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Underemployment and Overwork
Tony Kryger
Statistics Group
14 March 2000
Introduction
Australians are working longer hours than at any time during the past
20 years. A consequence of this has been that the proportion who are overworked-defined
here as those working 49 or more hours per week-is greater than ever before.
Paradoxically, this trend has also been accompanied by a rising proportion
of workers who are underworked-that is, working less hours than they would
prefer.
This Research Note looks at these apparently contradictory trends, how
they came about and who is affected. It does not, however, enter into
the contentious debate about work sharing, i.e. the suggestion that excess
hours can be reallocated towards more jobs.
Underemployment
For the purpose of this analysis, the definition of underemployment is
that used by the Australian Bureau of Statistics. That is, underemployed
persons are defined as persons working part-time who would prefer to work
more hours plus those who usually work full-time but who worked less than
35 hours in the survey week for economic reasons (i.e. stood down, on
short time, insufficient work available). An underemployment rate is calculated
by expressing the number of underemployed as a proportion of the labour
force.
The number of underemployed persons has increased more than threefold
during the past couple of decades, with a corresponding increase in the
underemployment rate from 2.6 per cent in 1979 to 6.4 per cent in 1999.
While females, who have a significant presence in the part-time labour
force, are far more likely to be underemployed than males, male underemployment
has been increasing much faster than for females. The result is that whereas
ten years ago there were almost twice as many underemployed females as
there were males, that differential has now narrowed to about 350 000
underemployed females to 250 000 underemployed males.
Underemployment in Australia rose significantly in response to the 1982-83
and 1990-91 recessions. The increase at the time of the 1990-91 recession
was especially large, rising from below four per cent of the labour force
in 1989 to over seven per cent in 1992. Since then the underemployment
rate has remained stubbornly high, being far less responsive to an improvement
in economic conditions than has the unemployment rate. Compared with the
unemployment rate which fell from around 11 per cent at the peak of the
1990-91 recession to below seven per cent today, the underemployment rate
fell only slightly and has remained above six per cent for almost all
of the post-recession period (Figure 1).
The increase in underemployment, particularly of part-time workers, can
be attributed to the following:
- A decline in the availability of full-time jobs, necessitating that
a number of persons take part-time jobs as an alternative to no job
at all. This is more likely to be the case for males than for females.
- An increase in both the demand for and supply of part-time workers
with a corresponding increase in the number of part-time workers who
would prefer to work more hours. Those demand side factors that explain
the increase in part-time work include growth in the services sector
(a disproportionate user of part-time workers) and the fact that part-time
casual staff are often less costly to employers than long-term continuous
employees. Supply side factors include the opportunity that part-time
work provides for workers to supplement the family income and to combine
work with family responsibilities.
Data collected by the ABS(1) has shown that most underemployment is of
a long-term nature with the average duration of insufficient work being
57 weeks. The average number of extra hours that underemployed people
would prefer to work per week is 16.2 (males 17.9 and females 15.1) with
most of the underemployed preferring to work full-time. The proportion
of underemployed males preferring to work full-time is significantly higher
than for females (76 per cent compared with 55 per cent) and is a reflection
of the decline in manufacturing industry, traditionally a major provider
of full-time jobs for males.
Overwork
Paralleling the rise in underemployment has been an increase in the average
number of hours worked by the full-time employed. During the past two
decades, average weekly hours worked by full-time employed males has risen
sharply-from 41.5 in 1980 to 44.2 in 1999. Among women working full-time,
the increase over the same period has been from 37.9 to 39.5.
Interestingly, the increase in average hours worked is due almost entirely
to a rise in the number of full-timers working very long hours (49+ per
week). Workers on very long hours made up just 21 per cent of all full-timers
in 1980. By 1999, that proportion had risen to 33 per cent. On the other
hand, the number of workers on 'standard' hours (35-40 per week) has fallen
dramatically from over 60 per cent of all full-timers in 1980 to less
than half today (Figure 2).
The phenomenon of overwork is not evenly distributed across the population.
Males are far more likely to be working very long hours than females.
Currently, around 40 per cent of male full-timers are working 49+ hours
per week and of these about half are working 60+ hours per week. Only
20 per cent of female full-timers are working very long hours. Hours worked
also vary by occupation, with managers and professionals overwhelmingly
working the longest hours. In 1999, two-thirds of all managers and 44
per cent of all professionals were working 49+ hours per week.
While some blue collar workers also work very long hours, a distinguishing
feature of the long hours worked by managers and professionals is that
much of it is as unpaid overtime. It is interesting to note that the average
hourly rate of pay received by those persons working 49+ hours per week
is often less than the hourly rate received by persons working fewer hours.
For example, in 1998, the average hourly rate of pay for persons working
40 hours per week was around $17, this rose to $18 for persons working
between 41 and 48 hours per week, falling to less than $16 for persons
on 49+ hours per week.
The longer working hours now being worked by Australians is not just
a short-term phenomenon. It began at the end of the 1982-83 recession
and has continued through various phases of the economic cycle to today.
Interestingly, the shift to longer working hours has coincided with a
number of workplace changes including 'increased product competition,
enterprise-based bargaining, a weakening of trade union influence on the
shopfloor, and increased levels of job insecurity throughout the workforce'(2).
It would appear that the increase in hours of work is the result of a
shift in the balance of power in the workplace away from employees and
toward management.
While working longer hours may be beneficial for employers, concern has
been expressed that it could be detrimental to the health of workers.
While there is no evidence to suggest that persons who work longer hours
are less healthy than those who work fewer hours, there are indications
that their health may be at risk in the longer term. A study undertaken
by the National Centre for Social and Economic Modelling(3) found that
there was a significant increase in alcohol use and the incidence of smoking
as hours of work rose. Moreover, people working over 50 hours per week
were significantly less likely to exercise. Working longer hours is therefore
related to life patterns that increase the risk of disease, disability
and premature death.
Conclusion
The coexistence of persons unemployed or underemployed along with persons
who are overworked indicates a maldistribution of the available work and
contributes to a widening social divide.
- Australian Bureau of Statistics, Underemployed Workers, September
1998 (Cat. No. 6265.0).
- Australian Centre for Industrial Research and Training, Australia
at Work, 1999, p. 119.
- D. Schofield, 'Unemployment and Health Risk Indicators'. Paper presented
at the Third National Conference on Unemployment, Queensland University
of Technology, Brisbane, 13-16 June 1996.
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