal work include a high proportion of 16-19 year olds, who are also considered vulnerable to exploitation due to potentially limited knowledge and experience of workplace rights and responsibilities (Broughton et al., 2016). The Labour Force Survey shows that temporary employees accounted for approximately 5% of all workers in Scotland for the period between April 2018 and March 2019.

Agency work: (where workers have a contract with an agency but work temporarily for an employer, Citizens Advice, 2019) was estimated to impact on rates of pay for workers, who were calculated as having earned 22p less per hour in 2016 than other workers (Judge et al., 2016). Workers who are officially employed by an agency but work for another company, sometimes described as ‘indirect workers’, may also be at risk of finding themselves in situations where neither the agency nor the company they provide work for take responsibility for their rights.

Franchise employees: (those who work for an organisation; usually an SME, which operates using the brand name, product and/or system of business of another firm – often multinational businesses such as McDonald’s or Starbucks – but is legally and financially independent, Koukiadaki et al., 2017) were also highlighted as an at risk employment type in a 2017 European Parliament report for the Committee on Petitions (PETI Committee), which notes that there is significant franchise activity in the UK, stating that “in terms of GDP, in 2009 franchising contributed £11.8 billion in the UK”. As with agency work the risk to workers employed in an organisation with this type of business model comes from “blurred organisational boundaries” which may result in a lack of clarity over responsibility for workers’ rights and lack of direct communication between workers and organisational decision makers; as well as limited worker representation (Koukiadaki et al., 2017).

Posted workers: (employees sent to work temporarily from one European Economic Area country to another, Broughton et al., 2016) are another group identified as at risk of precarious work conditions. This is due to potential lack of access to social security in moving between countries, risk of breaches of employment rights related to the exploitation of legal loopholes by some employers, and the risk of isolation, with potentially limited access to trade union representation.

Internships: (where work is undertaken, often by students, to develop skills and knowledge to put them in a better position in the job market, McLister, 2012) are also highlighted in some evidence as having the potential for precariousness due to often being paid at a very low rate, or not paid at all (Broughton et al., 2016).

Undeclared work: (any paid activities that are lawful as regards to their nature, but are not declared to the public authorities European Commission, 2007) was also identified in the evidence reviewed as being high risk for precariousness, as this type of work does not entitle workers to formal rights and legal protections. As tax and contributions are not paid, undeclared workers’ entitlements to benefits and pensions may also be affected (Broughton et al., 2016).

Digitalisation and the platform economy: (whereby economic activity is facilitated by digital platforms that allow individuals or organisations to access a group of other individuals or organisations for services or products, Hudson-Sharp et al., 2017) is also considered to pose a risk of precariousness to workers. Risks associated with the platform economy are low pay, pay insecurity and lack of access to in-house company benefits or training and development, with little workplace protection available (such as unemployment insurance or disability insurance). The Working Together – Trade union and co-operative innovations for precarious workers (2018) report comments on the growth of this sector in the UK: 

“Uber is often in the news, mostly in relation to taxi driver protests, but there is now a growing fleet of online labour-sourcing corporations including: TaskRabbit for small jobs, Handy for residential cleaning, Clickworker for surveys, data management, etc., MyBuilder for household repairs and improvements, Helpling for domestic help on demand, Axiom for tech-assisted legal services, Upwork for higher skilled freelancers and most recently the arrival of SuperCarers for social care and Teacherin for supply teachers.

Promoted as the ‘sharing economy’, these digital corporations operate to extract value via a ‘black box’ system that blocks any direct relationships between producers and consumers. Decision making in respect to pricing and policies are not co-determined and profits are definitely not shared by the platform owners. Command and control is the old name of this rapidly growing money making game” (Conaty et al., 2018, p. 18).

The gig economy (in which organisations contract independent workers for short-term engagements or individual tasks, often also using technology enabled business models and associated with self-employed/freelance workers and micro-entrepreneurs, Broughton et al., 2016) shares the risks of those faced by platform economy workers: fragmented, insecure employment and a lack of worker protections. Research by CIPD suggests that 4% of all UK employment is in the gig economy, with a higher proportion of gig workers aged 18-29 (39%), compared to other workers (of which 21% were in this age range). The research found a high proportion of gig workers (58%) engaged in gig economy activity as well as also having other employment, which could indicate this type of work is used to top up income (CIPD, 2017).

Workers in the gig economy often provide services through digital platforms and likewise there is overlap between other forms of employment mentioned above (fixed term contracts are often a characteristic of agency working for example), with precariousness associated both with some types of contract and some types of organisational/labour models.

The employment types listed above have in common the characteristic of flexibility, considered a strength of the UK labour market by the Taylor Review of Modern Working Practices (2017). Flexible employment becomes precarious when, rather than being a desired characteristic of employment for the worker and one that they actively choose, these types of work are only accepted because more secure forms of employment are not available (Broughton et al., 2016). Where flexibility is an involuntary feature of employment there is the potential that the balance of power transfers away from the employee/worker, who may be in a position where choice is more likely to be dictated by necessity than suitability, and in which they are subject to the pressure of securing ongoing/future employment. The types of flexible work highlighted above are all associated with a potential reduction in the security of employment, a key concern for Scottish workers highlighted in Taking the High Road – Work, Wages and Wellbeing in the Scottish Labour Market which notes that “job security, or lack thereof, was cited by many witnesses as an overarching concern in relation to in-work poverty and the health concerns related to poor quality employment” (Scottish Parliament; Economy, Energy and Tourism Committee, 2016, p. 23). 

Table 3.1 provides a summary of the types of employment highlighted above as at risk of precariousness.

Table 3.1 Summary of types of employment highlighted in evidence as at risk for precariousness