Page last updated at 00:14 GMT, Tuesday, 16 March 2010

Are working hours being cut to save jobs?

By Kevin Peachey
Personal finance reporter, BBC News, Norwich

Laurence Campion at Simply Soaps
Laurence Campion is looking to invest for the future

Tucked away in a Norfolk wood, a small team make soap by hand in a converted chicken shed.

But even here at Simply Soaps - a small operation set up 11 years ago with a grant from the Prince's Trust - it has been impossible to escape the downturn.

"This Christmas was not the same as others. Retailers were keeping their stock to a minimum," says founder Laurence Campion, in his sweet-smelling workshop in the family grounds.

"We were aware of the recession, but this was the first real sign of it."

With orders down by 5% to 15%, something had to give, and staff were told the factory would only run for three days a week.

"It was a tough decision to make. We took staff out for a meal. It was quite emotional, but everyone had a personal interest in us not going under," Laurence says.

They are far from the only business to reduce staff hours, and the growing number of part-time and temporary workers seems to have put the brakes on unemployment in the UK.

Clocking in

A recent report by the Office for National Statistics (ONS) found that with new job offers scarce when the UK economy started to shrink, so people started to consider working in jobs with shorter hours.

Graph on enforced part-time working

"This will have forced some people to take work that did not meet their needs in terms of hours worked and earnings, and hence increased underemployment levels," wrote Annette Walling and Gareth Clancy, of the ONS, in February.

The acceleration in the number of temporary and part-time workers is most striking in the latest Labour Force Survey - research released alongside monthly unemployment statistics.

Last month's figures showed a year-on-year increase of 32% in the number of temporary workers who could not find a permanent job. These are people who work full-time on a short-term contract.

Simply Soaps has cut costs by reducing hours

This figure was even higher - a rise of 35% - for part-time workers who could not find a permanent job. These are people who work fewer hours a week than full-time workers.

With the next set of jobs figures to be published on Wednesday, John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, says the trend is likely to continue "for a while".

"Employers are keen to preserve skills and avoid the cost of redundancy," he says.

"For workers, this option is better than the alternatives. There is a passive acceptance."

The low level of interest rates, and mortgage costs, mean that workers are better placed to accept these jobs as a short-term solution.

A more service-orientated economy, and a leaner use of staff by employers, means that businesses were also more likely to agree to shorter hours rather than lay-offs than they were in the recessions of the 80s and 90s, he says.

And the changing nature of the workplace is clear if you delve a little deeper into the Labour Force Survey figures.

There are more women who work part-time because they cannot find a permanent job than men, although both numbers grew by more than 30% in 2009 compared with 2008.

At Simply Soaps, two female members of staff have each taken more than one part-time job at different companies, which has lessened the blow of falling hours.

Taxing times

So are people just resigned to taking part-time work because they are aware of the economic reality, or is there something else in it for them?

Boarded-up shop
Some services and businesses were hit hard by the recession

Nigel Meager, director of the Institute of Employment Studies, says that the tax credit system has added an extra financial incentive to taking these jobs.

"In previous recessions, if people were offered a low-paid part-time job it was not worth their while in taking it," he says.

"But now doing some hours of work means some are eligible for tax credits. It means some people who might previously have stayed out of the system still have a foothold in the labour market."

Working tax credit is paid to people who work for 16 hours or more a week, for at least four weeks. Couples can also get help with their childcare costs.

Workers' rights

There are 1.43 million people in the UK with temporary jobs, and 7.7 million in part-time jobs, according to the latest ONS figures.

Classifieds websites say they are seeing rising numbers of people searching for these jobs.

But are these jobs being taken without consideration of the rights to which employees are entitled?

European rules have been tightened, aimed at avoiding the exploitation of agency workers.

The EU agreed the Agency Workers Directive at a meeting in Luxembourg in 2008 which will lead to agency workers gaining the same rights as full-time staff after 12 weeks of work.

We could be in for several years of sluggish growth in the labour market
Nigel Meager, Institute of Employment Studies

Other benefits that will be offered from the first day of employment include information about job vacancies where they are working, equal access to facilities such as childcare and transport, and rights for working mothers, such as time to attend ante-natal appointments and parent-friendly working hours.

These rules have yet to be enshrined in UK law, but many employers have already put them into place.

There is no specific definition of a part-time worker, and one man's part-time hours could be another's full day.

So these workers are generally identified by businesses as being those not employed full-time, whatever the hours.

And they have strict rights too, outlined in the Part-Time Workers Regulations.

Part-timers should receive the same pro-rata rates of pay and benefits as offered to comparable full-time workers.

As well as basic pay rates, this includes any holiday entitlements, sickness, maternity, paternity and pension provisions, and any other contractual entitlements provided by the employer.


When the economy picks up again, will these workers be in a prime position to work full-time again?

At Simply Soaps, Laurence Campion has been investing in new products and has taken the extra time to look into the web-sales side of the business.

He hopes to return the business to a five-day week.

"It has been a struggle, but we are confident about the future," he says.

The bigger picture painted by Nigel Meager, of the Institute of Employment Studies, is somewhat gloomier.

"We could be in for several years of sluggish growth in the labour market. This might be a problem for people locked into substandard jobs," he says.

So it is all eyes on the job figures - but some workers might have more time to study the numbers than they would really want.

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Telegraph Bank of England warns families to expect fall in living standards - 6 hrs ago
The Scotsman Bank: Workers face uncertain future within a weakened UK - 13 hrs ago Recovery may see more job losses - 36 hrs ago

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