From the TUC

Under-employment: the scale of the labour market challenge

15 Feb 2012, by in Labour market

The TUC achieved widespread coverage yesterday by highlighting the growing scale of under-employment across the UK.  With papers including the Mirror, the Guardian, the Independent and the Metro covering our analysis and many broadcast media running the story. Today’s figures show the picture is still extremely challenging, with 2.67 million people unemployed, 2.26 million people who are economically inactive and want a job and a further 1.35 million people who are working part-time but are looking for full-time work.

With 6.3 million people across the economy without any or enough work this is a vital debate to start. Our jobs market will not be on the mend until both levels of under-employment and unemployment are on their way back to pre-recession levels, a significant challenge given there are over one million more people out of work than on the eve of the downturn and close to the same number more again (around 800,000) in involuntary part-time employment.  While some work is undoubtedly better than no job at all, moving from full-time to part-time hours (on a most likely lower hourly rate) will prove a significant shock to family budgets. And when people can only find a very few hours of work a week their household incomes will differ very little from those of people who have no work at all.

So when Ministers claim there are plenty of jobs to go around they are simply wrong. With the ratio of jobs to unemployed jobseekers 1:5.8, with only 439,000 vacancies available at any one time (down around 240,000 from the start of the downturn) the level of competition in the labour market, particularly when the larger group of economically inactive and under-employed workers is considered, is clearly fierce. That’s why stories of hundreds of people applying for handfuls of jobs are now common place.

There have been a few minor queries around our analysis. Our approximation of the American U6 measure, as Full Fact have pointed out, included both discouraged and economically inactive workers who would like a job as seperate groups. Technically a few of those in the former group (around 68,000) will also show up in the latter – not all discouraged workers will have given up all hope of finding employment.  On the other hand, we don’t have a measure for under employment of part-time workers who don’t want full-time work (ONS doesn’t regularly produce such a series). But it is likely that among the 6.4 million part-time workers who tell the surveys that they don’t want a full-time job a substantial number will be seeking to increase their hours (not least the 200,000 couple households who are set to be hit by the Government’s requirement that they find more paid hours to qualify for Working Tax Credit) although not by as much as a full-time position would require.

So there is no perfect means to assess under employment using the ONS’s existing labour market measures, which is perhaps why the ING/Sky assessment of 6.9 million, or over one in five working people, is several hundred thousand higher than our analysis. But what our study does show is that a true assessment of the state of the UK’s jobs market requires far wider measures of labour market weakeness to be taken into account than simply the headline unemployment rate, and that the jobs challenge we face is even more significant than many may have previously realised.

We hope the debate on the scale of under-employment in the UK continues – and over the weeks ahead will be hosting a number of posts from authors with an interest in the subject.  We’re glad we’ve been able to make a contribution to boosting public awareness of the state of the labour market, and to highlighting the vital importance of politicians across the spectrum treating job creation as a policy priority.