By Rachel Hargreaves, Good Work Intern, ShareAction
The presents are wrapped and under the tree, sequins and suits are being worn to Christmas parties and families are coming together ahead of Christmas day.
However, for many people – for those who struggle to make ends meet – Christmas will not be so merry.
An insecure Christmas
5.1 million workers in the UK are in low paid and insecure jobs.
They will be delivering Christmas cards in the snow, serving mulled wine past midnight and helping pick out the perfect presents on Christmas Eve.
For many, their rotas were only received on Sunday evening. Shifts change weekly so planning when and how they will see their friends, family and loved-ones over the festive period is impossible.
And, just like the hours, the income is also irregular, so presents have been difficult – if not impossible – to save for. For those on temporary contracts, the end of the festive season will also mean the end of their employment.
The problem: insecure work
The shape of work is changing.
In the UK, the gig economy workforce has doubled since 2016. .
Precarious working conditions make it difficult for workers to plan both their time and finances. Not having set working patterns or notice of shifts makes it difficult for workers to spend time with family and do other activities.
Uncertainty of schedules and income also has negative impacts on mental health.
Workers in the gig economy are classified as self-employed. This means they are not guaranteed employment rights, such as sick and holiday pay, that so many of us take for granted.
The Resolution Foundation found a further million people across the UK, most of whom are on temporary, zero-hour and variable-hour contracts, are being denied these rights.
These workers in particular are left vulnerable and disadvantaged financially if they were to fall ill.
Insecure jobs are disproportionally concentrated in low-paid sectors and industries, including retail and hospitality. One million people earning less than the real Living Wage also have volatile pay and hours.
Often, workers find themselves trapped in insecure work as they cannot find a more secure option. The Living Wage foundation reported that 270,000 people have less than 16 guaranteed hours of work per week, but want more.
A growing case for positive change
Investors have been advocating for fair wages since 2013. The Living Wage investor coalition now includes 29 investors, representing some £2.4 in assets under management, including Legal and General Investment Management the largest asset manager in the UK. Together they are calling on top firms to accredit as Living Wage employers.
But ensuring fair wages is just one piece of the puzzle.
With the rise of insecure working practices, it’s important that all stakeholders – including investors – push companies to adopt sustainable business models and practices.
Providing secure jobs that pay a Living Wage and provide security is not only good for workers, but also companies and their investors.
The short-term benefits gained from non-standard contracts are reduced by long-term costs.
Workers with little job security are more likely to be less committed to organisational goals. Sectors with high usage of insecure and low pay contracts experience higher rates of absenteeism and turnover. And with recruitment and training of new employees costing over £25,000, companies face financial losses if they cannot retain staff.
Using precarious employment models also increases the risk of industrial action.
Staff at eCourier, a same-day delivery company subsidiary of Royal Mail, recently took strike action calling for a guaranteed minimum wage, holiday pay, sick pay and a pension.
And, although the court ruled to halt the strike action proposed by the Communications Workers Union against Royal Mail earlier this year, a staggering 97% of 110,000 workers balloted voted in favour. This shows the potential for a negative impact on both a company’s operations and financial performance.
There has also been a growing number of legal cases against gig economy companies, for their practices. Most notably, in 2018 it was ruled that Uber drivers should be treated as workers rather than self-employed, and be entitled to holiday pay and minimum wage. Uber lost an appeal against the ruling.
A call to action for investors
If investors seek to make long-term sustainable investments they need to start engaging with companies on insecure work.
Investors need to start asking about the use of temporary contracts, agency work, zero-hour and self-employed contracts in all companies.
Private equity funds have already started to reduce the funding they provide to gig economy start-ups and this is an issue that will be taking centre stage on the investor radar in the New Year.