The Office for
National Statistics (ONS) has just published updated figures from the Labour
Force Survey (LFS) on the number of UK workers who are underemployed and want
to work more hours and the number overemployed who want to work fewer hours for
less pay.
As expected the
number of underemployed workers – those who want to work more hours - fell by
116,000 in the year to Q2 2014 but the figure remains staggeringly high at
close to 3 million (2.975 million, 9.9% of people in employment). On average
each underemployed worker would like to work an extra 11.3 hours per week,
though the desire for longer hours is far greater for part-time workers (22% of
whom are underemployed) than for full-timers (whose underemployment rate is
5.4%). This in turn is the major reason why women, who are more likely to work
part-time, have a higher underemployment rate (around 11%) than men (around 9%).
Self-employed people also have a slightly higher underemployment rate (10.1%)
than employees (9.4%). Perhaps unsurprisingly the incidence of underemployment
is higher for workers in lower paid than higher paid occupations, since the low
paid need longer hours to earn a decent weekly wage, and for younger people (around
1 in 5 16-24 year olds are underemployed).
At the other end
of the desire for work spectrum 2.9 million workers would be prepared to cut
their hours for less pay (an average overemployment rate of 9.7%, which is roughly
similar for both employees and the self-employed)). On average the overemployed
would like to work 11.2 fewer hours but in this case its full-timers (with an
overemployment rate of 11.4%) rather than part-timers (5.2%) who want to work
less, with overemployment rates highest for professional and managerial workers
(at around 13%).
The ONS notes that
the underemployment rate has been higher than the overemployment rate since
2009 and thus concludes: “this means that there are more hours being desired by
workers than hours workers want to work less. Therefore over the years following
the recession there has been an increase in slack in the labour market for
those in employment, but this has started to decrease since the beginning of
2013.
Despite the recent
improvement, however, 2014 is nonetheless the sixth successive year in which
the underemployment rate has been at 9.5% or above. Such a prolonged period of
mass underemployment demonstrates the extent to which the very good headline
employment and unemployment figures of recent years mask a substantial underlying
shortage of work, the persistence of which takes some gloss off the UK’s
supposed ‘jobs miracle’.
Unemployment
didn’t reach the levels feared at the start of the financial crisis but the
degree of subsequent pain inflicted on the labour market has been as severe as
expected, it’s simply that the pain has been felt differently than in previous
recessions. And with almost 3 million people underemployed alongside still
almost 2 million unemployed the pain of work shortage and associated pay
weakness is likely to continue well into 2015.