ILPC 2027

 

Only last year, forecasters were issuing gloomy predictions that unemployment would reach at least 3 million by 2010 and then decline slowly (see, e.g., Financial Times, 13 July 2009). However, the actual rise has not been as dramatic. Unemployment is now hovering around 2.5 million, although the possibility remains that it may start rising once again as public expenditure cuts start to bite. So why have forecasters got it so wrong? Or to put it another way, what are the possible explanations for declining output failing to be translated into falling headcounts? So far the explanations given have tended to revolve around the enhanced flexibility of today’s labour markets compared to those of the past. Most notably, in this recession there has been a swift slowdown in wage growth, speedy and widespread use of recruitment freezes, hoarding of difficult to replace labour, and extended use of short-time working, lengthier holidays and unpaid leave (Lambert, 2010). In other parts of Europe, governments have given financial support to working time reduction schemes which cushion the effect of the economic downturn on levels of unemployment. In Germany, for example, unemployment has remained flat during the recession with most of the slack taken by reducing the number of hours worked (Hurley et al., 2009).

 

Prior to the recession, there was considerable interest in the mismatch of skills required for the job and the skills possessed by the job-holder (Felstead et al., 2007). This debate continues (and rightly so) to focus the minds of policy-makers on the ‘need to invest as much effort on raising employer ambition, on stimulating demand, as it does on enhancing skills supply’ (UKCES, 2009: 10), so that mismatches are minimized. However, the recession has highlighted that production of any type – mismatched or otherwise – is in short supply.  This is manifested most visibly in rising levels of unemployment (the loss of jobs) and less visibly in underemployment (the shrinking of jobs) with rising unemployment the tip of the iceberg.

 

This paper will examine how the totality of under-utilization has changed from 2000 to 2010 using measures such as unemployment, constraints on working time (i.e. preferences to work longer hours) and involuntary part-time working. By analyzing the effect that the recession has on the probability of particular social groups finding themselves among these three categories of under-utilized labour, the paper will contribute to a live, topical and policy relevant debate (see Tam, 2010; Walling and Clancy, 2010). It will address the specific question of whether, in the current recession, groups which are at greatest risk of becoming unemployed also face a high risk of being unable to find full-time work or find themselves in jobs where they would prefer to work additional hours. The paper will use cross-sectional techniques to analyze data from successive quarterly Labour Force Surveys (LFS) carried out from 2000 to 2010.

 

Felstead, A, Gallie, D, Green, F and Zhou, Y (2007) Skills at Work, 1986-2006, Oxford: ESRC Research Centre on Skills, Knowledge and Organisational Performance.

Financial Times (2009) ‘Light at end of tunnel raises false dawn fears’, by Brian Groom, 13 July.

Hurley, J, Mandl, I, Storrie, D and Ward, T (2009) Restructuring in Recession: ERM Report 2009, Dublin: European Foundation for the Improvement of Living and Working Conditions.

Lambert, R (2010) ‘The labour market and employment relations beyond the recession’, Warwick Papers in Industrial Relations, Number 93, Warwick: University of Warwick.

Tam, H (2010) ‘Characteristics of the underemployed and the overemployed in the UK’, Economic and Labour Market Review, 4(7): 8-20.

UKCES (2009) Ambition 2020: World Class Skills and Jobs for the UK, Wath-upon-Dearne: UK Commission for Employment and Skills.

Walling, A and Clancy, G (2010) ‘Underemployment in the UK labour market’, Economic and Labour Market Review, 4(2): 16-24.