Underemployment rises to affect one in ten workers

Changing working patterns and a huge rise in part-time work has resulted in one million more people working fewer hours than they would like, compared to 2008.

There are now 3.05 million people classed as underemployed, according to the Office of National Statistics (ONS), with almost two-thirds of those affected in part-time jobs.

Figures show that the number of people working fewer hours than they would like was fairly stable up to 2008, and then rose by almost 50 per cent when the recession began. Nearly two thirds of the increase took place in the 12 months between 2008 and 2009, when the economy was in recession.

The figures go some way towards explaining why unemployment has not fallen as steeply as previous recessions.

Those who are underemployed have either had their hours cut by employers, can only find part time work available, or are self-employed and don’t work enough hours. However in some professions, such as catering or cleaning, the hours of work are limited by the nature of the job, for example, when a bar or restaurant is open.

Part-time workers are much more likely to be affected, with 24 per cent (or 1.9 million workers) underemployed and wanting more work, compared to just 6 per cent of full-time workers.

The ONS found that in 2012:
– Overall one in ten workers wanted to work more hours.
– Among part-time workers, around one in four wanted to work more hours.
– School midday/crossing assistants and bar staff were jobs with some of the highest underemployment rates.
– Average underemployed workers earns £7.49 per hour, compared to £10.81 for an average employee

Young people and lower paid workers are most affected by underemployment, said the ONS. Of the 16-24 year old age group, one in five tend to be underemployed, compared to one in ten for those aged 35 to 49.

Underemployed workers are those in employment who are willing to work more hours – either by working in an additional job, by working more hours in their current job, or by switching to a replacement job. They must also be available to start working longer hours within two weeks
Their current weekly hours must be below 40 hours if they are between 16 and 18, and below 48 hours if they are over 18.

In terms of regions most affected, the top three areas for underemployment were the East Midlands, Yorkshire and the Humber and the North East

Economist John Philpott said that the figures highlight “the degree to which the headline unemployment count understates the current shortage of work in the UK economy”.

“While some work is obviously better than none, approaching one in five economically active people are struggling in today’s ‘no or not enough work’ economy,” he added. “Add in the effect of falling real take home pay for the vast majority of people in work and it becomes clear how much distress is being suffered in the jobs market.”

Flexible labour market

The rise in underemployment points to a shift in the labour market as it tries to adapt to a contracting economy. It also marks a more favourable situation for employers, said John Salt of the website Total Jobs.

“The increase in part-time jobs is an indication of a flexible market, where firms don’t bear as much risk if they want to lay staff off, for example,” he said.

“Underemployment is the reason that we have managed to stave off the disastrous unemployment figures some had feared given the parlous state of the economy, but the numbers don’t indicate any strength.”