Official unemployment figures are disguising the fact that a significant number of people who are in both full time and part time work are not able to work longer hours even though they want to, a report published on Thursday suggests.
According to an analysis carried out for the National Institute of Economic and Social Research (NIESR), the traditional measure of unemployment fails to capture the phenomenon of 'underemployment'.
The underemployment figure - which includes those workers who say they want more hours - currently stands at 9.9%, well above the unemployment rate of 8%.
Unemployment jumped sharply following the economic crisis in 2008 but appeared to level off towards the end of 2011.
Professor David Blanchflower, the former member of the Bank of England's Monetary Policy Committee who helped compile the report, said this new research goes a long way towards explaining why the unemployment rate hasn't risen as much as would have been expected given the drop in output.
"We find that the gap between our underemployment index and the unemployment rate is widening because employed workers who are getting real wage increases want more hours and they can't get them. This the equivalent of another half a million unemployed," he told The Huffington Post UK.
"So the level of slack in the economy is much bigger than we previously thought. The worry is that when eventually the recovery comes, hours will rise but unemployment won't fall."
According to the NIESR report, underemployment is particularly concentrated among the young, where official unemployment rates are close to 20%. In 2012, 30 per cent of those aged 16 to 24 who did have jobs wished to work longer hours.
Blanchflower and his co-authors warn that even if there was an upturn in demand, employers would likely extend the hours of existing workers before taking the risk of hiring new young employees.Suggest a correction