The rise of zero-hours contracts in Britain, reckoned in the latest survey published last week to cover 2.5% of the workforce, is beginning to look less like a response to an uncertain economic recovery and more like a new business model. Depending on the method used, the number of people working on these hyper-flexible arrangements is somewhere between 800,000 and 1.5 million. But if there is uncertainty about the exact numbers – partly a reflection of the continuing lack of a clear definition of a zero-hours contract – there is no doubt about where they are used: larger employers in hospitality, food processing, social care and the NHS.

But they are also spreading, geographically out of the south to the north, particularly the north-west, and from part-time work, often casual, to full-time employees – and into new areas like further and higher education. Precarious employment, work with no guarantee of hours or income, is no longer just a short-term answer for uncertain employers that helps to keep people in work and off benefits. It is becoming integrated into the economy. The question of what to do about it is more complex. As research for the professional human resources body, the CIPD, has shown, some workers prefer zero-hours contracts to anything that demands greater commitment on either side. The biggest group of workers on zero-hours contracts may be students who like hyper-flexible contracts because they mean that work can be fitted round studying. Some other groups – parents of small children or others with caring responsibilities – find them useful too.

At the end of last year the government introduced regulations that appear to ban the worst kind of zero-hours contract, where the employer can demand availability without guaranteeing any work at all. These so-called exclusivity clauses are now technically illegal: but only technically – redress has to be sought through an employment tribunal (at a cost of up to £300) and with no guarantee of compensation because the claimant has to show they have suffered loss of future earnings, something that is impossible by definition for anyone on a zero-hours contract.

Last week, New Zealand’s centre-right National government, backed by a unanimous vote in parliament, banned such contracts altogether. There may be less to this than meets the eye. The prime minister John Key has successfully pitched his tent across the centre ground in a way that has reduced New Zealand Labour, according to its critics, to a party of empty gestures. But it is not yet clear what the real implications of the ban will be: as the British TUC argues, there is more than one way for employers to duck their proper obligations like sick pay, paid holidays and parental leave. Agency work, for example, often carries no protection. False self-employment is increasingly used to deprive workers of hard-won rights. Most trade unions would prefer a smarter approach that would protect a wider range of workers. The TUC wants employers to be obliged to give all new workers, on day one, a written statement setting out the terms on which they are employed and limiting the time a worker can be employed on zero-hours contract before they are guaranteed a minimum number of hours.

Any government serious about building a low-welfare, high-wage economy, as George Osborne claims to be, would also be serious about promoting and protecting workers’ rights. In his last budget, he pulled a major surprise to lend some credibility to his pose as a workers’ champion by increasing the minimum wage, even if he went on to sour the effect with his assault on tax credits. This week, should he choose to, he could make less ambiguous progress. The chancellor could take a lesson from his ideological cousins in New Zealand and start to do something determined about regulating unacceptably exploitative contracts.

Cheap, easy-come, easy-go labour deters investment in training and other productivity measures, undermines loyalty and corrupts the relationship between employer and employee. Next week is not just budget week, it is also the government’s moment of decision on the trade union bill as it completes its progress through the Lords, This is a mean-spirited, unfair bill which will, among other measures, severely hamper the capacity of unions to work on behalf of their members. No workers’ champion can be opposed to the employees standing together to get a better deal for themselves. Without drastic modification of the union bill, the Conservatives’ vaunting claim to be the party of the workers is hollow indeed.