Beyond the measurement of unemployment and underemployment The case for extending and amending labour market statistics by Werner Sengenberger Copyright © International Labour Organization 2011 First published 2011 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ILO Cataloguing in Publication Data Sengenberger, Werner Beyond the measurement of unemployment and underemployment : the case for extending and amending labour market statistics / Debbie Budlender ; International Labour Office. - Geneva: ILO, 2011 1 v. ISBN: 9789221247432;9789221247449 (web pdf) International Labour Office labour market / unemployment / underemployment / measurement / data collecting / methodology 13.01.2 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. 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Catalogues or lists of new publications are available free of charge from the above address, or by email: [email protected] Visit our web site: www.ilo.org/publns Printed in Switzerland Abstract: The report of the ILO Working Group on Labour Underutilization entitled “Beyond Unemployment: Measurement of Other Forms of Labour Underutilization” (ILO 2008d) revisits the appropriateness of the current international standards concerning the statistical measurement of employment and unemployment. It suggests that the standard indicator of unemployment is maintained, while at the same time it calls for the introduction of supplementary indicators of various dimensions of underemployment. Based on this document, this report attempts to provide both theoretical and empirical rationales for complementing and ameliorating the present standards of labour market and employment statistics applied in industrialized and transition countries. It demonstrates how the measurement of the rate of unemployment and the broader concept of underemployment is influenced by the institutional and regulatory context of national labour markets affecting the international harmonization of the relevant indicators. It draws attention to the vast degree of change in the forms and structure of employment and labour markets, and also the evolution of the employment policy framework that occurred in industrialized and transition countries in recent decades. In light of these developments, it calls for an extended set of statistical measurement focussed not merely on the quantity of labour underutilization, but also on the quality of employment and work in order to better reflect the contemporary performance of labour markets. Beyond the Measurement of Unemployment and Underemployment: The Case for Extending and Amending Labour Market Statistics 3 4 Beyond the Measurement of Unemployment and Underemployment: The Case for Extending and Amending Labour Market Statistics Contents: Page Preface ............................................................................................................................... 7 1. Foreword ..................................................................................................................... 9 2. The aim of this report ................................................................................................ 11 3. On the role and impact of labour market statistics ................................................... 13 4. The evolution of labour market theory, policy and measurement ............................. 15 4.1 A brief history of concepts, policies and standards ................................... 15 4.2 Policy diversity across countries .............................................................. 33 4.3 Conclusions ............................................................................................... 40 5. A synopsis of labour market developments .............................................................. 41 5.1 Employment .............................................................................................. 41 5.2 Unemployment .......................................................................................... 42 5.3 Under-employment and over-employment ............................................... 47 5.4 Non-standard employment and precarious work ....................................... 50 5.5 Low pay, earnings inequality and working poverty .................................. 68 5.6 Conclusions ............................................................................................... 72 6. Beyond the conventional labour market measurements ............................................ 74 6.1 The limitations of the unemployment indicator ......................................................... 74 6.2 Beyond unemployment: Revision and extension of the labour force framework ...... 92 6.3 Beyond the labour force framework: Towards new frontiers in labour market statistics ........................................................................................ 101 6.4 Conclusions .............................................................................................................. 113 7. Summary ................................................................................................................. 117 References ...................................................................................................................... 119 Beyond the Measurement of Unemployment and Underemployment: The Case for Extending and Amending Labour Market Statistics 5 6 Beyond the Measurement of Unemployment and Underemployment: The Case for Extending and Amending Labour Market Statistics Preface Unemployment is by far the most frequently reported indicator of the labour market in the mass media of virtually every country in the world. Nevertheless, unemployment statistics are often criticised – in developed and in developing countries alike - for failing to reflect the ‘true’ extent of the employment problem. Such criticisms are not new. They have been expressed for more than 50 years. In response to them, various attempts have been made at the national and international levels to revise the statistical definition of unemployment, or to supplement it with other concepts such as visible and invisible underemployment, time-related underemployment and inadequate employment, expanded or hidden unemployment, labour reserve, etc. However, until now none of these concepts has obtained sufficient attention, and unemployment continues to be the only headline indicator of the labour market. The purpose of this Working Paper is to contribute to the discussion on the need for extending labour market statistics. The paper was prepared by Werner Sengenberger (former Director, Employment Department, ILO) in consultation with Ralf Hussmanns (Chief, Household Surveys Unit, Department of Statistics, ILO). Virginie Woest provided the secretarial support for the publication of the paper. The ideas developed in the paper were presented to the Technical Workshop on Measures of Labour Underutilization, which was held at the ILO in Geneva on 7-9 December 2009. Working papers of the Department of Statistics are meant to stimulate discussion. The ILO will therefore welcome comments and suggestions concerning the contents of this paper. They should be addressed to the Department of Statistics, International Labour Office, CH- 1211 Geneva 22, Switzerland, fax no. + 41 22 799 6957, e-mail: [email protected] Rafael Diez de Medina Director Department of Statistics International Labour Office February 2011 Beyond the Measurement of Unemployment and Underemployment: The Case for Extending and Amending Labour Market Statistics 7 8 Beyond the Measurement of Unemployment and Underemployment: The Case for Extending and Amending Labour Market Statistics 1. Foreword Labour market statistics has greatly evolved during the last half century. New indicators have been developed and existing ones refined. Nevertheless, criticism has been launched against