Workers are underemployed when they are willing to supply more hours of work than their employers are prepared to offer. The main driver of the demand for increased hours from employees is likely to be falling real wages. Total hours worked in the economy have increased since the beginning of the recession. A combination of slow-growing wages and price inflation has led to a reduction in the real value of take-home pay. In this context, underemployment may result in low pay regardless of the hourly rate. Low pay is one of the three main drivers of in-work poverty, which has been an increasing feature of poverty statistics in recent years. In 2013/14, half of working age adults in poverty lived in working households, as did more than half of children in poverty.
Measures of underemployment also help us to understand the true level of excess capacity in the labour market and the difficulties faced by particular groups within this market. For example, where there is underemployment this suggests even more difficult labour market challenges as even if there was an upturn in demand for labour, employers may prefer to extend the hours of existing workers before taking the risk of hiring new employees.
Increasing demand for labour will come from an expansion of the economy and growth in the number of opportunities to work. The Scottish Government's central purpose is to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. Scotland’s Economic Strategy focuses on two main pillars to achieving this objective; increasing competitiveness and tackling inequality. In terms of labour market participation, we aim to bring more people into the workforce, address persistent pockets of unemployment and underemployment, and help to tackle inequality and social exclusion.
The Scottish Government believes that a labour market that is fair and inclusive, and that provides sustainable and well-paid jobs, is key to tackling income inequality and addressing wider issues within the economy. Creating better workplaces, enhancing employee engagement, and fully utilising the skills of our workforce will be key to driving greater levels of productivity, bringing about benefits for businesses and the economy. Scotland’s Economic Strategy sets out this approach in greater detail.
As part of delivering this we have established the independent Fair Work Convention to consider the best thinking and research on matters relating to Fair Work, including innovative and productive workplaces, industrial relations, and the Living Wage. It will promote a new type of dialogue between employers, employees and trade unions, public bodies and the Scottish Government.
In addition, the Procurement Reform (Scotland) Act 2014 took every opportunity to promote Fair Work through procurement. Following this statutory guidance requires contracting authorities, in procurement exercises which commenced from 1 November 2015 onwards, to consider how they can address fair work practices (including zero hours contracts, the Living Wage and employee representation) as part of a procurement exercise along with other relevant criteria.
The Scottish Business Pledge was launched in summer 2015 as a shared commitment between the government and business towards boosting productivity, competitiveness, sustainable employment and workforce engagement and development.
Following the recession in 2008, the proportion of Scottish workers who were underemployed increased from 7 per cent to a peak of 10 per cent in 2012 and decreased to 8.6 per cent in 2014. The latest figures show that underemployment has decreased from 9.2 per cent in 2015 to 8.4 per cent in 2016.
Please note that figures for change over the year are based on unrounded figures.
The data is available at the bottom of the page.
This evaluation is based on: any difference within +/- 1.0 percentage points of last year’s figure suggests that the position is more likely to be maintaining than showing any change. A decrease of 1.0 percentage points or more on the previous year’s figure suggests that the position is improving; whereas an increase of 1.0 percentage points or more suggests the position is worsening.
As the gap has decreased by 0.8 percentage points, it is recommended that a ‘Performance Maintaining’ is posted.
For information on general methodological approach, please click here.
Scotland Performs Technical Note
Living Wage Foundation
Wealthier & Fairer
Safer & Stronger