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Professor Geraint Johnes
Professor of Economics at Lancaster University
T 020 7976 3516
Professor Geraint Johnes

The latest quarterly data from the Bell-Blanchflower underemployment index

Authors: Professor Geraint Johnes

29 April 2014

The latest BellBlanchflower data on underemployment, published here on The Work Foundation website today, provide a mixed picture of the current state of the labour market in the UK. There is evidence of some improvement over the course of the second half of last year, and that improvement is very welcome. Yet the data send a clear signal that the labour market in the aftermath of the Great Recession is a very different place to the labour market before.

 The unemployment rate peaked in the last quarter of 2011, but the subsequent decline in unemployment was very slow - indeed it did not change at all in the year to the second quarter of last year. In the second half of last year, however, the rate started to fall dramatically, and the most recent evidence is that this fall has continued into the early part of 2014.

 The rate of unemployment does not, however, reflect the experience of those workers who would like to work longer hours than their employers will hire them for - that is , underemployment. The BellBlanchflower data adjust the unemployment rate statistics to allow for this underemployment. In the period before the Great Recession there was very little underemployment, but that is not the case in the period since. Indeed, underemployment is tantamount to almost an additional two percentage points on top of the official unemployment rate. We might see underemployment as a useful thing during the period of recession - it may have served to spread the misery of the downturn more evenly than would have been achieved by having more people fully employed and more people jobless. But the persistence of underemployment through the early stages of recovery suggests that the labour market has still not adjusted back to what we once thought of as normality. In the most recent quarter for which we have data, the extent of underemployment rose slightly (though it had fallen slightly in the previous quarter).

 The detailed data produced by BellBlanchflower suggest that underemployment is a particular problem for young workers. A recently published report by The Work Foundation  analyses the spatial differences in youth unemployment, which are considerable. It will be instructive, in the coming months, to examine further the spatial aspects of underemployment - something that we intend to do here.

 There are indeed some very encouraging signs of recovery in the macroeconomy. What is clear, however, is that the nature of this recovery is more than usually nuanced. The fact that the overall unemployment rate is falling is unambiguously good news, but it may be concealing experience that is not so rosy. There is some evidence of fear leading to larger numbers of people working unpaid overtime, of a rising trend in self-employment where large numbers opt for this path in the absence of other options, and of underemployment especially amongst the young. At The Work Foundation, we intend to continue our research into these areas and to keep them at the forefront of the public debate.

Comments in Chronological Order (Total 2 Comments)

Harry Alffa

09 May 2014 12:11PM

As Danny Blanchflower agrees, SMEs are crucial to growth.
David Bell agrees, "it would be perverse if the banks didn't fund SMEs as a result of policy".

Given these to facts, why do neither of these intelligent men push for the idea of a feedback mechanism between banker & bank taxes and some measure of economic performance of the country?

Do they fear finance from the financial sector to their universities would be curtailed?

Harry Alffa

09 May 2014 12:12PM