Work and Pay

Unemployment and Underemployment

  • Published: Aug 15, 2012
  • Author: Tom MacInnes
  • Category: Work and Pay

Today's labour market figures showed a small fall in the number of people unemployed and small rise in the number in employment. At the same time, there have been rises in the number of people working part time because they cannot find full time work, meaning that the total number of people "underemployed" has not been higher for at least 15 years.

As part of our Monitoring Poverty and Social Exclusion series, we regularly produce an indicator of "underemployment". This includes the unemployed as well as those who want to work but are not currently economically active and those who work part time but want a full time job. Today's figures mean we can analyse the trends up to the mid point of this year. 

"Underemployment" from 1996 to 2012

unemployment_and_underemployment.png

In the first half of 2012, some 6.4m people were underemployed using the definition above. This was 200,000 higher than the previous year, and higher than any other point in the series. The reason for the recent rise was the increase in the number of people in part time work wanting full time work - up from 1.2m to 1.4m. 

Compared to 2011 as a whole, there was no fall in unemployment in the first half of 2012. This might be a surprise given today's figures, but we try not to report month on month changes, as they are often statistically unreliable. What we can say is that unemployment in the first half of this year was higher than the first half of last year, but lower than the second half. Overall, then, the picture is one of no change in unemployment. 

But the picture for employment is changing. On average across the first two quarters of this year, some 29.4m were in employment, higher than at any time since 2008. The composition of employment has changed as well. We know that the number of people working part time but wanting full time work is up, and so is the total number of part time workers. There are now 8m people in part time work, the highest number in the data series going back to the early 1990s. 

As we have said in previous blogs, the number of self employed people has risen. At 4.2m, again, the highest in the series. The number of people in part time self employment is, at 1.2m, also as high as it has ever been. 

Add to this the 600,000 people on temporary contracts who cannot find permanent work  -the highest since the late 1990s - and the workforce looks a lot different to how it was pre crisis. There has been a lot of commentary on the "mystery" of low/ no economic growth when employment is "booming", but adding together these various changes, add in falling real wages and it starts to make sense. There may be more people in work, but many are doing fewer hours and most are getting paid less for them. Family budgets are squeezed, and in an economy as dependent on consumption as ours, that results in low growth. 


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