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Underemployment up 1 million since 2008

The number of people in work wanting more hours stood at 3.05 million in April to June 2012

The number of underemployed workers – people who are in employment but want to work more hours – has risen by 980,000 since the start of the economic downturn in 2008 to stand at 3.05 million in 2012.

The number of underemployed workers was fairly stable over the period before the onset of the economic downturn in 2008. Since then, it has increased by 47%. Nearly two-thirds of the increase took place in the 12 months between 2008 and 2009, when the economy was in recession. The number of underemployed workers has continued to rise since 2009, although at a much slower rate than during the recession.

Just over three-quarters, or 76%, of those underemployed in 2012 stated a desire to increase their hours in their current job. This will include a range of people, from those who actively asked their employer for more hours to those who would merely prefer longer hours if given the opportunity. A further 15% wished to increase hours by finding a replacement post, leaving only 9% who wanted an additional role.

The occupation category that consistently has the highest rate of underemployment is ‘elementary occupations’ (such as labourers, cleaners and catering staff). Within this category, those with some of the highest underemployment rates in 2012 are school crossing/midday assistants (39%), bar staff (33%) and cleaners (31%).

In 2012, 24% of part-time workers were underemployed, compared with just 6% of full-time workers. This is not surprising though, as part-time workers have fewer hours of work to begin with. Another key factor influencing underemployment is the level of earnings. In 2012 the average underemployed employee earned a gross hourly wage of £7.49 while the average non-underemployed employee earned £10.81. The link between low pay and underemployment may partly explain why underemployment rates are higher for younger workers – in 2012 22% of workers aged 16–24 were underemployed, compared with 10% of those aged 35–49.

Underemployment rates vary across the English regions and devolved countries of the UK. Taking a four-year average from 2009 to 2012, the highest underemployment rate was in the East Midlands where 10.7% of workers wanted more hours in work. This was followed by Yorkshire and the Humber (10.6%), the North East (10.5%) and the South West (10.4%). The lowest underemployment rate was in the South East at 9.2%. Some of the shared characteristics among those regions and countries that have high average underemployment rates are above-average proportions of part-time workers, workers aged between 16 and 24 and workers in low-skilled elementary occupations. All these characteristics increase a worker’s chance of being underemployed.

There are many possible factors behind why a worker is underemployed, for example:

  • An employer may only be able to offer limited hours.

  • A worker may be in a job that only lends itself to certain hours of the day, e.g. bar staff can only work when the bar is open.

  • Self-employed workers may have low hours of work as a result of low demand for their skills or services.

  • Economic or personal conditions may change, increasing the desire for hours in work.

  • Poor economic conditions may result in more people looking for jobs but fewer jobs being created. This may cause people to settle for “second-choice jobs” as an alternative to unemployment and as a route into getting more hours in the future. For example a worker may settle for a part-time role even though they actually want a full-time one.

This is a short video looking at underemployment in the UK.

Firstly people are underemployed if they are in work and willing to work more hours, they are available to start working longer hours within 2 weeks and their weekly hours did not exceed 40 hours (if they are under 18 years of age) or 48 hours (if they are 18 years of age or over).

 

We will start by looking at underemployment since 2000 using this chart and firstly plotting the line for the number of people underemployed using this blue line and the percentage of workers who are underemployed using this green line.

We can see that in 2012 for the quarter covering April to June there were around 3.05 million workers underemployed in the UK and 10.5% of people in employment wanted to work more hours.

If we look back to 2008 and at the onset of the economic downturn we can see that around 2.07 million workers were underemployed covering around 7.1% of the workforce.

Between 2008 and 2012 the number of people underemployed increased by 980,000 and if we shade on the period of the 2008/09 recession we can see the sharp rise in underemployment over this period.

Using this small chart here we can see that almost 2/3 of the four-year increase in those underemployed occurred over the recession period.

 

We can split those underemployed into more detail. Firstly using this chart we can see that in 2012 around 9% of them wanted an additional job, the majority or 76% wanted more hours but in their current job and the remaining 15% wanted a replacement job with more hours.

We can also look at those underemployed and if they work full-time or part-time using this chart. By the nature that part-time workers work fewer hours the majority of people who are underemployed, or 62% work part-time with the remaining 38% working full-time.

 

However in the UK more people work full-time than part-time so we will now look at the underemployment rates within each group using this chart. Starting with the blue line here we can see the rate for people working part-time and here is the rate for those working full-time. We can see that in 2012 around 24% of part-time workers were underemployed and around 6% of full-time workers were underemployed. So a part-time worker in 2012 was four times more likely to be underemployed than a full-time worker.

 

Now we will look at differences in underemployment for different age groups using this chart. We can see that underemployment tends to decrease with age. Almost 22% of workers aged 16-24 wanted to work more hours and this falls to around 8% for those aged 50 to 64 and just over 4% for those aged 65 and over.

A couple of things to note when interpreting these differences are the percentage of people working part-time in each age group, shown here by these bubbles. We can see that 42% of the younger age group work part-time and we know that people working part-time are more likely to be underemployed.

Average wages are also important to consider and if we look at all employees aged 16 and over we can see their median wage and for those underemployed the median wage is lower which will be a combination of different types of jobs and working patterns between the two groups but a lower wage will increase the likelihood of wanting to work more hours.

Looking at it by age group we can see that underemployed people have lower average wages in each of the age groups except 65 and over and also the youngest group have the lowest wages which again may explain why they would like to work more hours than some of the other groups.

 

Now we will look at the occupations with the highest underemployment rates. In 2012 they were school crossing/midday assistants, followed by bar staff and cleaners.

 

Finally we will look at how underemployment varies across the country using this chart. Taking an average over the period 2009 to 2012 we can see that the highest underemployment rate was in the East Midlands where 10.7% of workers wanted more hours in work. This was followed by Yorkshire and The Humber, the North East and the South West. The lowest underemployment rate was in the South East at 9.2%.

We can now look at how the bars would have looked before the recession taking an average over 2005 to 2008, and if we now use this map we can see how many percentage points the underemployment rates have increased. Looking across the whole of the country the largest increase was in Yorkshire and The Humber followed by Wales.

 

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Categories: Labour Market, People in Work, Hours of Work, Employment
Content from the Office for National Statistics.
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