Zero-hours contracts are a drag on the economy and part of a wider employment problem, according to human resources professor Kim Hoque

Zero-hours contracts are ultimately bad for the UK economy, according to a leading business expert.

Kim Hoque, a professor of human resource management at Warwick Business School, believes they are holding back the recovery as they represent a drag on consumer spending.

"People on insecure zero-hours contracts are less likely to have the confidence to spend than people with more stable incomes," he said.

Zero-hours contracts have become a political hot potato in recent months, as they are seen by some to be exploitative, and ministers are looking at how best to tackle the issue.

According to the Chartered Institute of Personnel and Development (CIPD), around a million people in the UK are currently on zero-hours contracts, which do not guarantee regular shifts, and workers are expected to be available at the beck and call of the businesses that hire them. For some, particularly students, the arrangement works well, but for others it can cause extreme anxiety.

Research by the Recruitment and Employment Confederation of 600 employers found that more than one in four companies employs somebody on a zero-hours contract.

Professor Hoque concedes that UK employment has been remarkably buoyant despite the economic slump since the financial crisis, and this could partly be down to the flexibility of zero-hours contracts. But he also says under-employment could be a problem in the long run.

"The flexibility they provide may well have enabled the UK to avoid higher levels of unemployment during the economic downturn. They may also have enabled some people to maintain an attachment to the labour market who would otherwise not have been able to do so.

"That said, such contracts could also be seen as part of the wider under-employment problem that has affected the UK economy in recent times, with large numbers of workers on part-time or casual contracts wanting to work more hours but being unable to do so.

"Hence, while unemployment has remained lower than many economists predicted would be the case, underemployment has been high - and zero-hours contracts may be a significant part of this picture, and so impacting on consumer confidence and spending."

Copyright Press Association 2013