What causes underemployment

Statistics from the Federal Employment Agency

In addition to the registered unemployed, underemployment also includes people who are not considered unemployed within the meaning of the Social Security Code (SGB) because they are participants in a job promotion measure or have been ill for a short time.

The concept of underemployment does two things:

  1. It will be a possible full picture of the deficit in regular employment (on the primary labor market) in an economy.
  2. Real economic (especially cyclical) influences on the labor market can be better identified because the use of relieving labor market policy changes unemployment, but not underemployment.

Underemployment is made up of three groups of people:

  1. the Unemployed according to § 16 SGB III,
  2. Participants in certain Labor market policy measures and
  3. People in certain Special status (especially short-term sick people).

The underemployment becomes after the individual situation of the people differentiated. Individuals affected by underemployment range from people who are unemployed according to Section 16 of the Third Book of the Social Code to participants in the measure who are far from being unemployed according to Section 16 (1) of the Third Book of the Social Code. Individuals who are far from unemployed have largely solved their employment problem individually. But they stand for people who would be unemployed without these labor market policy measures. In the following overview the Components of Underemployment and the labor market policy instruments and special status currently assigned to them are summarized.

The decisive factor for the assignment to underemployment is Macroeconomic relief effect during the promotion or the dwell time in a special status. A distinction is made between two directions of action:

  1. Unemployment is reduced because the support reduces the effective labor supply: this applies to measures for activation and professional integration, qualification measures and arrangements similar to early retirement.
  2. Unemployment is reduced because additional employment is created or employment is stabilized: this applies to employment-creating measures, the employment subsidy, short-time work and the promotion of self-employment.

The introduction of underemployment accounting was described in the method report "Comprehensive labor market statistics: Unemployment and underemployment" (PDF, 359KB) from May 2009 and the first adjustment in the method report "Further development of the measurement concept of underemployment" (PDF, 691KB) from May 2011.