UK is underemployed: Should we be surprised?

 
Business analyst in search of employment Many people are resorting to unusual methods in their search for work

Should we be surprised to learn that there are now one million more "underemployed" people in the UK than in 2008?

We know that the economy itself is now operating well below potential. So it makes sense that a lot of people should find themselves working fewer hours than they would like.

Our economy is now around 3% smaller than it was before the start of recession, in the first quarter of 2008. What has puzzled so many people - for so long - is that the number of people in work is now almost exactly what it was then. We are just producing less stuff.

You can see how underemployment could help explain a part of that puzzle, if we were working fewer hours, as a country, but sharing those hours across a larger number of people.

As the chart shows, that is indeed a part of the story: the number of hours worked in the economy has not risen as sharply as employment, which suggests that quite a lot of people are working fewer hours than before - and, it seems, fewer hours than they would like.

Chart

The rise in self-employment in the past couple of years has been especially striking. Around 45% - nearly half - of the increase in employment since the summer of 2010 has been among the self-employed.

The popular image of a self-employed person is the entrepreneur, starting his or her company at their kitchen table. My colleagues and I have interviewed quite a lot of newly self-employed people over the past year or so that fit this hard-working stereotype. Some of their stories are truly inspirational.

But we have also spoken to some of the people highlighted by today's ONS release, who are counted as self-employed but feel like they are not doing very much work at all.

You might say it's better for them and for the wider economy if they are doing some work - to have some attachment to the labour market - rather than nothing at all.

However, given that this problem of underemployment seems to particularly affect the poorer parts of society, you would clearly not want this to become a permanent feature of our economy. Any more than you would want the UK's productivity - output per head - to keep falling, or our economy to continue operating so far below potential.

That same chart also makes clear that underemployment can only be part of the reason that the number of jobs has grown, while our national output has not.

That is because the total number of hours worked in the UK has also risen sharply in the past few years. At the start of 2008, total weekly hours in the UK stood at around 950 million. That fell to 905 million in the depth of the recession, but it is now almost back to where it was before, at around 945 million.

As the Bank of England pointed out in its recent Inflation Report, even if you assume that the recent increase in self-employment has yet to produce any extra output for the economy, that would still only explain about a tenth of the fall in the UK's productivity over that period.

Today's analysis from the ONS provides a useful snapshot of the uneven way that work has been distributed across our economy over the past few years - and the trouble that is causing many households.

By showing how the problem varies across different occupations, age groups and regions, the ONS has told us a lot of interesting things that we didn't know. But it has also told us something we already knew: the UK's economy is not working nearly as well as we would like.

 
Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this
    0

    Comment number 213.

    Nobody in the UK is interested in this. Wow. We are slowly sliding into economic banality and no one cares enough to read the State media.

  • rate this
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    Comment number 212.

    My wife has worked in education for 25 years. She has a masters and is dedicated to what she tries to do. Many of her colleagues would say that she is underemployed but she just wants to teach. In the brave new PC world someone like her who is not interested in'management' is under paid..... but not under employed.

  • rate this
    0

    Comment number 211.

    Well, what is 'underemployed' ? Surely most of us are? If we have any ambition (David Cameron, aspiration), we want more from our employment. I am nearly 50 and have seen my industry systematically dismantled for 30 years. We are all underemployed in Horticulture/ Agriculture.I hear all the political nonsense about creating a high wage economy. Yawn. Sinking ship. Bail out.

  • rate this
    0

    Comment number 210.

    Wow - this forum's still open? Presumably to give the under-employed something to do.

    So much wasted British human talent while the country encourages mass immigration, the import of cheap Chinese junk, and the outsourcing to India of services. Duh - what does the government think will result from all this? At least, an indigenous underclass to swell the dole queues.

  • rate this
    0

    Comment number 209.

    There's probably loads of people like me that aren't even included in the new statistics - 59 going on 60, medical photographer made redundant and took my NHS pension this year when my Trust was taken over by another one. I did sign on, but can't claim anything and my NI is paid up, so decided to sign off to save hoop jumping. I would prefer to work, but don't show on any stats.

  • rate this
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    Comment number 208.

    2008 and/or 2009
    2010
    2011
    2012
    2013

    1m divided by 4 is 250,000 immigrants a year
    1m divided by 5 is 200,000 immigrants a year

    SHUSSHHH! - don't tell the BBC

  • rate this
    0

    Comment number 207.

    205.IR35_SURVIVOR
    and as a result has made people less tolerant, which is a shame.
    +
    Yes - but less tolerant of what?
    There is a diffrence between 'tolerance' (putting up with something) & being forced to 'acceptance' & having no say
    The argument matters as the countries getting way ahead of us have their populations under control eg
    Netherlands (full up)
    Germany
    Norway
    Korea
    Est.

  • rate this
    +2

    Comment number 206.

    We should also look at the removal of statutory retirement age. I worked in one large organisation where the older staff would just hang on for redundancy becoming gradually less incentivised and productive.

  • rate this
    +1

    Comment number 205.

    #203/204
    and as a result has made people less tolerant, which is a shame.

    and as a UKIP party member you can not longer be a foster parent either.

    now they want to build on something like the size of DEVON to hold every body.

    this will end in trouble very big trouble

  • rate this
    +1

    Comment number 204.

    Immigrants come to UK because they see themselves as net beneficiaries & not as net contributors. Absorbing 5m+ immigrants very quickly has damaged UK real GDP per capita growth & triggererd massive demand for 'basic infrastructure' when what UK needs most is spending on 'value production infrastructure'. This has removed the prospect of sustainable UK growth as under-employed/not enough 'VPI'.

  • rate this
    +1

    Comment number 203.

    202

    A most excellent point.

    When history is written people will wonder what the Labour government of 1997 to 2010 actually did apart from turn the country into a complete shambles.

    I can see that you are not fond of `call me Tony' but do not forget that there where many others complicit in this scandal. Some of them want to come back to have another go. So watch it!

  • rate this
    +1

    Comment number 202.

    #195 you are correct this was another FAILED policy of "NEW LABOUR" and T.B.LIAR, ps one of many, left to let others to clear the mess up and sold the poorer working class masses down the river.

    It ok cos B.LIAR has made millions

  • rate this
    0

    Comment number 201.

    Surely it's a good thing that as the economy contracts we work less so that unemployment is stabilised?
    Is that not more socially equitable and fairer?
    Productivity tends to be high when there are conditions of high demand and high output.
    Anyway, most people create work which is unnecessary IMHO.
    Alan

  • rate this
    0

    Comment number 200.

    198

    I have told you my country of origin. My family has been here so long perhaps you would oblige me in saying where you come from?

    I have answered your questions about EU migration. The failure belongs to UK government. I have also implied that the UK state is so incompetent that leaving the EU would be a disaster.

    I am not disputing that migration has an effect on the local job markets.

  • rate this
    0

    Comment number 199.

    Well, I'm off hob-nobbing with the missus tonight. She's a right cracker.

    Hope you finally figure out what immigrants think. Don't forget, you could ask them. Be careful though - they breath fire, so I believe. There is no evidence they don't.

  • rate this
    0

    Comment number 198.

    197
    You should know what you think & you have refused to answer the questions.
    Destabilising the host country is another form of 'anarchy' in its various forms?
    How would foreign anarchists be treated in your country of origin? Not very well I expect
    Illegal & all immigrants - Come here to be better off
    There is no evidence of 'net contributions' - Their better off is generally someone's loss

  • rate this
    0

    Comment number 197.

    196

    Not having moved much in 10,000 years how would I know what an immigrant thinks?

    I presume migrants come here because they see a better opporunity than the one at home. This is understandable. People tend to be rational in their behaviour.

    However it is the responsibility of government to ensure that this does not destabilise the host country. This is where your anger needs to be directed.

  • rate this
    0

    Comment number 196.

    193
    'the idle can draw off the fruits of society without contributing belongs to Randian nutters of the Far Right.'
    +
    What is in the mind of an immigrant?
    Do they ask themself - How welcome are foreigners in my country (of origin?)
    No, of course not
    Do they come to UK becasue they really like the 'British'?
    No, of course not?
    So why do they come & insult when 'challenged'
    Why come here?

  • rate this
    0

    Comment number 195.

    194

    I sympathise with your frustration.

    It was the last administration that understated migration from Eastern Europe and failed to regulate the labour market to protect native Britons. Other EU nations did regulate migration.

    The implication then is that the immigration stems from failure within the UK rather than being imposed by the EU.

    UK failure will continue even if we leave the EU.

  • rate this
    0

    Comment number 194.

    UK & its citizens are 'under-employed' because UK is not now a sovereign realm as is subservient to EU fascist dictator administration.
    Hypocrite opportunists stream into UK from countries which make the foreigner very unwelcome & lecture us British with EU fasci-crat PC rhetoric as our govt & feeble politicians cower & serve their own interests.
    Too many & living standards fall - is here & now

 

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