Over ten per cent of Britain's possible labour is wasted

Combining underemployment and unemployment shows the output gap is much bigger than previously estimated.

Our own economics editor, David Blanchflower, has a new paper out today co-authored with David Bell of the University of Stirling, taking a deeper look at underemployment.

Increasingly, the issue is being understood as one of the major crises in the UK today. It explains how our unemployment rates have recovered far more quickly than GDP growth would lead us to expect, as well as providing a hypothesis about the UK's falling productivity levels (if full-time permanent workers have are more productive than part-time and temporary workers, then high underemployment would hinder the UK's productivity).

While it's usually better to be under-employed than unemployed (because the number of people who are actually better off on benefits is vanishingly small), it's no walk in the park. At best, underemployment results in wasted potential in the same way as unemployment, with people who could work more not having the choice. And working for one day a week is much less than a fifth as good as working for all five: you can't buy a weekly travelcard, meaning commuting costs more; you can't build up expertise or connections at work; and you spend the vast proportion of your income on essentials, leaving little left over after the bills are paid (a problem that also afflicts people in full-time employment, of course).

On top of that, as Jonathan Portes points out, underemployment is an issue which overwhelmingly affects young people (of whom 1 in 5 are already unemployed):

In 2012, 30 per cent of those aged 16 to 24 that did have jobs wished to work longer hours. This means that the labour market for the young is even more difficult than the raw unemployment rates imply. 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.

But the thing is, despite underemployment being such an important issue, we don't have any great way to measure it. The unemployment figures include statistics asking people in part-time and temporary positions whether they'd rather be in full-time permanent jobs, which is a good start, but it's an overly simplistic measure (what about part-timers who want to stay part time but have more hours?), and it fails to properly capture the interplay between un- and under-employment.

Separately, the annual Labour Force Survey asks respondents whether they are looking for more hours of work at the same pay, and how many hours they are actually working; but those measures are even harder to compare to the unemployment data, and are far too infrequent to be of much use.

That's where Blanchflower and Bell step in. By combining those two measures with the general unemployment rate, they have put together an "underemployment" index. They write:

Like the unemployment rate, it is expressed as a percentage. It can be thought of as measuring the ratio of net unemployed hours to total available hours assuming that the hours preferences of the employed at current wages are met.

If everyone who was employed was working exactly the number of hours they wanted to be, then the index would be the same as the unemployment rate. In fact, it can fall below the unemployment rate, in times when the majority of employed workers would rather reduce their hours – and that's how it was in the boom years. But once the great recession hit, the index diverged markedly:

It's an important measure, because it reflects not only the "external" labour market that most of us see – unemployed people hunting for jobs – but also the "internal" labour market: people with work, negotiating with their employers for more or less work. As a result, the authors write:

This index gives perhaps a broader estimate of the extent of underused capacity in the economy – the output gap – than a simple measure based on the unemployment rate.

The policy implications, they write, are clear. Taking a narrow view, the ONS needs to pick up the ball on this, and start publishing the data alongside the broad unemployment index. But in the broader sense:

There is very substantial spare capacity in the labour market; the implication being that if demand were higher, output could easily be higher, and it could be higher without exerting any significant upward pressure on real wages. So any further stimulus, whether fiscal or monetary, would not be inflationary. People want to work.

Looking at underemployment as well as unemployment confirms that the stagnation Britain has experienced is unlikely to be purely, or even mainly, structural. Stimulus is likely to lead to more employment, not more inflation; and so it should be done as soon as possible.

Staff in a dispatch centre package goods to ship. Shift workers are frequently underemployed. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The wildfire victims of forestry neglect - and the trees that saved them

Events in Portugal show how present mismanagement of the natural world reaches far beyond climate change, while also leaving communities more vulnerable to its effects.

When guesthouse owner Liedewij Schieving first heard about the wildfire in nearby Pedrogado Grande, she wasn’t overly concerned. “We always have fires here,” she explains at her home deep in the central Portugese forest.

It was only later that night, eating outside with her 11 guests, that the fear set in: “The wind was starting to smell and the sunset looked weird and dark.” By early the next morning the vast wall of flames had breached their remote valley. “I’ve never been in a war,” Liedewij says, still shaken, “but it was how I imagine war to sound.”

Soaring to temperatures of over 800 centigrade - high enough to melt windscreens and sink tyres into tarmac - the inferno eventually burned over 30,000 hectares of forest. By the time it was quelled, 64 adults and children had lost their lives, some dying trapped in their cars as they tried to escape down an unsafe road. “The biggest tragedy of human life we have known in years,” is how the country’s Prime Minister responded to the news on 18 June.

Two months later, the Pedrogado fire has proved the precusor to another summer of extreme weather events. Across southern and central Europe recent weeks have seen high winds and low humidity whip up wildfires everywhere from Spain to Serbia. At time of writing, 2,000 people in Portugal are trapped in the town of Mação as flames and smoke block their exit. In France, fires recently forced over 20,000 people from their homes and campervans.

Climate change is an unmistakable culprit. A Carbon Brief analysis of 140 studies from around the world found that 63 per cent of extreme weather events are linked to human-caused warming - making them either more likely or more severe.

Yet as countries assess the damage, evidence of humanity’s wider mismanagement of nature is also becoming harder to ignore. In Portugal, the excessive planting of eucalytpus trees is taking some of the blame for recent events. The species is the timber of choice for the country’s powerful paper industry, covering both industry-owned plantations and hundreds of tiny private smallholdings who sell it on. But it also happens to be highly flammable: think Grenfell cladding but spread over nearly a million hectares of land.

Liedewij’s story is evidence of this. Where dense eucalyptus forest once hid her home in dappled shade, the hillside is now charred and bare. “It was terrible,” she says of the moment she opened the gates for the farm animals before fleeing the valley, “we thought we were leaving them behind to grill”. Except that, as in all good disaster films, Liedewij’s goats didn’t burn - and nor did her picturesque house. Instead, fire-retardant willow trees by a nearby stream held the flames naturally at bay. On returning the next morning, she even found the hens laying eggs.

Liedewij Schieving outside her B&B at Quinta da Fonte - the bare hills behind the house show just how close the fire came.

Seen from above, her remote farmstead is now a tiny island of green amid a sea of black. She still panics at the smell from the woodfired heating, but support has poured in from friends both in Portugal and her native Holland, and she soon plans to fully re-open Quinta da Fonte B&B. Many guesthouses in nearby villages have already got back up and running.

Others among her neighbours, however, are not so lucky. Over 10,000 separate fires have destroyed 141,000 hectares of land in Portugal this year alone, with the annual cost of wildfire losses estimated to reach around €200m. A situation that risks further perpetuating the cycle of poverty and neglect that also played their part in the tragedy.

According to Domingos Patacho from the environmental NGO Quercus, the forest has become more hazardous as many of central Portugal's thousands of smallscale landholders leave their land untended to seek better wages elsewhere. Meanwhile, those who remain are often financially dependent on the income from the eucalyptus. They could choose to plant less flammable and water-hungry species, such as native corks or oaks, Patacho explains, but these can take twice as long to mature and provide a return.

The result is rising tension between the Portugese paper industry and the central government. After the June fire, the parliament pledged to push ahead with plans to limit the monoculture plantations. But the country’s Association of the Paper industry has previously warned that any ban on new plantations could hurt exports and jobs.

The reality is that both sides of the eucalyptus spread - both industry-owned and private - need improved regulation. But in a country only recently released from EU imposed austerity measures, debates over how enforcement could be financed are particularly tense. Not least since many areas do not even have an up to date land register, Patacho expplains.

At ESAC, an agrarian research base in central Portugal, professor Antonio Ferreira believes the time is now ripe for discussion between politicians, citizens and researchers about the future of forest land-use as a whole. The country needs to encourage people “to re-introduce native species, which will diversify the landscape and economic activity in those areas,” he says.

And the impulse is far from limited to Portugal. “We need to look at all the social aspects to get the full picture as well as the scientific side of forest management,” says WWF’s Jabier Ruiz of Europe’s wider wildfire problems. One route out of the woods may be greater EU policy support for those living in marginalised, rural areas, he adds.

What is clear is that as the continent warms, the need to improve the balance between social, environmental and commercial interests becomes ever more crucial. And while politicians debate, work at Liedewij’s home is already underway. Over the next few weeks, a group of her eco-minded friends, builders and topographers will help her re-build and re-landscape her farm. From digging terraces to stop landslides, to preventing the eucalyptus from re-emerging too close to the roads, their aim is to regrow a forest that works for all: a slow-burn project perhaps, but a bright one.

India Bourke is an environment writer and editorial assistant at the New Statesman.