700,000 Britons swell the ranks of 'underemployed'

Number of people who cannot work as many hours as they want rises to 2.8m

(Rex)

As today's expected unemployment figures show another stabilisation in the headline numbers, the Office for National Statistics has reported that the equivalent of an extra 2.8 million people are officially "underemployed" – that is having to work fewer hours than they want – in addition to the 2.6 million officially out of a job.

A total of 5.4 million Britons are working less than they would wish, a figure that could yet be higher if the number of self-designated "students" and other examples of disguised unemployment that can be extracted from the official statistics are included.

Analysis by the ONS shows that, in the last quarter when the economy contracted – between July and September last year – there were 2.8 million underemployed people, up sharply from the 2.1 million who were on imposed short-time or part-time working in the same period in 2007; before the recession pushed many out of secure full-time work.

The official data also reveals that just over a half a million people have had to take temporary work while they wait for a permanent position to become available, about 80,000 more than before the recession.

The statistics point to a widespread acceleration of the existing trend towards a more casualised workforce. Traditional full-time jobs, particularly in manufacturing and traditionally filled by men, have been giving way to a part-time, more "freelance" economy, with women faring relatively better than men.

But while the recession has hastened this trend, it is not entirely new. The number of part-time workers who could not find a full-time job began to increase in the first quarter of 2005, over three years before the first economic contraction. It peaked at 1 million people last month – but even that extraordinary figure does not reveal the full picture of unemployment, the ONS says.

"Underemployment levels and rates are generally higher than the number and proportion of involuntary part-time workers. This is because a person may be willing and available to work longer hours whatever their reason for taking a part-time job, and even if their job is full-time," an ONS spokesman said.

On that wider basis, which includes everyone prevented from working as much as they want, most of the increase in underemployment has occurred during the economic downturn, with the underemployment level last autumn increasing by 594,000 on the previous year, and the rate being up 2.2 percentage points.

The potential increase in work and output available to the economy could be even higher, the ONS says. They say that around 325,000 employed people are looking for an additional job; some 459,000 are looking for a replacement job with longer hours; and 2.7 million want to work longer hours in their current job. This gives a grand total of 3.5 million workers who would rather work longer hours, but does not take account of their availability to work these hours. Of these, 3 million were available to start working longer hours within two weeks.

Many economists say that the UK's flexible labour market – evidenced in these figures – has helped keep the headline unemployment number slower than they might otherwise be. Overall, the trend appears to be towards a widening division between those in secure full-time employment with final salary pension schemes – often in the public sector – and those, usually in the private sector, who find themselves with little if any structure to their working lives.