BLOG: Trapped in underemployment

There are more people in employment that at any time in the UK’s history. That is a fantastic achievement and something we should celebrate.

However, there is a danger that the good news story on employment can mask a story of low pay and too few hours among many employees.

While part time employment is a choice for many people, millions of people across the country are trapped in jobs where they don’t earn enough in wages.

A new report by employment specialists Reed in Partnership analyses official data from the Quarterly Labour Force Survey. It shows that almost one in ten working people in the UK are ‘underemployed’, by which we mean they want to work more hours at their current rate of pay - and that rises to more than one in five of part time workers.

Since the recession, the focus of government policy has rightly been on helping people remain in jobs and get into work. The consequence of that is the unemployment rate has fallen at a far faster rate than the underemployment rate, and the difference between the two is now at its greatest for over the last 15 years. This demonstrates why the government is right to now be shifting its focus on to developing a “in work progression service” to support people to increase their take home pay.

Age and gender are two of the key factors that influence the likelihood of being underemployed. Young people are most affected by not being able to work the number of hours they need, and this decreases as they get older. The problem is particularly acute among women - while female workers actually have lower underemployment than men in their early twenties, it increases substantially in their late thirties and forties and the gap between men and women remains pronounced until converging again in their fifties. We believe that this could be related to started a family and indicates that women struggle to return to their desired level of employment after having children.

Our research also shows a clear correlation between family situation and underemployment. Lone parents are the group most likely to be underemployed, with female lone parents most affected.

Female lone parents are 39% more likely to be underemployed than male lone parents and almost four times as likely to be underemployed than a married couple with no children.

Finally, we found that underemployment varies hugely between different industries. Six times as many people working as cleaners or tutors want to work more hours than those working in the electricity and gas sectors.

We have used our report to make a number of recommendations to help tackle the problem of underemployment.

• Skills should be better aligned with employment opportunities, with better employer engagement in schools and colleges. This includes providing young people with better careers guidance, and information about the employability potential of different subjects at an early stage in their education.
• Underemployment rates should be published alongside headline unemployment rates to drive the focus of policy making.
• We agree with the Government’s policy objective to increase the emphasis on in-work progression within employability programmes.
• People with particular health conditions are substantially more likely to be underemployed than the population as a whole and an In-Work Support Service should incorporate assistance to manage health conditions to prevent them being a barrier to progression.
• More support should be provided to women returning to work after having children as well as supporting lone parents. The Government has, rightly, sought to improve access to childcare for 3-4 year olds, and should consider how access to affordable childcare can be ensured for those with older children.