Matt Aldrich, Sara Connolly, Margaret O’Brien and Svetlana Speight Underemployment across Europe: Families’ response to the Great Recession Matt Aldrich, Sara Connolly, Margaret O’Brien and Svetlana Speight ESRC grant number ES/K003739/1

Setting the scene – labour market effects of the recession Falls in GDP across Europe from 2008 onwards, unemployment rates increasing But major differences between countries Much focus on unemployment, but underemployment also an important factor (22% of PT workers across Europe are underemployed (Eurostat)) Most countries seen austerity cuts and restrictions to family policies In 2007, Real GDP growth of 3%, by 2009 Europe’s economy shrinking by 4% - many countries not yet reached 2008 output Effects on labour market lag behind gdp – unemployment reached 10% by 2011 but still growing In UK: Historically, employment falls proportionately to GDP during a recession However, over the Great Recession 2008/9, it only fell by half that of GDP Unemployment reached a peak of 7.8%, but stabilised much more quickly than in previous recessions (ELMR 2010, ONS) However, underemployment is prominent and has continued to increase since the UK returned to growth (Bell and Blanchflower 2013) 3.5% fall in aggregate working hours – 27.7million hours per week (Philpot 2010)

Methodology EU Labour Force Survey 2007 – 2011 Couple households, reference person aged 16-64 Child: at least one person living in the household aged 15 or less (could be biological, step or adopted) Hours: total usual hours worked per week by individual in main job, including overtime; FT 30+ hours per week, PT < 30 Underemployment: wishes to work more than current usual hours Data is weighted

Choice of countries UK – liberal, ‘enabling’ family policy but declining support from the state DE – relatively small impact of recession, strong pro-working family policy FR – strong labour rights and a restrictive 35hr working week ES – southern European, limiting family policies, severely hit by recession

Impact of the recession, selected countries Annualised GDP growth (%) So when the recession hits these families through a tighter labour market, what are the potential effects and how can they respond to these challenges? World Bank 2015

Household response to deteriorating labour market Households jointly make labour supply decisions Partner can act as a buffer for lost income resulting from un(der)employment But if opportunities are scarce, households with children can suffer due to higher financial burden. When one worker in the household loses their job or faces restrictions in hours, the partner can potentially act as a buffer for lost income by entering the labour market or increasing their hours. But if the labour market is tight, then there may be limited opportunities to do this, and families may suffer either through worklessness or through underemployment. These effects may hit households with children harder than households without children, because of the greater financial burden they face – particularly in the light of cuts to family support.

Proportion of households with children who are workless

Proportion of households with children with a ‘non-standard’ working arrangement 49% of Spanish households were male breadwinners in 2001 – southern Europe welfare regime, historically low female employment, pathway dependency of welfare regime, – emphasizes this radical break happening in ES through increase in non-standard working arrangements. UK liberal labour market, more flexible, more females employed (mainly part-time) but been able to adjust

Incidence of underemployment

Depth of underemployment Depth of underemployment in UK and ES similar, but incidence higher in Spain

Regression analysis Which factors affect likelihood of underemployment? Logistic regression, dependent variable whether male is underemployed (1) or not (0) 2 regressions all couple households households with children only Pooled data for 2007, 2009, 2011 Explanatory variables: Year, work status of couple, qualifications of couple, number/age of children and age of male, region and occupation (not reported) Coefficients reported as Average Marginal Effects (see Mood 2010)

Which factors affect underemployment? Germany UK France Spain Year 2007 -0.062 -0.005 0.030 -0.040 2009 Reference category 2011 0.000 0.008 -0.012 0.006 Work status Works part time 0.147 0.107 0.158 0.213 Partner not working 0.019 0.046 0.038 Partner part-time -0.042 -0.016 -0.056 -0.041 Partner works full-time Partner underemployed 0.117 0.053 0.173 0.125 Qualifications Low 0.014 -0.010 0.001 Medium High -0.011 -0.009 Partner low 0.010 0.003 0.007 -0.002 Partner medium Partner high -0.008 -0.021 Number of children No children 1 child 0.016 2 children 0.015 0.004 3 children 0.022 4 or more children 0.021 -0.001 0.034 0.026 Age <25 0.017 0.063 0.051 25 - 34 0.023 0.055 35-44 45 - 54 -0.051 -0.017 55 - 64 -0.116 -0.067 Fathers more likely to be underemployment than non-fathers: In UK, having 1 child makes father more likely to be underemployed compared to having no children. In DE, having 2 children makes father more likely to be underemployed than having no children. In FR, having 1 child or 4 or more children makes father more likely to be underemployed. In ES, having 1 or 3 children makes father more likely to be underemployed than having no children. Quals of father – in FR, father having high quals decrease likelihood of underemployment. In ES, fathers quals have no effect. Quals of partner – partner with low quals in DE makes father more likely to be underemployed. Partner’s quals have no effect in FR. Year dummies: Less likely to be underemployed in 2007 in UK, less likely to be underemployed in FR in 2011. Coefficients reported as average marginal effects. Significant effects (5% level) shown in bold. Controls for occupation and region not shown, N=54816 (UK), 22734 (DE), 62543 (FR), 45451 (ES)

Which factors affect underemployment? Fathers only Germany UK France Spain Year 2007 -0.069 -0.001 0.031 -0.048 2009 Reference category 2011 0.004 0.012 -0.010 0.002 Work status Works part time 0.181 0.125 0.176 0.247 Partner not working 0.026 0.003 0.046 0.050 Partner part-time -0.022 -0.014 -0.059 -0.037 Partner works full-time Reference category Partner underemployed 0.093 0.051 0.170 0.135 Qualifications Low qualifications 0.020 -0.013 0.008 -0.006 Medium qualifications High qualifications -0.012 -0.021 Partner low qualifications 0.013 0.006 0.016 Partner medium qualifications Reference category Partner high qualifications -0.018 Age of youngest child < 1 0.000 0.032 1 to 2 0.005 0.045 0.010 2 to 3 0.001 -0.004 0.021 -0.019 3 to 4 0.023 0.017 4 to 6 -0.002 0.011 6 to 11 12 to 15 -0.003 Number of children 1 child 2 children -0.005 -0.008 3 children -0.009 4 children 0.014 0.009 Age <25 0.034 0.040 0.061 25 - 34 0.037 0.015 35-44 45 - 54 -0.028 55 - 64 -0.020 -0.068 -0.053 Which factors affect underemployment? Fathers only PT work – father in PT work more likely to be underemployed (but AME much larger in ES than DE, UK or FR) – and larger than they were for all coupled men Partner not working – no effect in UK, but father more likely to be underemployed in DE, FR, ES Partner works part-time – father less likely to be underemployed in all 4 countries Partner underemployed – father more likely to be underemployed Age of youngest child – no effect in UK, Germany or Spain, but in FR younger aged children associated with greater likelihood of underemployment Number of children – no effect Qualifications of father – lower or higher quals decrease likelihood of underemployment in UK. In Germany, low qualifications more likely to be underemployed, in Spain high quals less likely to be underemployed. Father’s quals have no effect in FR. Quals of partner: partner with high quals result in lower likelihood of underemployment of father in UK, ES, FR. Low educated partner makes it more likely father will be underemployed in FR and UK. No effect of partner’s quals in DE. Year dummies: More likely to be underemployed in UK in 2011, less likely to be underemployed in 2007 in DE and ES. More likely to be underemployed in FR in 2007. Austerity cuts from 2011 in UK contributing to underemployment? Coefficients reported as average marginal effects. Significant effects (5% level) shown in bold. Controls for occupation and region not shown, N=24037 (UK), 9296 (DE), 32722 (FR), 22485 (ES)

Conclusions Part-time work and working hours of partner have a significant effect on underemployment of fathers Partner facing underemployment increases chance of father being underemployed Coupled with austerity measures, has potentially damaging effects on families and child poverty Having a high-qualified partner means father is less likely to be underemployed – household has greater ability to recoup those lost hours Spanish households increasingly utilising non-standard working arrangements to cope with recession Important to consider underemployment in all working types, not just PT workers Working hours of partner rise more for parents than non-parents when partner is underemployed