How can you have growing employment and a shrinking economy?

Underemployment: the UK’s response to economic weakness

Despite the UK economy being in recession in the first quarter of 2012, unemployment fell by 45,000 (and youth unemployment was down by 18,000). This is very welcome news. Throughout the last four years of recession, hesitant recovery and return to recession the UK’s labour market has performed remarkably well. The fact that 2.63 million people are unemployed is terrible news, but, if the pattern of previous recessions had held, that number could have been closer to 3.5 million. It’s bad, but it could have been a lot worse.

Companies and workers have found two alternatives to mass redundancies: cuts in real pay and increased part-time working.

Pay has failed to keep pace with prices for much of the last four years and the latest figures show regular earnings (excluding bonuses) increased by just 1.6 per cent over the last year, compared to consumer price inflation of 3.5 per cent.

Meanwhile, the 105,000 increase in employment in the latest quarter was more than fully accounted for by part-time workers, while the number in full-time employment fell by 13,000. Looking at the numbers differently, 90,000 of the 105,000 increase in employment in the last quarter was due to an increase in self-employment.

These are not new trends; they have been evident throughout the recession and recovery. The following table shows the change in employment over the last four years (i.e. comparing the first quarter of 2008, just before the recession, with the first quarter of 2012):

 

Change in employment (000s)

Total employment

-277

 

 

Employees

-544

Self-employed

307

Unpaid and on government programmes

-40

 

 

Employment – full-time

-744

Employment – part-time

467

 

 

Employees – full-time

-792

Employees – part-time

248

 

 

Self-employed – full-time

44

Self-employed – part-time

263

In round numbers, over this period total employment in the UK has fallen by close to 300,000. But the number of full-time employees is down by 800,000, while the number of part-time employees and the number of part-time self-employed people are both up by about 250,000.

We know there are many reluctant part-time workers because the Office for National Statistics asks those who are working part-time if they would prefer to be working full-time and 1,418,000 are currently saying yes – the highest number since comparable records began in 1992 and an increase of 700,000 over the last four years. Unfortunately, the ONS does not ask the self-employed if they would rather be working as an employee – but it is a fair bet that some of the recent increase in self-employment reflects people who would rather not be self-employed but have set up their own businesses because they cannot find a company to employ them.

The headline unemployment figures do not tell the full story of the UK labour market during the recession and recovery. As well as a large increase in unemployment, there has been a large increase in underemployment – people working fewer hours than they would like.

This represents lost potential output to the UK economy, as well as lost income and lower living standards for those who find themselves underemployed, but it is far better for the economy in the long-run for people remain in work than for them to lose their jobs. Once people are out of work, there is a risk they lose touch with the labour market and find it impossible ever to get back into employment (as happened to thousands in the 1980s).

It is not clear, however, why underemployment is replacing unemployment as the response to economic weakness. There is no evidence of a renaissance in industrial relations at the whole economy level, but it seems that in many companies employers and workers are getting together to agree that more part-time working and cuts in real pay are preferable to lay-offs. You could say that some workers have decided that they are better off "all in it together" than seeing some of their number lose their jobs.

There is, however, one sense in which the increase in involuntary working is bad news, and that is for the outlook for employment once the economy does start to grow at a healthy pace. When this happens, before they start to recruit new workers, companies will want to bring back into use the underutilised resources represented by underemployment. Meanwhile, workers who are working part-time involuntarily will want to return to full-time employment before they see new colleagues alongside them. There is a limit to the "all in it together" sentiment, which means it is not likely to extend to those unfortunate enough to be unemployed.

At a macro level, the result is likely to be something of a "jobless" recovery. Stronger output growth, when it eventually arrives, accompanied by modest increases in employment – and stubbornly high unemployment – while part-time working falls and full-time working increases.

A worker is underemployed in the HK stock exchange. Photograph: Getty Images

Tony Dolphin is chief economist at IPPR

Photo: Getty
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A clinically-approved birth control app is changing the way we think about contraception

The particle physicist Elina Berglund has created an app that is 99 per cent effective. 

Women around the world using the contraceptive pill have long complained to their friends about its perceived side effects – weight gain, acne, mood swings to name a few. Some more recent studies have verified that anecdotal evidence – a Danish study from 2013 confirmed that there was a 40 per cent increased risk of depression for women who were on the pill, compared to those who weren’t.

Frustration around the inadequacy or ill-suitability of certain methods of contraception is rife. One woman, Elina Berglund, decided to do something about it.

Formerly a particle physicist at CERN (and a member of the team responsible for the discovery of the Higgs Boson particle), Berglund co-founded Natural Cycles, a contraceptive app, with her husband Raoul Scherwitzl. Approved as a contraceptive app earlier this year, it is downloadable on a smartphone and relies on a relationship between body temperature and fertility to tell women when they're fertile.

But contraception campaigners have viewed the concept with caution. Widespread use of the pill, condoms, and diaphragms comes after decades of campaigns against reliance on "natural methods" – not to mention the opposition of religious organisations like the Catholic church. 

At first glance, Natural Cycles might not seem all that different from the Vatican-approved "rhythm method", which is based on observing the exact stages of a woman's fertility cycle and avoiding sex during ovulation. This can be, according to the NHS, up to 99 per cent effective – but in reality it is closer to 75 per cent, because "people can make mistakes". 

Users of Natural Cycles take their temperature daily and input it into the app (which costs £6.99 a month). The app then compares the figure to its own dataset and uses an algorithm based on Berglund's days from CERN. It also asks for other data, such as the dates of user's periods and whether they are planning for a pregnancy or not, to create a personalised calendar.

If it’s safe to have unprotected sex, then the in-app calendar will show up as green. If not, the in-app calendar will show up as red. On those red days, users should find methods of contraception if they aren’t seeking pregnancy.  

Menstrual tracking apps are all the rage (there are around 1,000 of them on the current Apple app store). But recent studies have shown that those apps are often inaccurate and lack any scientific basis. 

Natural Cycles, by contrast, carried out three clinical trials, each time expanding the dataset to reduce errors. The most recent, written up in Contraception, involved 22,785 women across 37 different countries in settings that mimicked real life. The co-authors pointed out that in instances of perfect use, one out of 100 women become pregnant accidentally. However, in instances of typical use, seven out of 100 women had the same result.

When Natural Cycles first gained publicity, Berglund pointed out to the press that “now they (women) have a new, clinically verified and regulatory approved option to choose from”. Berglund and Scherwitzl are looking into getting Natural Cycles prescribed on the NHS, like the pill.

So is Natural Cycles the future of family planning? The first thing to make clear is that the app cannot actually function as physical contraception – on “red” days, the app advises users to use a condom if they’re having sex and don’t want to get pregnant. It cannot prevent the transmission of sexually transmitted diseases either. 

Nor is the app really marketed to those who may benefit from the most information about their sexual health – 16 to 25-year-olds, who are also the age group most likely to engage in risky sexual behaviour. 

A spokesperson for Marie Stopes, the reproductive health NGO, said: "Apps to track fertility are a high-tech version of what women have been doing for years with a diary and a thermometer.

"For anyone trying to get pregnant, they might well help. However, if you want to avoid pregnancy, it’s much better to choose a reliable, long-acting modern method of contraception like an IUD or implant. Traditional methods, including tracking fertility, carry a much higher risk of unintended pregnancy."

The app relies on an algorithm, meaning it is only as effective as the data that it receives from users. It is also not free, which may exclude its usage by certain sections of society. A blog written for NHS Choices emphasised that the data collected in all the trials was collected from women who were already signed up for the product, making it likely that they had an incentive to continue with this specific additional contraceptive, as opposed to looking elsewhere. Even so, a third of users who had signed up still dropped out, potentially because of the maintenance required to get results from it. 

All the same, Natural Cycles has 380,000 users and counting. It has received clinical approval to be marketed as a medical device, and it seems to be meeting a need – 70 per cent of Natural Cycle's users come from hormonal contraception, according to Berglund. In her account of Natural Cycles in the Evening Standard, Kate Wills highlighted that the Apple Watch had all sorts of health inputs, but no way to track periods.  All kinds of apps exist to make modern life easier – why has it taken so long for one that addresses a concern for so many women to make its way into the mainstream?

The history of contraception is littered with examples of women being ignored. Early birth control studies vastly underplayed the potentially debilitating side effects of hormone fluctuations on women’s mental health and physical appearance, often treating users as though they were hysterical. Add into the equation the stigma around accessing contraceptives safely and non-judgementally, and it’s easy to see why a relatively painless and private form of contraception might be appealing. 

Natural Cycles may well work for some women – those who are in stable relationships, hoping to get pregnant and fastidious enough to note their temperature every morning. But it doesn’t prevent diseases, requires a steady commitment and – here's the clincher – can't take measurements when you’re hungover as alcohol can affect your temperature. There's also a big difference between the "perfect" use of the app, and the likelihood of pregnancy when used in a "typical" fashion. So long as that's the case, old-fashioned contraception seems unlikely to be swept away by a digital revolution.