UK: Thousands of young people in work are ‘underemployed’, claims NIESR report

David Blanchflower

David Blanchflower - Credit: David Devins/newscast

THE lack of job opportunities for young people during the downturn is even worse than gloomy headline figures suggest with nearly a third of those in work “underemployed”, research suggests today.

Latest official data shows that nearly a million 16 to 24-year-olds are out of work but figures published today suggest even more are not being given as many hours as they wish.

Of those in the age group that did have jobs in 2012, 30% wanted to work more, according to the study by former Bank of England policymaker David Blanchflower and fellow economist David Bell.

The study, published by the National Institute for Economic and Social Research (NIESR), showed the labour market for the young was even worse than raw unemployment figures of 979,000 implied.

It also suggested that even if there were an upturn in demand, employers would be likely to extend the hours of existing workers before taking the risk of hiring new young employees.


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The researchers said that standard unemployment figures - which have fallen overall in the past year - failed to give a proper picture of “labour market slack” in the economy.

In the whole UK workforce, the proportion of the workforce who were jobless or underemployed rose from 6.2% in 2008 to 9.9% in 2012, according to an index calculated by the researchers, while over the same period the unemployment rate rose from 5.8% to 8%.

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The index combines the numbers of unemployed with those in work but not being given as many hours as they want.

It expresses the additional hours that the unemployed and underemployed are willing to provide as a share of total workforce hours.

The figure also takes into account those who want to work less hours meaning that at times it can be lower than the headline unemployment figure.

Undereployment was worse among ethnic minorities, particularly those describing themselves as black or black British, the study found.

Total hours worked in the economy have increased since the start of the recession but a fall in wages when inflation was taken into account was likely to be behind the demand for increased hours among workers represented by the figures.

Separate NIESR research on the UK economy suggested it would grow by a sluggish 0.9% this year and by 1.5% in 2014, in line with other economists’ predictions.

It noted that while headlines had focused on Britain avoiding a “triple-dip” recession last week, the data showed another picture of weak growth and the wider picture was of a “stagnating economy”.

A further forecast suggested the world economy would grow 3.3% this year and by 3.7% in 2014 with medium term prospects “unusually uncertain”.

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