LONDON (Reuters) - A sharp rise in the number of people working less than they would like helps explain the apparent resilience of Britain’s job market while the economy stagnates, according to a study published on Thursday.
British unemployment has risen from 5 percent in 2007 to just under 8 percent, well below the double-digit rates scaled during recession in the 1990s.
The study, co-authored by labour market economist and former Bank of England rate-setter David Blanchflower, shows nearly 10 percent of British workers wanted more hours than their employers would provide in 2012. In 2007, that figure stood at 5 percent, the same as the unemployment rate.
“The United States has suffered twice the increase in unemployment seen in Britain for half the drop in output,” Blanchflower said. “The rise in underemployment in the UK is a big part of that puzzle.”
The United States publishes a measure of underemployment which is seen as a useful indicator of slack in the economy.
Simon Kirby, UK economist at the National Institute of Economic and Social Research think-tank which published the study, urged Britain to do the same.
“Underemployment figures could be calculated easily from the existing Labour Force Survey,” he said.
Britain’s job market indicators may come under increasing scrutiny if the Bank follows the Federal Reserve in providing “forward guidance” on monetary policy.
The Fed has specified that rates will remain low until unemployment falls below a certain level. Chancellor George Osborne has asked the Bank to report back to him in August on the merits of adopting Fed-style guidance.
Reporting by Christina Fincher; Editing by Ruth Pitchford