IDEAS home Printed from https://ideas.repec.org/a/spr/jlabrs/v59y2025i1d10.1186_s12651-025-00396-z.html
   My bibliography  Save this article

Reconceptualising labour utilisation and underutilisation with new ‘full-time equivalent’ employment and unemployment rates

Author

Listed:
  • Donald Houston

    (University of Birmingham)

  • Colin Lindsay

    (University of Strathclyde)

Abstract

Time-related underemployment (wanting to work more hours) has become an entrenched feature of a number of mature economies since the Global Financial Crisis of 2008, recent short-run post-COVID labour shortages notwithstanding. Employment and unemployment rates are thus increasingly inadequate measures of labour utilisation and underutilisation. This paper develops novel ‘Full-Time Equivalent’ (FTE) employment and unemployment rates based on hours worked and hours wanted calibrated to a 37.5-h full-time week for the United Kingdom. FTE rates reveal greater labour market slack than evident in conventional measures, as well as lower utilisation and/or greater underutilisation among women, young people, low-skilled workers and in geographically and economically peripheral regions. The FTE employment rate shows statistically significant correlations with both earnings and labour demand across UK local labour markets, whereas the conventional employment rate fails to detect this relationship. The paper argues that the use of FTE metrics by policy makers would point towards, firstly, more demand-side labour market policies in weaker local labour markets rather than relying heavily on coercive supply-side labour market activation and, secondly, less hawkish monetary policy required to control inflation, which causes unnecessary harm to economically weaker regions.

Suggested Citation

  • Donald Houston & Colin Lindsay, 2025. "Reconceptualising labour utilisation and underutilisation with new ‘full-time equivalent’ employment and unemployment rates," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 59(1), pages 1-17, December.
  • Handle: RePEc:spr:jlabrs:v:59:y:2025:i:1:d:10.1186_s12651-025-00396-z
    DOI: 10.1186/s12651-025-00396-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s12651-025-00396-z
    File Function: Abstract
    Download Restriction: no

    File URL: https://libkey.io/10.1186/s12651-025-00396-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bacher, Johann & Koblbauer, Christina & Leitgöb, Heinz & Tamesberger, Dennis, 2017. "Small differences matter: How regional distinctions in educational and labour market policy account for heterogeneity in NEET rates," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 51(1), pages 1-4.
    2. Hila Axelrad & Miki Malul & Israel Luski, 2018. "Unemployment among younger and older individuals: does conventional data about unemployment tell us the whole story?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-12, December.
    3. Werner Eichhorst & Verena Tobsch, 2015. "Not so standard anymore? Employment duality in Germany [Vom Normalarbeitsverhältnis zu atypischen Verträgen? Die Dualisierung des deutschen Arbeitsmarktes]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 48(2), pages 81-95, August.
    4. repec:iab:iabjlr:v:52:i:1:p:art.8 is not listed on IDEAS
    5. Gianna C. Giannelli & Ursula Jaenichen & Thomas Rothe, 2016. "The evolution of job stability and wages after the implementation of the Hartz reforms [Die Entwicklung von Beschäftigungsstabilität und Löhnen seit Einführung der Hartz-Reformen]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(3), pages 269-294, November.
    6. Axelrad, Hila & Malul, Miki & Luski, Israel, 2018. "Unemployment among younger and older individuals : does conventional data about unemployment tell us the whole story?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages 1-3.
    7. Francis Green & Alan Felstead & Duncan Gallie & Golo Henseke, 2016. "Skills and work organisation in Britain: a quarter century of change [Fertigkeiten, Fertigkeitsanforderungen und Arbeitsorganisation in Grossbritannien: Trends über das letzten Vierteljahrhundert]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(2), pages 121-132, October.
    8. Annette Walling & Gareth Clancy, 2010. "Underemployment in the UK labour market," Economic & Labour Market Review, Palgrave Macmillan;Office for National Statistics, vol. 4(2), pages 16-24, February.
    9. John Komlos, 2019. "Trends and Cycles in U.S. Labor-Market Slack, 1994–2019," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot GmbH, Berlin, vol. 65(3), pages 209-235.
    10. Scott Baum & William Mitchell, 2010. "Labour Underutilisation and Gender: Unemployment Versus Hidden-Unemployment," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 29(2), pages 233-248, April.
    11. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin* & Giorgio Topa, 2020. "The Shadow Margins of Labor Market Slack," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(S2), pages 355-391, December.
    12. Elisabetta Olivieri & Marco Paccagnella, 2012. "Measures of labour underutilization: a european comparison," Politica economica, Società editrice il Mulino, issue 1, pages 103-129.
    13. Anastasios Kitsos & Paul Bishop, 2018. "Economic resilience in Great Britain: the crisis impact and its determining factors for local authority districts," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 60(2), pages 329-347, March.
    14. Salvatori, Andrea, 2018. "The anatomy of job polarisation in the UK," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages 1-8.
    15. repec:iab:iabjlr:v:51:i:1:p:art.4 is not listed on IDEAS
    16. Mathew Johnson & Miguel Martínez Lucio & Stephen Mustchin & Damian Grimshaw & Jo Cartwright & Jenny K. Rodriguez & Tony Dundon, 2023. "City regions and decent work: Politics, pluralism and policy making in Greater Manchester," Environment and Planning C, , vol. 41(3), pages 504-522, May.
    17. repec:bla:ecorec:v:61:y:1985:i:173:p:516-21 is not listed on IDEAS
    18. repec:iab:iabjlr:v:52:i:1:p:art.3 is not listed on IDEAS
    19. Fontanari, Claudia & Palumbo, Antonella & Salvatori, Chiara, 2022. "The updated Okun method for estimation of potential output with alternative measures of labor underutilization," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 158-178.
    20. Ija Trapeznikova, 2017. "Employment Adjustment And Labor Utilization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 889-922, August.
    21. Ija Trapeznikova, 2017. "Employment Adjustment And Labor Utilization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(3), pages 889-922, August.
    22. Diane Perrons & Robin Dunford, 2013. "Regional development, equality and gender: Moving towards more inclusive and socially sustainable measures," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 34(3), pages 483-499, August.
    23. Johann Bacher & Christina Koblbauer & Heinz Leitgöb & Dennis Tamesberger, 2017. "Small differences matter: how regional distinctions in educational and labour market policy account for heterogeneity in NEET rates," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 51(1), pages 1-20, December.
    24. Peter Dawkins & Mark Wooden, 1985. "Labour Utilization and Wage Inflation in Australia: An Empirical Examination," The Economic Record, The Economic Society of Australia, vol. 61(2), pages 516-521, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephan Brunow & Stefanie Lösch & Ostap Okhrin, 2022. "Labor market tightness and individual wage growth: evidence from Germany," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 56(1), pages 1-21, December.
    2. Marcin Kolasa & Michał Rubaszek & Małgorzata Walerych, 2019. "Are flexible working hours helpful in stabilizing unemployment?," NBP Working Papers 319, Narodowy Bank Polski.
    3. Andrea Salvatori & Seetha Menon & Wouter Zwysen, 2018. "The effect of computer use on job quality: Evidence from Europe," OECD Social, Employment and Migration Working Papers 200, OECD Publishing.
    4. Ondřej Dvouletý & Martin Lukeš & Mihaela Vancea, 2020. "Individual-level and family background determinants of young adults’ unemployment in Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(2), pages 389-409, May.
    5. Peter Sunley & Ron Martin & Ben Gardiner & Andy Pike, 2020. "In search of the skilled city: Skills and the occupational evolution of British cities," Urban Studies, Urban Studies Journal Limited, vol. 57(1), pages 109-133, January.
    6. Fontanari, Claudia & Palumbo, Antonella & Salvatori, Chiara, 2022. "The updated Okun method for estimation of potential output with alternative measures of labor underutilization," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 158-178.
    7. Batara Surya & Syafri Syafri & Hernita Sahban & Harry Hardian Sakti, 2020. "Natural Resource Conservation Based on Community Economic Empowerment: Perspectives on Watershed Management and Slum Settlements in Makassar City, South Sulawesi, Indonesia," Land, MDPI, vol. 9(4), pages 1-31, March.
    8. Katharina Dengler & Katrin Hohmeyer & Cordula Zabel, 2021. "Welfare recipients’ transition into employment and employment stability in Germany," LABOUR, CEIS, vol. 35(4), pages 450-484, December.
    9. Andrea Salvatori, 2018. "The anatomy of job polarisation in the UK," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-15, December.
    10. Sara Ayllón & Javier Valbuena & Alexander Plum, 2022. "Youth Unemployment and Stigmatization Over the Business Cycle in Europe," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 103-129, February.
    11. Rosario Scandurra & Ruggero Cefalo & Yuri Kazepov, 2021. "Drivers of Youth Labour Market Integration Across European Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(3), pages 835-856, April.
    12. Muhammad Saleh Mire, & Muhammad Awaluddin & Agus Junaidi & Akhmad Noor, 2024. "Analysis of Socioeconomic and Industrial Development and its Impact on Environmental Quality and Unemployment in Indonesia," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 10(12), pages 176-191, January.
    13. Precious Mncayi & Phindile Mdluli, 2019. "Why are they not looking for employment? A South African Youth Perspective," Proceedings of International Academic Conferences 9912247, International Institute of Social and Economic Sciences.
    14. Kristina Thomassen & Emil Sundstrup & Jonas Vinstrup & Karina Glies Vincents Seeberg & Lars Louis Andersen, 2022. "Barriers and Facilitators of Re-Employment among Senior Workers: Prospective Cohort Study," IJERPH, MDPI, vol. 19(18), pages 1-7, September.
    15. Kristina Thomassen & Emil Sundstrup & Sebastian V. Skovlund & Lars L. Andersen, 2020. "Barriers and Willingness to Accept Re-Employment among Unemployed Senior Workers: The SeniorWorkingLife Study," IJERPH, MDPI, vol. 17(15), pages 1-9, July.
    16. Biddle, Jeff E. & Hamermesh, Daniel S., 2024. "Adjusting Labor along the Intensive MarginS," IZA Discussion Papers 17162, Institute of Labor Economics (IZA).
    17. Fabian Busch & Robert Fenge & Carsten Ochsen, 2021. "Do Firms Hire More Older Workers? Evidence from Germany," CESifo Working Paper Series 9219, CESifo.
    18. Oxana Bezler & Teodor Sedlarski, 2022. "Quantitative Analysis of the Interaction of the Labor Market and the Higher Education Market (on the Example of Kazakhstan)," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 137-156.
    19. Livia Anastasiu & Ovidiu Gavriş & Dorin Maier, 2020. "Is Human Capital Ready for Change? A Strategic Approach Adapting Porter’s Five Forces to Human Resources," Sustainability, MDPI, vol. 12(6), pages 1-20, March.
    20. Egessa Abel & Nnyanzi John Bosco & Muwanga James, 2021. "Determinants of youth unemployment in Uganda: The role of gender, education, residence, and age," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-29, January.

    More about this item

    Keywords

    Labour utilisation; Labour underutilisation; Unemployment; Underemployment; Gender; Youth unemployment; Regional unemployment; Labour market slack; Monetary policy;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jlabrs:v:59:y:2025:i:1:d:10.1186_s12651-025-00396-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.