1. 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

2. 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)

3. 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

4. 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

5. 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

6. 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.

7. Proportion of households with children who are workless

8. 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

9. Incidence of underemployment

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

11. 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)

12. 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
0.023
0.055
35-44
-0.051
-0.017
-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), (DE), (FR), (ES)

13. 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
0.037
0.015
35-44
-0.028
-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), (FR), (ES)

14. 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