5 Reasons Why Zero-Hour Contracts Are the Future of Work

Zero hour contracts, already common in UK and Europe, are likely to catch on in the US.

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By Maite Baron

Opinions expressed by Entrepreneur contributors are their own.

During the recent downturn, many companies found that they couldn't shed costs as fast as they needed to, because many of their staff were on permanent or fixed-term contracts.

In the UK, one answer to this problem was the introduction of the zero-hours contract, which offers the employee no guarantee of a minimum number of hours' work. On the plus side, it has provided an incentive for many to consider self-employment as a freelance or independent contractor.

By the spring of this year, there were around 1.4 million zero-hours contracts in the UK, meaning that over 10 percent of Britain's working population is on one. In sectors such as tourism, catering and food, around 50 percent of employees have one, with other big users being retail and the care industry.

Related: Finding Contract Work Online

Elsewhere in Europe, zero-hours contracts are more constrained by law. In Germany, for instance, employees in the banking sector who are nearing retirement can cut down their hours so they end up working on a zero-hours basis. In Austria, there are somewhat similar "beck and call contracts," though these are governed by tighter working time regulations, while in the Netherlands there are at least a quarter of a million workers subject to "minimum terms'.

Will this trend stretch to other parts of the world? Probably.

In our interconnected world, what's happening in one country impacts on others. And simply being aware of what's happening elsewhere helps you to think more flexibly and be better prepared to take control of your own professional future, wherever you are.

There's no question that, for employers, zero-hours contracts are a particularly useful tool, but that doesn't mean that, as the economic picture brightens, they will disappear. Here are five reasons why zero-hours contracts and similar "as and when" arrangements are more likely to stay than go:

1. The future of work demands flexibility. In a fast moving economy, flexibility can give competitive advantage, ensure survival and increase your chances of success. As a result, companies are increasingly looking to build "suppleness" into their structure, so they are better equipped to manage change as it happens, by matching resources to demand.

Trade unions may not like them but many employees seem to want this too. Half of those questioned in a recent CIPD survey said they were perfectly happy with a zero hours arrangement. For them, having flexibility and choice in their work is preferable to fixed hours and no choice.

2. The tried and tested "Hollywood model' is spreading to other industries. While zero-hours contracts are particularly common in fast food and retail, other sectors where workflow is unpredictable, such as the creative industries (advertising, PR, film and design), have long employed "per project contract' freelance talent to deal with the ups and downs, and the specific skill requirements of individual projects.

Think of a Hollywood film. The script writer, director, actors, extras, make-up artists, in fact everyone, is contracted on a temporary basis. When the project is completed, each has to find the next contract. That's a trend that's spreading to other, less "arty' areas of work.

Related: Welcome to the Nimble Workplace of the Future, One Fostering Constant Change

Now, even professional employees who would once have been formally contracted, are having to embrace this new flexibility. Many actually find they prefer being "hired when needed" as it means they can offer their services to a variety of employers, rather than just one. It also helps ensure they acquire and use more skills, as well as keeping themselves up-to-date.

3. There are no geographical barriers any more. Thanks to the spread of new low-cost technologies, geographical boundaries between markets have been erased. At the same time, online job markets like Elance and oDesk have removed one of the greatest fears of many would-be entrepreneurs -- making sales. Now, as long as you have Internet connectivity, anywhere can be your office, and anyone in the world can be your client. Local or international, now there's now little difference between the two.

This offers particular opportunities for anyone with high-level skills looking to start their own business, build teams of global talent, or find new clients faster.

4. Niche and expertise are great differentiators in a crowded marketplace. As companies look to cut costs by adopting more flexible ways of working, this also opens up opportunities for those with specialist skills to command higher fees. Thanks to the "economics of flexibility" they can also bid for contracts they would never have had the chance to go for previously, when so much more was done "in house."

5. Transitioning from a "job creating" to a "self-sufficiency" economy. There is no doubt that for those without premium skills, zero-hours contracts and other "as and when" staffing solutions can mean financial uncertainty, disengagement and a lack of commitment on both sides, employer and employee. But the trend is growing, and the employment market is adapting and adjusting to it.

Therefore, while zero-hours contracts in their current form may be legislated away by political pressure, the requirement to be adaptable in a fast-changing world of work is here to stay.

Such self-reliance will be good for the wider economy, with the low start-up costs of self-employment generating opportunities for many more new entrepreneurs, who rather than looking to someone else for a job, will create their own.

Increasingly, many more of us will have to get used to being in business for ourselves, responsible for finding and managing our own work. That will require us to adopt a much more entrepreneurial mindset. That's no bad thing, as the future of work is already here.

Related: Employee or Independent Contractor?

Maite Baron

Multi-Award Winning Author, International Speaker, Co-Founder of TheCorporateEscape.com

Maite Barón is author of Corporate Escape: The Rise of the New Entrepreneur. She is CEO of The Corporate Escape, a London-based consultancy, training and coaching company specializing in helping professionals escape the rat race, rekindle their passion for life and reinvent themselves as new entrepreneurs.

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