Underemployment: So Many People in Work despite the Downturn?

As the latest economy growth figures were released this week, it emerged that the UK economy grew by 0.3%, narrowly avoiding a triple-dip recession (going into recession for the 3rd time since the 2008 financial crash). Government ministers came out claiming that the effect of their policies meant the economy was being rebuilt. However, only they believe their own propaganda on this issue.

Similar to this is the official claim that UK inflation stands at 2.8%. For most people who have seen the cost of electricity, gas and basic foodstuffs rocket up, inflation is probably closer to 10%. Many fault the way it is calculated claiming it doesn’t truly reflect the reality.

One of the things that has puzzled many economic experts is the fact that unemployment had not shot up during the current slump. The government claims that this is proof that its austerity program was working. Obviously, ministers seek to claim that their policies are working so they cling to any bit of good news on the economy.

The reality is that the economy is hardly growing at all, public borrowing is still high and there isn’t much of an export boom to come to the rescue. So, even though more than 2.5 million people are out of work in the UK, 2012 was the best year for employment growth since the bursting of the dotcom bubble.

How can this be the case when almost 7,000 public-sector jobs are shed each month and the economy hovers on the edge of a recession? Perhaps, the most important explanation is that the main published figures miss important groups, such as the part-time workers who want to go full-time but can’t, or the freelancers and self-employed who are barely attracting enough work or customers to get by. Neither of these groups are out of work; but nor are they fully employed, yet they are included in the national figures.

Since the 2008 crash, this phenomena of ‘underemployment’ has grown. A recent report says that today, Britons would work an extra 20 million hours if they could only get them. Apparently, that is equivalent to adding another half a million workers to the unemployment figures which would take the number of unemployed to over 3 million.

The reality is that there has been a growth – during this period of prolonged downturn – of workers on zero-hours contracts. A zero-hours contract is a type of contract under which an employer does not guarantee the employee a fixed number of hours per week. Rather, the employee is expected to be on-call and receive compensation only for hours worked. 23% of Britain’s major employers keep workers on contracts that deny them the same conditions as regular employees. The current downturn has also seen a shrinking of full time jobs replaced by growth in part-time jobs. Whilst these people are in work; in reality, they don’t consider that they have a working income and this shows little sign of changing anytime soon.

While ministers are happy to trumpet the lower than expected unemployment figures, the reality of underemployment in the UK looks like storing up problems for years to come.

Taji Mustafa

Media Representative of Hizb ut Tahrir in Britain