Underemployment Unemployment

The ONS this week announced that underemployment in the UK has risen to just over 10% of the labour force, up nearly 50% since the start of the recession in 2008. Underemployment now stands at just over 3 million, affecting 20% of young people and concentrated in low skill occupations. The ONS defines the underemployed as those who are currently working and willing to work more hours than they currently do, and are available to start within the next two weeks. The underemployed are either looking for more work from their current job, or looking to move to a job with more hours. Underemployment is, of course, not to be confused with unemployment, where individuals are not working at all, or inactivity, where individuals who are of working age are not looking for work, including students, carers and the disabled.

Underemployment rates vary across the regions, with the highest rate in the East Midlands and the lowest in the South East. In 2012, 24% of part-time workers were underemployed, compared with just 6% of full-time workers. In a separate survey, the UK was found to have the second worst underemployment levels in the EU-27, with only Ireland experiencing more underemployment.

The rise in underemployment is closely associated with the downturn in economic activity following the onset of the 2008 recession, and reflects the underlying impact of an increasingly flexible labour market whose origins date back to the early 1980s. While recession has led to the wholesale shedding of full time jobs across Europe, workers in the UK have either taken up short-time working, thereby ‘saving’ their jobs, while the unemployed have taken up part-time work. In contrast, the picture across much of Europe indicates a reluctance to create or accept part-time work and underemployment.

There is, however, growing concern that in the UK the debate about rising unemployment and inactivity have directed attention away from, perhaps, the equally serious problem of underemployment. Underemployment may mask the underlying problem of insufficient work for the UK’s labour force, and also partly ‘explain’ the recent rise in employment as workers move between full and part-time jobs. It is claimed that rising underemployment in this recession is the reason that unemployment did not hit the 3 million mark, as in previous recessions. To a great extent the underemployed represent a relatively neglected group who sit between the more clearly defined ‘fully employed’ and ‘unemployed’.  What is especially worrying is the growing army of young underemployed who, at the beginning their working lives have increasingly low expectations about the quantity and quality of work available to them.  For those fortunate and gifted enough to get to university there is always the hope that the economy will have improved enough by the time they leave. However, for those hoping to join the labour market in the immediate future the prospects of full time work are low while the likelihood of an extended period of underemployment remains high.

Sources: ONS, The Telegraph

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