News Underemployment in UK reaches post-recession peak

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Labour market increasingly divided between workers in full-time roles and those in poorly paid, ad-hoc jobs, experts suggest.

More workers are in part-time, low-paid jobs today then during the 2008 global recession, despite unemployment reaching its lowest level since the 1970s, analysts have warned.

The latest labour market analysis from the Office for National Statistics (ONS) and Citi Research showed that the proportion of ‘underemployed’ workers, including those with insecure roles, grew by around 50 per cent between 2008 and 2018.

In particular, the number of people on zero-hours contracts more than doubled during the same time period.

Underemployment – where workers stay in part-time, temporary or zero-hours contract roles because they cannot access full-time positions – appears to be replacing unemployment as a major factor in labour market inequality.

It is so prevalent that experts suggest that the divide in modern Britain is now between those in full-time roles and those in poorly paid, ad-hoc positions.

In April, People Management reported that the recent fall in unemployment could be masking underlying problems with the UK workforce, including the growing number of insecure jobs.

Around 4.5 million people in the UK are currently in some form of insecure work, with this figure highly likely to increase over the next few years given current labour market trends.

Last year, a survey from Accenture Strategy revealed that nearly three-quarters of recent graduates ‘feel underemployed’.

Cath Jenkins, employability and partnerships manager at Wales-based Better Jobs, Better Futures, said underemployment was a “constant source of insecurity” and a “significant barrier” to maximising earnings and career potential for many candidates.

Underemployment was more prevalent in certain sectors such as accommodation and food services, wholesale and retail, and health and social work, she said.

In research seen by People Management, academics from Stirling Management School at the University of Stirling raised concerns that wage growth was partly to blame for the increase in underemployment.

“There remains a puzzle around the world over why wage growth is so benign given the unemployment rate has returned to pre-recession levels,” said David Bell, professor of Economics at Stirling Management School and co-author of the report. “It is our contention that a considerable part of the explanation is the rise in underemployment, which rose in the great recession but has not returned to pre-recession levels even though the unemployment rate has.

“Over the period 2001-17, we find little change in the number of workers who want fewer hours, but a big rise in the numbers wanting more hours. Underemployment reduces wage pressure.”

Karen O’Reilly, stakeholder manager at the Recruitment & Employment Confederation, said: “Many people seek flexibility nowadays to fit around studies or family life – but choosing to work part time should not prevent people from being able to progress and attain high-quality jobs, with salaries to match.”

Alex Lawrence of told People Management that while it regularly deals with employers that “shoehorn” full-time jobs into part-time positions, this related to demand from candidates wanting part-time flexible roles.

“In our experience, it’s rare to find people who are stuck in one badly paid, part-time job. Many candidates, when asked, may well report they would like more hours or to earn more, which is hardly surprising – the same would apply if you asked a lot of self-employed people,” he said.

Recent statistics on zero-hours contracts showed that more than 50 per cent of those working on them were women, and 66 per cent were part time, raising concerns that women are disproportionately affected by the precarious nature of much zero-hours work.

Similarly, the ONS reported that one in 10 people in full-time education and 36 per cent overall aged between 16 and 24 were on such contracts in the UK. Six per cent of UK employment contracts were carried out on a zero-hours basis in November 2017 – a total of 1.8 million contracts, 100,000 more than the year before.

The government is currently consulting on recommendations from the Taylor review on how to deal with underemployment, with the ONS and Citi Research analysis indicating a clear increase in underemployment across the UK, with many workers struggling to find permanent, full-time work.

At the same time, in certain sectors, such as healthcare, the NHS has warned there are now not enough doctors, nurses or midwives.

This is partly related to immigration rules and the EU referendum hampering their recruitment drives, as the UK becomes a less attractive place to work for non-nationals. Increasing numbers of skilled medical professionals from overseas are being refused permission to work in the UK, including 100 Indian doctors, recruited to work in the north west across 30 NHS trusts, who reportedly had their UK work visas refused.

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