Figure 10: Proportion of potential hours in the labour market
Source: Office for National Statistics
The number of hours worked series is taken from the most recent labour market statistics release.
The number of potential extra hours that part time workers could supply by moving to full time jobs is calculated by multiplying the number of people in this position by the difference between average full-time and average part-time hours.
The number of potential extra hours that unemployed workers could supply is calculated by multiplying the number of unemployed people by average hours worked.
The number of potential extra hours that inactive workers would like to supply is calculated by multiplying the number of inactive workers who report that they would like to have a job by average hours worked. There are a number of limitations to this approach as it is broad in scope and therefore may overestimate/underestimate the number of potential hours available in the economy. For example it includes: 1. People not seeking work, but who say they would like a job and are available 2. People not seeking work, but who say they would like a job but are not available.
Note that these estimates are sensitive to the assumptions made in particular about the likely average hours of the unemployed and inactive. If these potential workers would prefer to work fewer hours than the current average, then the degree of labour market slack is over-stated by this measure. If, by contrast, they would prefer to work longer hours than average (for instance, because they are overwhelmingly seeking full-time work), the degree of slack on this measure would be understated. Finally, note that this analysis makes no allowance for an equilibrium rate or frictional level of unemployment.
All data used are published in the Labour Market Statistics release: estimates of the potential hours supplied by part-time and unemployed workers are similar to, but differ slightly from, ONS estimates of underemployment and other work in the field.