Unit 2 Macro: Underemployment in the UK Economy

The Office of National Statistics published some important data this week on the state of the UK labour market as the economy struggles to sustain a decent recovery. They released information showing that the number of underemployed workers i.e. those who want to work more hours, has risen by an estimated 1 million (or 47.3%) since the start of the economic downturn in 2008 to stand at 3.05 million in 2012. Nearly two thirds of the 1 million increase took place in the 12 months between 2008 and 2009, when the economy was in recession.From 2000 to just before the 2008/09 recession the number of people underemployed was relatively steady and since 2009 the number has been rising, although at a much slower rate than during the recession.We thank Hannah Thomas from the ONS who has provided us with this superb info-graphic on under-employmentUnderemployed_Workers_Graphic.pdf This will make for a terrific teaching resource in the classroom and help to deepen student understanding of differences between unemployment and under-employment.

Reasons for under-employment

There are many possible factors behind why a worker is underemployed, for example:

An employer may only be able to offer limited hours

A worker may be in a job that only lends itself to certain hours of the day, e.g. bar staff can only work when the bar is open

Self-employed workers may have low hours of work as a result of low demand for their skills or services

Poor economic conditions may result in more people looking for jobs but fewer jobs being created. This may cause people to settle for “second-choice jobs” as an alternative to unemployment and a route into getting more hours in the future. For example a worker may settle for a part-time role even though they actually want a full-time one.

More teaching resources here

BBC News video - click here