​Project Spotlight: Rethinking Local Labour Markets and Under employment in the UK​

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​In a new series of blogs, we will review City-REDI’s current and historical work. In the next blog, we will examine a paper published by Professor Donald Houston and colleagues.

This report illuminates the persistent challenges of underemployment and workforce planning in the UK’s local labour markets.

The research delves into the factors contributing to underemployment and its consequences for productivity, offering insights for policymakers, businesses, trade unions, employers, employees and other stakeholders.​


Understanding the Research

The study delves into how time-related underemployment—where individuals work fewer hours than they desire—remains a significant problem in various UK local labour markets. It argues that national workforce planning often overlooks local economic dynamics, leading to mismatches between workers’ skills and job opportunities.  At the local establishment level, however, employers use underemployment as a workforce planning strategy in different ways in different places.  Underemployment can be used to retain staff on contracts (e.g. in rural areas where recruitment can be difficult) or to maintain flexibility to respond to rapidly changing business needs (e.g. in large urban economies).

By analysing quantitative data and qualitative interviews with employers from different sectors and localities, the researchers demonstrate that a one-size-fits-all approach to employment policy fails to address the unique challenges faced in specific places. They advocate for policies that consider local labour market conditions, educational opportunities, and industry needs.

This study contributes to ongoing discussions about employment policy in the UK, emphasizing the importance of localized approaches to address underemployment effectively.​

Why Underemployment Matters

Underemployment is not simply a personal or individual problem. As Houston and Lindsay’s research shows, its impact radiates across multiple layers of society:

  • Economic Efficiency: Skilled workers in low-skill or part-time roles represent a huge loss of potential productivity.
  • Social Mobility: If young people enter insecure or part-time work after education and can’t progress, it traps them in cycles of stagnation and poverty.
  • Job satisfaction, productivity and Wellbeing: Being underutilized at work contributes to low morale, stress, long-term dissatisfaction and lower productivity.
Policy Recommendations
  • Regional Workforce Strategies: Develop bespoke workforce strategies tailored to the specific economic profiles of cities and towns.
  • Stimulate the creation of ‘good jobs’ in a ‘good growth’ framework: Moving up the value-added chain allows for a stronger financial underpinning of jobs and stronger investment in people and skills.
  • ‘Stakeholder-oriented’ business models: Encourage employers and investors to allow for a range of voices, including employees and trade unions, in decision-making and have a longer-term focus of the contribution of the organization and its people to value creation.
  • Recalibrate employment policy to avoid adding to underemployment: ‘Young Person’s Guarantee’ initiatives and broader employment support activation schemes should be calibrated to ensure that employment outcomes do not contribute to underemployment.

The paper stresses that traditional employment metrics are insufficient for understanding these dynamics. A low unemployment rate may mask a workforce that’s underused and undervalued.

Read the full report.


Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

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