Latest unemployment data delivered a relatively pleasant showing that headline unemployment stalled at 7.8% in November 2009 (subscription required). The UK unemployment rate is much lower than might have been expected given the length and severity of the recession (particularly when we consider that unemployment currently stands at 10% in both the US and the Eurozone). But Times business editor David Wighton argues that a focus on unemployment masks another difficult issue facing the economy: the problem of under-employment (external website).
Wighton says that new Office for National Statistics (ONS) data show that:
This was the recession of the "under-employed" - people who have clung on to their job by agreeing to shorter hours, or who have lost a full-time position but quickly picked up a part-time job.
Wighton says the ONS puts the under-employment rate - which focuses on employees who would like to put in longer hours - at around 10%, up from around 8% at the start of the recession.
Unemployment growth has been dampened by the new collaborative spirit in the workplace - with both employers and employees willing to explore alternatives to redundancy, such as pay freezes and reduced hours. But the under-employment data suggest that this does not necessarily represent a panacea for the labour market.
Wighton says:
[U]nder-employment is not a "get out of jail free" card for the economy. Shorter hours and pay freezes mean modest pay packets, and modest pay packets coupled with debt-laden households do not bode well for consumer demand. [...] Under-employment is here to stay.
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