Thursday, December 17, 2009

How Does Under-Employment in the QNHS Contribute to an Overall Measure of Labour Market Distress?

Following on from the previous post (based on the CSO's Quarterly National Household Survey), another question arises: what is the extent of underemployment in the Quarterly National Household Survey (QNHS)? And... what does this mean for an overall measure of labour market distress?

We know that there were 1,922,400 people in employment in the third quarter of 2009; which represents an annual decrease of 184,700 (or 8.8%). However, 15,300 of those in employment are 'part-time under-employed'; almost three times as many compared to summer 2007. This can be seen in the chart from the previous post. (Technical details about the measurement of 'part-time under-employment' are provided in the comments section).

Also, besides under-employment, the 'part-time' component of employment has increased by about 16,000 individuals; comparing Q3-2009 to the summer of 2007. It is possible that some of these individuals may not be classified as 'under-employed' because they have given up looking for additional hours of work. What does all of this mean for the headline statistic that the (non-seasonally adjusted) unemployment rate climbed to 12.7% in the third quarter of 2009?

Firstly, taking account of the 15,300 individuals who are 'part-time under-employed' means that we get an overall measure of labour market distress (i.e. unemployed plus 'part-time under-employed'). The rate of labour market distress (by this measure) was 13.4% (non-seasonally adjusted) in the third quarter of 2009. (Broader measures of labour market distress were discussed on the blog before - here - in the context of U.S. unemployment. And also on the Economix Blog: here).

Finally, if we take account of individuals who are 'marginally attached to the labour force' (see previous post on declines in the labour force), the rate of labour market distress was 14.3% (non-seasonally adjusted) in the third quarter of 2009. This figure (which requires seasonal adjustment) is closer to taking account of individuals forced onto shorter working weeks; and those who have given up looking for work (this could include the long-term unemployed who are not job-seeking).

1 comment:

Martin Ryan said...

According to the CSO:

"In July-September 2008 the question used to measure ‘part-time underemployment’ was replaced with two new questions, which aim to capture the exact same concept as before, but in simpler language. This change was made in response to concerns about the quality of the ‘part-time
underemployment’ indicator, evidenced by its almost static nature since the survey began, and also feedback from the field force about the complexity of the original question.

This change has introduced a break in the ‘At work, part-time, underemployed’ series, between
July-September 2008 and all previous quarters.

This indicator should be considered tentative until such time as a stable time-series has been established. The performance of this indicator will be monitored over the coming year, and it is possible that additional changes may be required."