Jobs crisis: One in ten left underemployed

ONE in ten people in the labour market now rank themselves as “underemployed” and want to work more hours, according to new figures that reveal the full extent of the jobs crisis.

Scots workers say they want to work more hours as their wages fail to keep up with rising cost of living. Picture: PA
Scots workers say they want to work more hours as their wages fail to keep up with rising cost of living. Picture: PA

The findings, compiled by academics for Scotland on Sunday, show that Scottish workers want to take on the equivalent of 50,000 extra full-time jobs in order to make their take-home pay meet the rising cost of living. Union chiefs last night said it further exposed the economic hang-over from the recession, with stagnant wages and rising costs prompting extra demand for work which firms are still unable to provide.

The new figures, compiled by Professor David Bell and Professor David Blanchflower and funded by the Economic Social Research Council, calculate that the “underemployment” rate for Scotland is currently 9.8 per cent – double pre-recession levels, and well above the official unemployment rate.

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A previous Scottish Parliament inquiry into the issue found that 154,000 part-time workers and 89,000 full-time workers ranked themselves as “underemployed”.

Bell estimated the average extra hours the group wanted to work, and found that it amounted to around 50,000 full-time jobs.

He said: “The recession has been accompanied by lots and lots of workers who say they would like to be working longer hours. It is due to a combination of reasons. One of the key things is that wages have been flat while prices have been going up, so take-home pay has been going less far since 2008. Some workers will also have had their hours cut.”

Across Britain, figures published by Labour last week put the UK-wide figure for “underemployment” at more than three million, a 10 per cent increase on figures in 2010.

Economists are warning that the demand for more work may now make it more difficult to reduce unemployment, with underemployed workers likely to take on any extra hours being offered once the economy takes off.

The consequences of underemployment were also highlighted last week when Business Secretary Vince Cable warned that some firms may be “exploiting” the situation by offering zero-hours contracts, under which staff are not guaranteed shifts or work patterns. As many as one million people across Britain are now working under such contracts.

Stephen Boyd, assistant secretary for the Scottish Trade Union Congress, said last night that the government needed to pump-prime the economy to boost demand.

“With real wages now having fallen for 41 consecutive months, the demand for more hours is likely to increase, but employers will struggle to provide these hours as long as demand for goods and services remains depressed. This is a macroeconomic problem 
requiring a serious macro-economic response, and overturning cuts in capital expenditure would be a good place to start,” he said.

He added: “If the nascent recovery does take a firmer hold, high levels of underemployment are also likely to constrain the labour market’s ability to create new jobs as firms simply increase the hours of underemployed workers”.

David Lonsdale, assistant director of CBI Scotland, said 
the underemployment figure was a “sign that the Scottish economy is operating below its potential”.

He added: “A sustained return to economic growth will help to alleviate the problem. Government can assist by becoming a more effective catalyst for private-sector growth, through keeping a tight lid on costs which affect business, prioritising public expenditure on infrastructure and by encouraging exports.”

He added: “Every effort should be made to ensure underemployment doesn’t become entrenched. However, staying connected to the jobs market is vitally important 
for people and has a positive effect on their future employment prospects.”

Labour has said the failure of employers to offer sufficient work is due to the fact that the government has “strangled the recovery”.

However, the Department for Work and Pensions denied there was a “surge” in underemployment. A spokesman said: “The total number of hours people are working continues to rise, and latest statistics showed that the number of vacancies are continuing to increase – up 12 per cent in the past year.”

Twitter: @EddieBarnes23