Tackling underemployment for future generations – is aspiration the answer?

Andrew Wells
Initiative Manager | Business West
15th January 2018

Employment is at record levels in Swindon and across the country, leading to conclusions that the UK labour market is in rude health. 

Yet, behind the statistics, the reality of work often tells a different story.

Underemployment, a factor sometimes overlooked by politicians and the media, is a prevalent feature of the UK labour market, and it is harming productivity, social mobility and the economy.

It is understood that there are two types of underemployment: skill-related underemployment and time-related underemployment.

Time-related underemployment, is a concept that many of us will be familiar with, as a result of the controversies surrounding zero-hour contracts. 

Individuals considered to be in time-related underemployment are those who are willing and able to work longer hours, but do not get the opportunity for whatever reason.

Business confidence is a key factor that influences time-related underemployment. 

If businesses lack confidence, they are unlikely be expanding or investing, meaning that they will be reluctant to hire new people or offer current employees more work hours. For this reason, Government places strong emphasis on business confidence, viewing it as a key economic lever to maximising workforce productivity.

In contrast to time related underemployment, the causes of skill-related underemployment are much less easy to quantify and the reasons behind it are much more complex, meaning that there is a lack of consensus on how to tackle the issue among a diverse working population.

Skill-related underemployment describes when an individual is in paid employment, but their skillset is not being utilised as effectively as it could be. 

For example, a graduate working in hospitality for minimum wage would be considered underemployed. Male or female returners who settle for a less senior position at their company after having a child would also be considered underemployed. A PhD educated engineer doing administrative work would be considered underemployed too.

In each of these scenarios there are clear structural labour market issues that need to be addressed – the supply of graduates vastly outnumbers the supply of graduate level jobs; organisations often underperform in terms of reintegrating their employees following maternity leave; the jobs market is highly competitive and research funding is scant, meaning that few engineering PhD candidates find full-time research positions.

Yet, in each of these scenarios there are also individual and organisational factors that contribute to individuals’ underemployment. A graduate may be aware of their underemployment but lack the confidence to pursue the career they aspire towards. Returners may possibly have reduced desire to return to a high-pressure role, for example, now that family life has become a priority. The engineer may lack knowledge of career pathways following their postgraduate research. 

In short, the reasons for skill-related underemployment are complex and boundaries between factors are blurry, making it an intensely difficult issue to tackle. Nevertheless, each needs to be considered in relation to the other in order to maintain a healthy and vibrant economy - workers need to be able to find work that maximises their potential for as long is as necessary to be productive.

Let me put it this way. Highly skilled, high value areas of our economy such as high-tech are incredibly labour intensive. Therefore, it seems unlikely that UK would be able to be globally competitive, if it was an industry norm to work say 20 hours per week. 

Equally, if all of our graduates went into unskilled jobs, our economy would falter, no matter how many hours they worked, as the gross value added is small by comparison. 

This is why time related and skill related underemployment are often viewed as different sides of the same productivity coin, given that both are required to achieve positive economic outcomes. 

While there is no quick fix and underemployment will never be eradicated completely, we can minimise the problem for future generations, through realigning work and education with business and individual skills requirements to develop new career pathways.

The Government’s Industrial Strategy and its planned overhaul of technical education in England will go some way toward achieving this aim, yet, on the human-side there is one key factor business and legislators need to get grips in parallel with these developments.

Among 10-16 year olds, one of the key predictors of future time and skill related underemployment is aspiration. 

The reasons for which is obvious.

A lack of aspiration at an early age not only leads to poor educational outcomes and a lack of information about career pathways, but a lack of confidence to pursue a career in the first place, meaning that scores of immensely talented young people never even get the chance to demonstrate their abilities.

A recent example of this illustrated by Nick Walker, who after suffering severe epilepsy and being bullied at school found himself out of work and out of hope for the future at the tender age of 16.

Now 23, Nick has shown himself to be an incredibly talented young man – doing great things for charity and a rising star at his employer Marks and Spencer. 

To think that he spent years flitting between unemployment and low-paid work that didn’t match his abilities, underlines the fact that we need to unlock young people’s potential, so that they contribute the fullest spectrum of talents, skills and abilities. 

In recent years, more and more business has come to recognise and got to grips with this problem.

Businesses are now providing educational courses, schemes for school leavers and community engagement that twenty years ago would have been unthinkable.

Barclay’s Life Skills programme for example is a fantastic initiative that helps instil confidence in young people to raise their career aspirations. Large organisations such as KPMG run school leaver schemes targeting young people from disadvantaged backgrounds. In addition, large numbers of small businesses from across the UK go into to schools to engage with young people and help excite them about the world of work.

Pupil by pupil, getting young people to recognise the talents and potential within themselves to have a successful career and help the economy flourish. 

I am proud to say that in Swindon we have an engaged business community that is doing lots of great things to help raise aspirations amongst the town’s young.

On 6th March, many of them (including Swindon’s leading employers) will be exhibiting at STEAM to raise aspirations and awareness of young people at this year’s Swindon Jobfest.

It is a fantastic event that has a significant impact on the young people who attend, laying the foundations for skilled and rewarding working lives. Given that the event aims to achieve a broader purpose, exhibition stands are offered at a significantly discounted price when compared to similar business expo events, so go on, help future proof Swindon’s productivity and prosperity. Help us build the high skilled, high productivity economy where no one is underemployed and sign up today.

Do you want to join the conversation?

Sign up here
  • Drive your business forward with a skilled workforce

    Our specialist skills advice and support will connect you with local and national training providers to ensure you and your staff receive access to quality and relevant training.