Underemployment is a persistent and under-recognised challenge in the UK labour market. It affects millions of workers who are employed but not to their full potential: those working fewer hours than they would like, earning a low or minimal salary, and/or stuck in roles that fail to match their skills and aspirations. This report brings workers’ experiences into focus and provides insights into employers’, policy makers’ and trade unions’ perspectives.
The Underemployment Project has investigated the scale and impact of the underemployment phenomenon across the UK and in four cities, combining national survey data with in-depth interviews with workers and employers. The project looked at how the different forms of underemployment individually and in combination take effect. What emerges is a troubling picture: underemployment is not a marginal issue.
The first key finding is that underemployment is widespread, persistent, and deeply embedded in the structure of our economy, but it is also unequally distributed. It affects workers across age groups, ethnicities, and educational backgrounds, but there is intensity in low-wage sectors and among those facing systemic barriers to progression in the workplace. Existing labour market statistics often fail to capture the full extent of underemployment, masking the mismatch between employment status and economic security and labour potential.
Second, underemployment carries significant personal, organisational and social costs. Underemployed workers describe feelings of frustration, stagnation, and invisibility. Many speak of being trapped, unable to progress or plan, and struggling to make ends meet and save for the future despite being employed. The emotional toll is real, and the loss of potential is profound. Underemployment is not only a worker issue but also a threat to employers and organizational success through higher turnover intentions, poorer work relationships, and weaker engagement.
Third, the research shows that change is possible. Workers are clear about what they want: recognition, progression, and fair hours scheduling. Employers report that offering inclusive job design and meaningful development pathways helps improve retention, morale, and productivity. Policymakers have levers to pull through regulation, training access, and better employment classification to ensure that work is not just available, but adequate.
Finally, the report makes the case that we must reframe how underemployment is conceptualised and measured. Underemployment is often conflated with part-time work or temporary contracts, but the reality is more complex.
This report is a call to action. Underemployment is not a temporary inconvenience. It is a structural barrier to equity, growth, and resilience. Addressing it requires coordinated effort across sectors. We invite employers, policymakers and trade unions to get onboard with our recommendations and five-point action plan, to act on the evidence, listen to workers, and build a labour market that works for everyone.
Read the full report here: Unlocking Workforce Potential – Final Report