Lauren Wood from Citizens Advice Scotland told the Economy, Energy and Tourism Committee changes to working and child tax credits in April highlighted how people "struggle to make ends meet on the hours they have and also how people struggle to increase their hours to any extent".

The committee was continuing its inquiry into the scale and character of underemployment in Scotland on 23 January 2012.

The remit of the inquiry covers the short and long-term implications of underemployment for Scotland's economy and people.

Ms Wood also pointed out that for the self-employed it "really could be a case of hunger or bust" due to varying hours of work affecting tax credits leading to individuals facing some weeks having no money.

She also said sanctions from Job Centre Plus for people leaving part-time jobs with few hours meant "more people trapped" and could leave those individuals in a "terrible place" facing a "significant period of time without any money at all".

An increase in the length of time of sanctions led to an increased risk of homelessness, pushing people into what seemed like a "perpetual state of poverty" and some of the "biggest worries" facing CAS were food poverty and fuel poverty.

Emily Thomson from the Women in Scotland's Economy Research Centre quoted the TUC report 'Underemployment Crisis' saying "it is just as bad to have a bad job as to have no job" and said the health effects of underemployment were the same as for unemployment.

Ms Thomson called for an extension of child care subsidies to help extend women's employment and pointed out child care workers were "desperately undervalued in developed economies".

Speaking on behalf of the Joseph Rowntree Foundation, Dr Jim McCormick said some ways to address underemployment were to improve the targeting of relevant work experience and skills investment, to incentivise employers to increase the hours they offered and to give people more of a secure platform to build jobs.

The committee also took evidence from Norma Philpott from Citizens Advice and Rights Fife; Robin Parker from the National Union of Students Scotland; Dave Surtees from the Association of Graduate Careers Advisory Services and Des Loughney from the Edinburgh Trade Union Council.

A number of the witnesses raised concerns about pay day loans and their impact on people.