The government is smug about the unemployment figures but there’s a huge problem with underemployment

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Sophia Akram

A UK think tank is suggesting that, while unemployment figures are relatively low, underemployment is an escalating problem. And its findings could provide food for thought for policy makers.

Counting the hours

One of the problems with the definition of unemployment is that it doesn’t take into account part-time workers who want full-time work.

In its report [pdf] Counting the Hours, the Resolution Foundation touches on this while looking at the “hollowing out” of the labour force in the UK. Or in other words, the loss of middle-paid jobs, which has previously been argued to be the result of automation and moving jobs overseas.

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The Resolution Foundation looked [pdf, p2-3] at figures from the Labour Force Survey and found that:

  • The number of male employees working part-time has increased from 8.1% to 11.7% between 1997 and 2017.
  • The proportion of men earning around a third of the median weekly wage (the middle wage if all the wages recorded were listed in numerical order) has increased by 70% over 19 years.
  • Of men earning around a third of the median weekly wage, the proportion of them working part-time increased from 31% in 1997 to 53% in 2016.
  • The proportion of men earning more than twice the median weekly wage increased by 15% over the same period.
  • The proportion of men earning the median weekly wage has fallen by 15%.
  • The average number of hours worked by male employees fell from 39.8 in 1997 to 37.1 in 2016. And the drop was most noticeable among the lower-paid.

The Resolution Foundation found underemployment was less marked [pdf, p16] for low-paid women than for low-paid men, but otherwise broadly similar for men and women.

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Blue sky thinkers take note

These findings give policy makers several points to consider:

Firstly, the report [pdf] uses weekly wage levels rather than hourly. And it suggests that rates of pay are not as primary an issue as weekly earnings.

Secondly, while unemployment has been cited as being at the joint lowest level since 1975, the statistics show a shifting pattern in the way men work. More men working low-paid jobs are working part-time. But many of them would like to work more hours, so the shift is partly involuntary [pdf, p3].

Thirdly, the results counter previous arguments to explain the loss of middle-paid jobs. As the Resolution Foundation’s Policy Analyst Stephen Clarke said:

When people talk about the labour market ‘hollowing out’ they’re normally referring to mid-skilled jobs moving to other parts of the world, or disappearing altogether as a result of automation.

But Britain’s real hollowing out problem has much more to do with the hours people are working than the rates of pay different jobs bring. The increase in earnings inequality among men is about the increasing number of low-paid men who are either reducing their hours or moving into part-time work, in some cases against their wishes.

Silver lining?

The silver lining is that the gap between men and women working part-time is narrowing.

But the overall result is not good news for households getting by on fewer hours than they need or want.

Wages and pay freezes are still an important part of the debate. But the report shows a largely ignored trend that’s hitting the bottom line of working households. So while the government tries to use low unemployment rates as markers of success, the devil is in the detail – and the detail is less than positive.

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