Underemployment in the voluntary sector

Joe Heywood joined NCVO as a research assistant in 2013. He analysed NCVO’s data on the size and scope of the voluntary sector in the UK. Joe has now left NCVO. These blog posts have been retained for reference.

Something of a paradox emerged in this year’s UK Civil Society Almanac. While both income and spending had dropped in 2011/12 compared to the previous year, the number of people working in the voluntary sector was, by contrast, increasing noticeably.

Two possible explanations…

1. Things have subsequently picked up

The period covered by the Almanac – financial year 2011/12 (grey area in Figure (a) – preceded the most recent increase in the sector’s workforce (for which we have more timely data), this increase in workers could be a good sign.

The drop in income and spending in 2011/12 could have been a temporary blip that had recovered soon after. If this were to be true, we should expect an increase, at least in spending, by the time that the Almanac’s figures for 2012/13 are ready.

2. Weaker output and strong employment

A second explanation is that this pattern of weaker output, yet strong employment is a feature of today’s economy across all sectors, commonly described as the UK’s productivity puzzle. Some have argued that employers faced with shrinking budgets have looked at more flexible working arrangements to cut wage bills, rather than reducing the number of people in work. As we noted in the working patterns section of the Almanac, almost two-fifths of the sector’s paid workforce are part-time.

Taking a closer look at the data

In this post, I go into a bit more detail than what is available in the printed edition of the Almanac for this topic of underemployment.

Figure (a) breaks down the different reasons why people are working part-time: including wanting to working part-time, being unable to work part-time and other reasons (such as being a student). As this graph shows, the workforce of the sector has increased noticeably since the end of 2011 to around 800,000 paid employees by 2013.

It’s not all good news, and it’s not just the voluntary sector

The proportion of part-time employees indicating that they were working reduced hours because they could not find full-time work has been rising in the sector since 2009. From 2003 to 2009, the proportion of part-time employees who would have preferred to be full-time had not been more than 10%. But by the last quarter of 2012, this had risen to around 17%, (roughly 50,000 people).

Further analysis of the Labour Force Survey reveals that this is by no means a problem that is confined to the voluntary sector. Figure (b) shows the percentage of part-time employees in each sector who stated that they are working reduced hours because they are unable to find a full-time position. The same trend we noticed in the voluntary sector is also happening to a lesser extent in the public sector and to a greater extent in the private sector. For the latter, the proportion has doubled from 10% to 20% since 2008. Since the economic crisis, this problem of under-employment seems to be a feature of how organisations in all sectors try to keep people on. Whether or not the strong record in employment at the moment points to a recovery or suggest low productivity remains to be seen. We will keep a close eye on this in the next Almanac.