Labour leader Ed Miliband has pledged to end what he called an “epidemic” of zero-hours contracts being used in the UK.

Labour has proposed changes that would see zero-hour workers offered permanent contracts after 12 weeks. But the cost to retailers like Sports Direct remains unknown.

Miliband said the contracts were “not good enough for the people of Britain” as he launched a crackdown on the controversial deals, more than 70,000 of which are used in the retail industry at present.

A Labour government, he said, would pass a law that gives workers on zero-hours contracts the right to convert their contract into a regular one after three months.

Miliband added that the controversial contracts are “undermining family life” as a “symbol of an economy that doesn’t work”, but Conservatives claim the Labour policy would lead to a loss of jobs.

While Miliband and his party trade blows with their Tory counterparts over whether or not the move would be good for workers, the fate of retailers seems to have been overlooked.

“Employers can’t afford to put everyone on zero-hours on to a permanent contract. Some of those staff will end up having no work altogether”

Vicky Redwood, Capital Economics

That’s because there is one burning question that remains unanswered: if the new government implements changes like those suggested by Labour, what will be the cost to retailers?

It is a question that, seemingly, no one has a definitive answer to, but the statistics suggest it would amount to more than a mere drop in the ocean.  

Between October and December 2014, around 697,000 people said they were employed on a zero-hours contract in their main job, according to the Office for National Statistics (ONS). That represents 2.3% of the UK workforce.

72,000 of those were employed by retail and wholesale businesses, that is around 1.8% of the sector’s total workforce. And almost one in five of those are working at Sports Direct.

Job losses

While none of the big four grocers use zero-hour contracts according to shop workers union Usdaw, it is understood that half of businesses with 250 or more employees use the controversial deals, allowing them to hire staff with no guarantee of regular hours.

Substituting those contracts for permanent ones would clearly come at a cost – one that remains unknown. But one thing is almost certain – retailers would not be able to employ as many workers if they were forced to make such changes.

Miliband, who sees Labour’s policy on the contracts an integral part of his election campaign, said the move would help to raise the standard of living and boost poor levels of productivity in the UK. Others have said that would not happen.

Sports Direct has come under fire for employing almost 15,000 zero-hours staff in the UK, but its chairman Keith Hellawell said changes to the law would “take away the flexibility” of its workforce and lead to a loss of jobs.

It’s an opinion echoed by Capital Economics chief UK economist Vicky Redwood. She says: “Employers can’t afford to put everyone on zero-hours on to a permanent contract. Some of those staff will end up having no work altogether if they are forced to do so.

“There is no doubt that zero-hours contracts make the labour market more flexible, so you just have to find the right balance.”

Stability or flexibility?

But Usdaw general secretary John Hannett said the move from zero-hours to permanent contracts would “provide people with stability at work and a regular income that allows them to properly plan their personal finances.”

Centre of Retail Research director Joshua Bamfield agrees with Miliband’s notion that zero-hours contracts are symbolic of a struggling economy, but beleives there is still an appetite for them in the present financial climate.

Bamfield says: “A lot of the people on zero-hours contracts like them, so the idea of changing them into permanent ones may not be as significant as one might think.

“Students at university who are fitting work around their locations and timetables aren’t going to want full-time contracts. They can’t be forced to take them, so they will just stay on their zero-hours contract.

“When the economy improves and there’s more stability, that could improve the situation and we could see less of these contracts. In that sense, Labour could be pushing an open door.”

Retailers will no doubt be keeping a close eye on the general election on May 7 - the result of which could have consequences that even they don’t know the true extent of at this stage.