Last updated: November 28, 2012 4:39 pm

One in 10 workers now underemployed

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One in 10 workers are now underemployed, an increase of almost half since the economic downturn began in 2008, a study by the Office for National Statistics has found.

It said the number of workers who wanted to work more hours each week had grown by almost 1m to 3.05m, out of a total workforce of 29.41m. Almost two-thirds of the underemployed were part-timers.

The highest rates of underemployment were among the lowest-paid workers, such as cleaners, caterers and labourers, and among young people.

The figures show the downside of the UK’s recent jobs boom. While net employment has grown by more than 750,000 and is close to record levels, many people are working fewer hours than they would like.

The ONS said the number of underemployed workers was fairly stable until the run-up to the recession in 2008, but grew sharply after that.

Almost two-thirds of the increase took place in the 12 months between 2008 and 2009, when the economy was in recession. The number has continued to rise since then, but at a much slower rate.

John Philpott, director of The Jobs Economist, a consultancy, said the figures highlighted the degree to which the headline unemployment count understates the shortage of work in the economy.

“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,” he said.

The highest underemployment rates were in the East Midlands, Yorkshire and Humber and northeast and southwest England, the ONS said.

The average underemployed worker earned £7.49 an hour, more than £3 less than someone who was not underemployed.

More than one in five of workers aged 16-24 were underemployed this year, compared with 10 per cent of those aged 35-49.

The ONS said 1.9m of the underemployed were in part-time jobs and that 24 per cent of all part-timers wanted more work.

The shortage of work has led to a big rise in the level of underemployment among the self-employed, who are now more likely to report being underemployed than those who work for others.

The rise in underemployment does little, however, to explain the UK’s productivity puzzle, whereby employment has recovered much more strongly than output.

That is because, despite the number of people wanting more hours, the total weekly number of hours worked has recovered almost to pre-recession levels.

The Department for Work and Pensions said: “More than half of the 700,000 extra people in work since 2010 are working full-time and we have recently seen record numbers of people in employment.

“Part-time working suits millions of people and gives others the skills and experience to find a different job or take advantage of longer hours when they are available.”

But Brendan Barber, general secretary of the Trades Union Congress, said: “Being underemployed carries a huge pay penalty that puts a real strain on people’s finances.

“Long periods of underemployment can cause longer-term career damage, which is particularly worrying for the one in five young people currently trapped in it.”

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