Millions of UK workers are stuck in the wrong job or working fewer hours than they would like, according to a report warning that this army of underemployed people are blocking opportunities for those outside the labour market.
The Resolution Foundation thinktank said that 5m extra hours of work a week are needed to soak up employees’ demands for more work. Moving those underemployed into longer hours would free up their part-time roles for new entrants, including those currently defined as economically inactive – many of whom have health problems or caring responsibilities.
The analysis is being published before a wider-scale Resolution Foundation report later this week on how the UK can achieve the government’s goal of full employment.
The latest official labour market figures put unemployment at its lowest level for more than a decade at 5.1%, but employment experts highlighted signs of slack remaining, including a slowdown in wage growth and a drop in job-to-job moves.
The Resolution Foundation says a key part of securing full employment will be bringing the economically inactive into employment. But doing that will require better mobility in the jobs market and an increase in hours for the underemployed - those who say they wish to work more than they are offered.
The unemployed (those who class themselves as both looking for and available for work) are dwarfed in number by the economically inactive, who are either not looking or unavailable for a variety of reasons, said Laura Gardiner, a senior policy analyst at the Resolution Foundation.
She added: “Many people assume that moving towards full employment simply involves getting the unemployed into work. But the biggest potential job gains stem from bringing in the much larger group of economically inactive people. To do that we need to focus on the kind of work available, particularly for the large numbers with health problems and caring responsibilities to juggle.
“Encouraging people into part-time jobs lies at the heart of boosting employment. The good news is that the UK’s flexible labour market provides plenty of part-time opportunities. The bad news is that far too many of those jobs are already taken by people who would prefer to work more hours elsewhere.”
Finding another 5m hours a week for the UK’s underemployed workers would free up part-time roles that suit many workless people and would boost pay, particularly for younger workers, said Gardiner. That 5m-hour requirement compares with “zero or below” in the mid-2000s when there was overemployment at times, with people reporting they worked more hours than they wished, she added.
Dip in job-to-job moves
The thinktank’s analysis also highlights room for improvement on job mobility - how much workers are able, and want to, move from their existing jobs to new ones. After declining dramatically during the downturn, job mobility had been rising but has recently fallen back again and remains one-third below its peak, it said.
Gardiner added: “The government is right to make full employment a central target of this parliament. A good starting point for bringing more people into work is to free up roles by improving the jobs market for millions of workers who are simply stuck in the wrong job.”
Job-to-job moves were particularly depressed for young workers, who tend to rely on them most for pay progression and promotions early on in their careers, she said.
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