Rate of Underemployment in the UK: Importance for Individuals and the Economy

This essay critically discusses the rate of underemployment in the UK and its importance for both individuals and the economy. It explores the concept of underemployment, its impact on skills and wages, and its effect on business growth. The essay also highlights the measures taken by the UK government to address underemployment.

Critically discus the rate of
underemployment in the uk
and its importance for both
the individual and the
economy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAINBODY...................................................................................................................................3
Concept of underemployment in UK...........................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Employment is essential for individuals and country’s economy because it improves
living standards of individuals and their families and it indirectly stimulate country’s GDP rate.
In this essay will discuss over the concept of underemployment in UK and it’s significance for
both individuals and the economy.
MAINBODY
Concept of underemployment in UK
Underemployment is a condition wherein people does not have any permanent job but
they employ as labour force at less than full time for specific time period. In other word a
situation whereas people work only few hours as per their wish are known as underemployment.
Such employees work various job to generate enough money accordingly their living expenses.
Underemployment employees are also known as hidden employees because they are highly
skilled but after that they get less money (Bell and Blanchflower, 2018a). However,
underemployment situation occurs when employee’s jobs do not require practices of all skills,
education. Underemployment are two types such as visible and invisible. Visible
underemployment contains such employees who offers their services only few hours as
compared typical job. Such employees are ready to work additional hours but after that they
cannot earn fulltime employment like typical job. So, they often work two part-time jobs to earn
their livelihood. Invisible underemployment involves such workers who works fulltime jobs but
do not use their all skills at the workplace. Such employees cannot measure because it requires
wide survey to meet job requirement. In addition, they also do not feel that their skills can be
better if they apply elsewhere. Underemployment concept is highly observed in UK due to
recession period. The recession period was come in 2008 in UK that time wide number of people
have lost their jobs or become unemployed in UK (Datta, 2019). Technological change is also
one of the major reasons of underemployment for instance, ATM machines and mobile banking
sector has replaced needs various bank tellers who used to be entry level for banking career. As
resultant there were many collage grades who were taken such works in which they were expert.
Such employees have become underemployment employees whose position cannot easily
replaced by digital tools.

Underemployment brings negative impact on employees such as they can lose the ability to
improve their skills along with continue job training. Due to underemployment they enable to
return their former field in the absence of training (ONS, 2020). So, it will be right to say that
underemployment is like unemployment because both brings higher poverty level. In efficient
income causes families unable to by such products which they want. As result poor disposable
income reduces demand of users for the product that directly impacts business growth. Overall,
low growth rate of business decreases GDP rate of country. UK has become one of famous
company for underemployment because there include such people who are forced to work part-
time instead of full-time job. According to David N.F. and David G. stated that
underemployment is one of the major reasons of lower wage growth because employer gets such
employees who willing to work at lower wage and posses’ all skills which are required for the
workplace. While other people who have expertise for workplace but requires adequate salary
then employer replaces skilful staff with underemployed employees for saving extra cost
(Taylor, 2019).
With this statement can be interpreted that underemployment is also considerable reason
of lower wages in UK. But in the year of 2008 UK’s government paid attention on
underemployment people because they are more important as compared unemployment in
leading weakness of wage growth in the United State. Then, UK’s government has imposed rule
to bring wage equation for underemployment so that their purchasing behaviour improve that
directly stimulate growth of business in the UK market. While CIPD research disclosed
information that more than half of graduates are offered their services graduate level job after
leaving their studies after six months. Such graduates earn quite less such as below the UK
average wage. On the other hand, females are also quite paid less as compared male based on the
graduate employment gap. So, UK’s government has taken initiative to rise employment rate
around 4% since 2010 (Bell, D. and Blanchflower, 2018b). Such initiative has fallen
unemployment rate around 6.0% but still there were 35% people have unemployed for a year in
2010. So, UK’s government has taken decision to improve SME businesses so provides
mortgage payments at low interest rate that improve employment opportunity and provides
platform such people who do not get such platform wherein they can apply their all skills and
experience effectively.

Significance of underemployment for individuals and economy
Underemployment measurement is important for the UK’s economy as well as
individuals because it brings similar impact of unemployment on people (eyes, Tomlinson and
Whitworth, 2017). For instance, unemployed people do not get such platform wherein they can
apply their skills and expertise due to inadequate disposable income or lack of financial
resources which directly impact on their purchasing behaviour that leads low business growth.
When business growth starts to become lower that weak GDP rate of country. While
underemployment makes people less skilful because they do not get such job wherein, they can
practice their actual job and they forget their former filed skills due to lack behind of training
(Ramos, Surinach and Aris, 2012). Just because of this underemployment people do not get that
salary structure which they deserve after giving additional hours. It is important for the
individuals to understand underemployment factors critically (Blanchflower, 2015). When new
generation understand the difference between underemployment and unemployment then they
automatically will select that profession which is related to their field and can expand their
knowledge and skills more adequately. It directly reflects GDP rate of country and will reduce
unemployment and underemployment ratio.
CONCLUSION
This essay has discussed over underemployment and reason behind of it in UK. It has
been summarized it’s concept of underemployment and it’s impact on individuals and the
economy in this essay.

REFERENCES
Bell, D. and Blanchflower, D. (2018a) Underemployment and the lack of wage pressure.
National Institute Economic Review, 243
Bell, D. and Blanchflower, D. (2018b) The lack of wage growth and the falling Nairu, National
Institute Economic Review, 245.
Blanchflower, D. (2015) As good as it gets? The Uk labour market in recession and recovery.
National Institute Economic Review, 231.
Datta, N. (2019) The gig economy and workers’ preferences for steady jobs. CentrePiece
Autumn.
Heyes, J., Tomlinson, M. and Whitworth, A. (2017) Underemployment and well-being in the UK
before and after the Great Recession. Work, employment and society 31(1).
ONS (2020) Labour market economic commentary: January 2020
Ramos, R., Surinach, J. and Aris, M. (2012) Regional Economic Growth and Human Capital:
The role of Over-education. Regional Studies 46(10)
Online
Taylor, M. (2019). We need to tackle bad work to solve our productivity puzzle. [Online].
Available Through:-
<https://www.thersa.org/discover/publications-and-articles/matthew-taylor-blog/
2020/01/bad-work-productivity-puzzle>