The case for an inwork progression
service
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Contents
1. Introduction
2. Underemployment in the UK
3. Individual characteristics
4. Industry
5. Recommendations
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Summary of findings
Scale of underemployment: Almost 1 in 10 working people in the UK want to work more hours at
their current rate of pay. This rises to almost 1 in 5 part time workers. The difference between
underemployment and unemployment rates is now at its greatest since at least 2000. This suggests
that while the economic recovery has helped people remain and move into work, around one in ten
people are not working the number of hours they would like. This demonstrates why the
government is right to develop an in-work progression service.
Location: Underemployment varies across the UK, with someone living in Wales most likely to be
seeking additional hours and someone in Northern Ireland least likely to.
Age and gender: We find that young people are most likely to be looking to work additional hours,
with underemployment decreasing with age. Underemployment rises significantly among women in
their late 30s and 40s, perhaps suggesting that women struggle to return to their desired number of
hours after becoming a parent.
Disability and health conditions: Disabled people are more likely to be underemployed and
someone is substantially more likely to be underemployed if they have a health condition such as a
learning difficulty or speech impediment.
Family situation: The likelihood of being underemployed is substantially greater if someone is a lone
parent, and underemployment is greatest among female lone parents with dependent children.
Underemployment is lowest among married couples with no children.
Ethnicity: People with Chinese, Indian or white Irish/British ethnicity are least likely to be
underemployed, while people of Bangladeshi ethnicity are most likely to be underemployed.
Education: Generally, the higher the level of education someone has makes it less likely they will be
underemployed.
Industry sector: Underemployment varies hugely between sectors, with those working in the
accommodation and food service industry almost six times as likely to be underemployed than
someone working in the electricity and gas sector.
Social mobility: The composition of the household as someone grows up also appears to have an
impact on underemployment. A person has an increased chance of being underemployed if they
grow up not living with their family.
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1. Introduction
Underemployed workers are those people in employment who are working
fewer hours than they wish. The Government intends to establish an in-work
progression service, making the UK one of the first countries in the world to
attempt a large scale programme to support low paid people to increase
their earnings.
To help inform the design of this in-work service, this report analyses the
latest Labour Force Survey information to better understand the profile of
the underemployed.
This report defines underemployment as those who would like to work longer hours, at current basic
rate of pay, given the opportunity. Unless otherwise stated, all the data on underemployment in this
report is from the October-December 2015 Quarterly Labour Force Survey. 1 The data was analysed
by Reed in Partnership using the UK Data Service. The sample is weighted to ensure the estimates
are representative of the whole population and compensates for differential non-response among
different sub-groups.
Policy drivers
The Department of Work and Pensions intends to establish an in-work service to assist individuals on
Universal Credit on low incomes to increase their income. The UK will be one of the first countries in
the world to attempt a large scale in-work progression programme. By the time Universal Credit is
fully rolled out, the Government anticipates they will be working with one million more claimants
who are in work.2
The support will be offered to low-paid claimants to increase their earnings to the earnings
threshold, which is equivalent of 35 hours per week at the National Living Wage. They will be
encouraged to increase earnings by



Increasing their hours
Receiving a pay rise in their current job
Moving to a new job at more hours or increased pay
Reed in Partnership supports the Government’s stated aim of assisting low-paid claimants to
progress in work and the concept of an in-work service. We hope this report will be a useful addition
to the discussions around this policy priority.
1
Office for National Statistics. Social Survey Division, Northern Ireland Statistics and Research Agency. Central
Survey Unit. (2015). Quarterly Labour Force Survey, July - September, 2015. [data collection]. UK Data Service.
SN: 7842, http://dx.doi.org/10.5255/UKDA-SN-7842-1.
2
www.publications.parliament.uk/pa/cm201516/cmselect/cmworpen/549/54904.htm#_idTextAnchor010
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2. Underemployment in the UK
2.1 Scale of underemployment
While the unemployment rate in the UK is around 5.1%, the rate of underemployment is
considerably higher.3 Data from the Labour Force Survey shows that more than almost a fifth
(19.5%) of part-time workers would like to work additional hours at the current basic rate of pay. In
contrast, only 5.9% of full-time workers are seeking additional hours. Across all working people,
around one in ten (9.5%) are looking for more hours of employment.
The Labour Force Survey also details how many additional hours people would like to work:




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Almost nine in ten people who said they would like to work additional hours (88%) said they
could start to do so within two weeks.
Almost one in four (24.6%) underemployed workers would like to work between one and
five hours more per week.
Over a third (41%) of workers seeking additional hours would like to work between five-anda-half and ten hours more.
Around a quarter (23.6%) of underemployed workers are seeking between ten-and-a-half
and twenty more hours.
http://ons.gov.uk/ons/taxonomy/index.html?nscl=Unemployment+Rates#tab-data-tables
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How many extra hours would you like to work per week?
20.5-25 hours
2.6%
25.5-30 hours
2.5%
31+ hours
1.9%
15.5-20 hours
10.3%
1-5 hours
24.6%
10.5-15 hours
13.3%
5.5-10 hours
41.0%
2.2 Underemployment vs unemployment over time
The below graph shows the Q4 2015 (October-December) underemployemnt (blue line),
unemployemnt (orange line) and the difference between the two (green line) between 2000 and
2015.
The graph shows that the gap between underemployment and unemployment remained fairly static
until 2011, with both rising following the financial crisis. However, since 2011 the gap has widened,
with unemployment falling far faster than underemployment.
The gap between underemployment and unemployment is now at its greatest since at least 2000. It
suggests that while the economic recovery has helped people remain and move into work, around
one in ten people are not working the number of hours they would like. This demonstrates why the
government is right to develop an in-work progression service.
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Underemployment vs unemployment 1998-2015
12
Financial crisis
Percentage of population
10
8
6
4
2
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year (Q4 Oct-Dec period)
Underemployment
Unemployment
Difference between under- and unemployment
2.3 Geographical variance
There are significant variations in underemployment across the UK. Underemployment is highest in
Wales, where 11.1% of workers are seeking additional hours. In contrast, only 6% of people in
Northern Ireland are looking for more work.
The figures also show that despite the dominance of London in the UK’s economy, it has the third
highest levels of underemployment in the country.
The below graph shows underemployment (blue line) and unemployment (orange line) for different
parts of the UK (October – December 2015 figures). There appears to be little correlation between
underemployment and unemployment, as Northern Ireland has one of the higher rates of
unemployment, despite the lowest underemployment rate.4
4
http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletin
s/regionallabourmarket/february2016
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Underemployment and unemployment by location
5.30%
Wales
11.10%
6.10%
Yorkshire and Humberside
10%
6.30%
London
9.80%
4.50%
East Midlands
9.80%
3.70%
South West
9.70%
3.90%
South East
9.50%
4.90%
North West
9.50%
8.10%
North East
5.80%
Scotland
5.20%
West Midlands
9.10%
3.90%
East of England
9.50%
9.40%
8.60%
5.80%
6%
Northern Ireland
0%
2%
4%
6%
8%
% seeking additional hours/unemployed
Unemployment
Underemployment
10%
12%
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3. Individual characteristics
3.1 Gender and age
There is a significant disparity in unemployment between men and women. The official statistics
show that while 8.4% of men are looking for more hours, this increases to 10.7% for women.
% of women and men seeking additional hours (all employment)
8.4%
10.7%
Men
Women
When we analyse underemployment by age, we see that it is most pronounced among young people
and, on average, decreases as people get older. Looking at the age split by gender we observe that
women have lower underemployment than men when in their early twenties and then only slightly
higher underemployment in their early 30s. Underemployment among women compared to men
increases substantially in their late 30s and 40s, and the gap remains pronounced until converging
again in their 50s.
This could be related to starting a family and indicates that women struggle to return to their desired
level of employment after having children.
% seeking additional hours
25
Comparison of underemployment by gender
Male
Female
20
15
10
5
0
18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64
Age
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3.2 Disability and health problems
There is a greater proportion of underemployed disabled people compared to non-disabled people.
While 9.3% of people without a disability are underemployed, this increases to 11% of disabled
people.
% seeking additional hours
Equality Act Disabled
9.3%
Not disabled
11%
Levels of underemployment can be much higher if someone suffers from a health condition, with
almost a third of people with learning difficulties (32.2%) and speech impediments (31.4%) seeking
additional hours.
Underemployment by health condition
Legs or feet
7.6%
Progressive illness
7.8%
Heart,blood,pressure,circulation
7.8%
Diabetes
8.3%
Arms,hands
8.6%
Stomach,liver,kidney,digestion
8.9%
Other problems,disabilities
9.1%
Back or neck
9.2%
Skin conditions,allergies
10.4%
Chest,breathing problems
10.6%
Difficulty in seeing
12.1%
Difficulty in hearing
13.2%
Depression,bad nerves
13.9%
Mental illness,phobia,panics
16.2%
Epilepsy
18.6%
Speech impediment
31.4%
Learning difficulties
32.2%
0%
5%
10%
15%
20%
25%
% seeking additional hours
30%
35%
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3.3 Family situation
There is a clear correlation between family situation and underemployment, with lone parents at
increased risk. A female lone parent with dependent children is more likely to be underemployed
than a male lone parent, and approximately twice as likely to be underemployed than someone part
of a married couple with dependent children.
Someone who is married with no dependent children is least likely to be underemployed,
significantly less than if a married couple has dependent children. Interestingly, while single men are
more likely to be underemployed than single women, this situation is reversed when they have
dependent children.
Underemployment by family type
Married couple with no children
5.6%
Civil Partners with dependent children
5.9%
Cohabiting couple with no children
8.0%
Cohabiting couple with non-dependent children
only
9.0%
1 person - female
9.0%
Married couple with dependent children
9.2%
Married couple, non-dependent children only
9.2%
Civil Partners with no children
10.6%
1 person - male
10.7%
Cohabiting couple with dependent children
11.2%
Male lone parent with non-dependent chldren
only
12.6%
Male lone parent with dependent children
14.6%
Female lone parent, non-dependent children
only
14.7%
Female lone parent with dependent children
20.3%
0%
5%
10%
15%
20%
% seeking additional hours
25%
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It is clear that there is a substantial correlation between marriage and employment, with people
married and living with their spouse least likely to be underemployed. However, separation during
marriage has a negative impact on employment, with those married and separated the most likely
group to be seeking additional hours.
Underemployment by marital status
Married, living with spouse
7.1%
Widowed
9.8%
Divorced
10.0%
Single, never married
12.4%
Married separated from spouse
13.1%
0%
2%
4%
6%
8%
10%
12%
14%
% seeking additional hours
3.4 Ethnicity
Ethnicity appears to have a significant impact on underemployment, with people of Bangladeshi
ethnicity most likely to be seeking additional hours. The ethnicities least likely to be underemployed
are Chinese and White Irish.
Underemployment by ethnicity
White Irish
4.5%
Chinese
8.0%
Indian
8.8%
White British
8.9%
Pakistani
10.0%
Mixed/Multiple ethnic groups
11.5%
Any other Asian background
11.9%
Other White
13.7%
Black/African/Caribbean/Black British
14.8%
Other ethnic group
16.2%
Bangladeshi
18.0%
0%
2%
4%
6%
8%
10%
12%
14%
% seeking additional hours
16%
18%
20%
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3.5 Education
Data from the Labour Force Survey suggests that there is a link between education and
underemployment.
People with degrees or equivalent are least likely to be underemployed, with underemployment
increasing for those for those with A levels and then GCSEs as their highest education level. Perhaps
unexpectedly, people with no qualifications are less likely to be underemployed than those with
GCSE levels.
% seeking additional hours
Underemployment by education level
12%
10.40%
10.6%
9.20%
10%
8%
11.30%
6.90%
6%
4%
2%
0%
Degree or
equivalent
Higher education
GCE A level or
equivalent
GCSE grades A*-C
or equivalent
No qualification
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4. Industry
Underemployment varies hugely between different industries, with the underemployment rate in
some sectors almost six times as high as others. For example, 23.3% of ‘households as employers’
(cleaners, babysitters, tutors) are seeking additional hours, compared to only 5.2% of those working
in electricity and gas sectors.
Accommodation &
food services
Sectors with highest proportion of
underemployment
Households
as employers
Arts, entertainment
such as cleaners, babysitters and tutors.
& recreation
23.3%
18.1%
15.9%
Underemployment by industry
Households as employers
Accommodation and food services
Arts, entertainment and recreation
Admin and support services
Education
Wholesale, retail, repair of vehicles
Other service activities
Health and social work
Transport and storage
Water supply, sewerage, waste
Construction
Real estate activities
Manufacturing
Prof, scientific, technical activ.
Information and communication
Public admin and defence
Electricity, gas, air cond supply
Financial and insurance activities
Mining and quarrying
Agriculture, forestry and fishing
Extraterritorial organisations
0%
5%
10%
15%
20%
25%
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5. Recommendations
Across the UK, approximately 1 in 10 working people would like to work more hours and are
therefore underemployed. Since the 2008 financial crisis, the underemployment rate has not
decreased as quickly as the unmployment rate and the gap between the two is the largest it has
been since at least 2000.
This report has considered the profile of people most likely to be underemployed, and examined
factors such as age, gender, industry, ethnicity and eduction. Given the findings of this report, we
make the following recommendations:
Preventing underemployment

Underemployment rates should be published alongside headline unemployment rates to
drive the focus of policy making.

Skills should be better aligned with employment opportunities, with better employer
engagement in schools and colleges. This includes providing young people with better
careers guidance, and information about the employability potiential of different subjects at
an early stage in their education.
Reducing underemployment

We agree with the Government’s policy objective to increase the emphasis on in-work
progression within employability programmes.

People with particular health conditions are substantially more likely to be underemployed
than the population as a whole and an In-Work Support Service should incorporate
assistance to manage health conditions to prevent them being a barrier to progression.

More support should be provided to women returning to work after having children as well
as supporting lone parents. The Government has, rightly, sought to improve access to
childcare for 3-4 year olds, and should consider how access to affordable childcare can be
ensured for those with older children.

Businesses should be provided with a better understanding of how foreign qualifications
translate and increasing the availability of English language classes would help remove the
barriers faced by people born outside of the UK.