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QrjgipaJ: ENGLISH Distr.
LIMITED
E!CN.14!CAS.4!LS!10 1 00tober 1964
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UN\TED NATIONS
ECONOMIC AND.
SOCIAL COUNCIL
ECONOMIC C~~"ISSION FOR AFRICA African Seminar on Labour Statistics
Sponsored and Organized by the
Economic Commission for Africa and the International Labour Organi sa tion
Addis Ababa, 3-12 November 1964 Item 8 of the provisional agenda
INTRODUCTION TO
UNDEREMPLOYNENT lilEASURE!IIENT (Paper prepared by the International Labour Offioe)
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INTRODUCTIOi,
1. The main characteristics of underemployment, as an economic, social and labour phenomenon, are briefly mentioned here to elucidate the statistical problems related to its measurement. Underemployment, taken in its broad sense, as an inadequate utilisation of available human resources and capacities, is a common feature of the employment situation in almost all societies. But its extent and nature largely depends on the level of socio-economic development, the pace of economic growth.andthe institutional framework of the country. Underemployment and unemployment, which reflect imbalances between the labour and other factors of production, are rooted in many different but often inter-related factors of economic, social and demographic character. Among the more important of these are; lack of capital and equipment;
low production, productivity and income; structural changes and cyclical fluctuations, deficient domestic or external demand; .rising volume of new entrants to the labour force emerging from the growth of population; and institutional
·?nd social obstacles. Depending on the combination and inter-action of factors involved, such imbalances may take the form of unemployment and/ or underemployment both of them
being constituent parts of the employment situation in the countries concerned.
2. It is trite to observe that the imbalances between labour and the other co-operating factors of production in the developing countries are fundamentally due to lag in development itself. A widely prevalent type of imbalance is between the land factor and labour. with the gro,~h of population, labour supply keeps mounting. But in the absence of expanding employment opportunities in industry or services and of adequate progran~es of land reclamation, irrigation and the like to bring new land under the plough, the growing labour force presses continuously on the limited available arable land. This leads to small and uneconomic holdings which do not permit full or efficient utilisation of the labour available. Persons whose labour is not really required have to be retained on the holdings because of
I This paper draws heavily on the ,(eport of the Meeting of Experts on rv;e§sUr~.!llfE!.-9f Underemploy!!!ent (document
• M.E.I'"U.jD.4-:J LL.O., Geneva 1963, passages from which are reproduced, adapted or summarised in places.
family and kinship ties and because they have nowher-e else to go.l In some cases, it is not the over-all shortage of land but its unfair distribution which is at the root of agri- cultural underer.1ployment. Another case in point relevant to some African countries is inadequate transport storage and marketing facilities. If the latter existed, available
labour could be more fully utilised to increase output, e.g.
of forest products. Urban underemployment in many African countries is characterised by a generous supply of "services", which require little skill or capital and for which lithe
demand'.' is rather induced, SUC,. as those offered by self- appointed car-park attendants, shoe-shine boys, pedlars, etc. This also reflects a general shortage of productive employment opportunities resulting from lag in development.
Underemployment is thus a reflection of underdevelopr.1ent on the plane of employment.
3. The relationships between underemployment, on the one hand, and employment and unemployment, on the other, are quite obvious since underemployment represents the entire spectrum of transition from full employment to complete
unemployment. Adequate knowledge oi the prevailing employ- ment pattern is therefore essential for any empirical study of underemployment. Unemployment, compared to under-
employment, is much smaller in terms of nwnbers of persons affected, but has grave social consequences which influence government policies regarding the unemployed section of the population. Underemployment, although its impact is not as sharp as that of unemployment is, however, the most wide- spread form of inadequate utilisation of eXisting human resources in many African countries. Since an improvement in this regard can contribute to accelerate the development process itself, underemployment should also be recognised as a serious problem.
4. As the analysis and uses of und er-empLovment; data are discussed in another working paper of the Seminar
(AdLd,7), only a brief reference to this subject is made here. A basic objective of underemployment statistics and analysis is to estimate the volume of the segment of the labour force which is underemployed and to describe its demographic and socio-economic characteristics, as well as to assess the amount of unutilised labour represented by underemployment. This needs to be further analysed for the
1 In technical literature, this situation is referred to as one where r;;arginal productivity of labour approaches zero ;'- it is considered as central to underemployment in many less developed countries. In simple terms, it means that many persons, although apparently employed in work, especially.in agriculture, make such a small contribution to production that they may be withdrawn without any significant drop in output, other things remaining the same.
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vqrious sectors of the economy and the different regions of the country. These data are needed for making and apprais- ing policies and programmes in the fields of employment and manpower, particularly with the object of a fuller and more adequate utilisation of available labour resources. Two specific uses of underemployment statistics may also be
mentioned. The first is in the estimating of future supply of and demand for labour. Secondly, several African
countries have initiated programmes of labour-intensive public construction - roads, canals, dams, wells, schools, etc. - largely with the help of rural labour during seasonal slacks.
Underemployment data are helpful in planning, locating and scheduling projects under such programmes.
CONCEPTS AND DEFINITIONd
5. Underemployment is a complex phenomenon with inter- related causes, symptoms and effects. Its measurement and
analysis therefore require a many-sided approach. There are also many types of inadequacy in employment which it would be impracticable to attempt to list exhaustively. A clear
indication of the major types of inadequacies which are significant for economic and social analysis would, however, contribute to making a discussion on the subject more
specific.
6. Accordingly, the following major categories of
underemployment may be identified but it should be recognised that they do not necessarily cover all aspects of the. problem:
(a) visible underemployment, which involves persons involuntarily working part-time or for shorter than normal periods of work;
(b) invisible underemployment, which exists when a person's working time is not abnormally reduced but whose
employment is inadequate in other respects such as - (i) when his job does not permit full use of his
highest existing skill or capacity;
(ii) when his earnings or employment are abnormally low·
(situations (il and (ii) are sometimes described as disguised underemployment),
(iii) when he is employed in an establishment or economic unit whose productivity is abnormally low [situation sometimes described as potential underemployment).
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7. Visible underemployment results from an insufficiency in the volume of employment opportunities while invisible
underemployment occurs when there is a qualitative inadequacy in employment. Skill utilisation, income and productivity are highly co-related variables. For example, persons whose skills are underutilised or whose productivities are
relatively low, also tend to have below average incomes. It is, however, desirable in underemployment measurement and analysis to recognise these as distinct types of inadequacy since in practice significant numbers of cases arise where these variables do not move in the same direction. The
overlapping nature of these categories of underemployment should be noted.
8. The definition given in para. 6 above limits the concept of underemployment to persons in the labour force or rather to the employed persons. dince underemployment is thus set within the framework of the labour force concept, the analysis on the subject com be made more specific and more penetrating with the help of labour force and other
statistics, such as those on production and national accounts which are also based on the notion of economic activity.
But in the context of the analysis of manpower resources and utilisation, the non-participation in economic activities of certain categories of persons outside the labour force, e.g.
young women without children, is sometimes referred to as an example of underemployment. Such aspects of the under- utilisation of the available manpower resources can be best studied, however, by other means as suggested in para. 16 and as implied in some variants of the labour force reserve approach discussed in paras. 2~-25.
VISIBLE UNDERSMPLOYM.£NT
9.
Although visible underemployment makes up only a fraction of total underemployment in most African countries, its measurement is fUlly justified since labour force sample surveys provide a ready means for the purpose and the data obtained can be of great prcctical utility. It is true that the self-employed and family workers tend to "spread" work over time or work at low intensity since they often have nothing better to occupy their time. This results in such workers reporting much longer working time than they would really require on their present jobs. They would notnecessarily report longer working time, for instance, if more work were available to them, e.g. more land to cultivate.
The definition of visible underemplo~llent in p~ragraph 6 above, however, does not allow for adjustments for this phenomenon of work spread since they run the risk of being arbitrary or subjective. l
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I Such adjustments may be implied in the underemployment measurement by the estimation
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approach to of labour force
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10. The definition of visible underemployment requires
• observation of the time units actually worked and the time units available for extra work in respect of each employed person. Reliable or at least usable data concerning these items, preferably expressed in terms of hours per week, can be obtained within the framework of labour force sample
surveys even in African conditions. Survey experience in other underdeveloped countries has demonstrated that the
problem posed by the absence of a developed awareness of time duration which is often observed among workers engaged in traditional types of activities, e.g. peasant farming, help- ing in the family shop etc., can be overcome by skill in interviewing. The data on extra time available for work, while also useful, requires, however, some caution in inter- pretation since subjective elements are involved. The
measurement of visible underemployment should be based on
the work time actually observed, sometimes called "gross time"
and not based on the time which would be required for this type of activity under conditions of normal productivity, sometimes called "net work".
11. As in the case of unemployment, it is difficult to ascertain the genuineness of the desire or the conditions of availability for extra work which involve subjective elements, especially in the conditions of the African countries where an organised labour market is limited or non-existent. The problem can, however, be satisfactorily resolved by well- designed survey procedures as confirmed by the experience of several countries. A useful guide for the purpose in some cases might be to ascertain availability for work in the customary type of ffinplo~uent on prevailing terms. Another expedient tried with some success in rural areas in certain regions has been to inquire about time available for
cultivating extra land.
12. The definition of visible underemployment (para.
6 above) involves the choice of the "normal" duration of work. The duration specified in Law or in collective agreements applies, at times rather imperfectly, only to regUlated employment, but in non-regulated employment there is much variation in the time worked in the different types of activities. Customary working schedules also vary
seasonally in some instances, as in agriculture. Norms adapted to different categories might, however, prove too numerous for practical convenience. The norms chosen therefore should be representative of actual practices but limited in number. While international st andar-de for the normal duration of work are not meaningful, inter-country comparisons of the distribution of the employed, especially visibly underemployed, by time duration worked ran be made if the latter are expressed in standard intervals.
1 Para. 10, Resolution Concerning the Measurement of Underemployment adopted by the Ninth International Conference
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13. To measure all aspects of visible underemployment ••
especially seasonal variQtion, as in agriculture, it would be necessary to collect information in respect of a whole year.
If the week is chosen as a reference period and the survey spread uniformly over a whole year by surveying a sub-smnple in each week of the year, the resulting data would reflect the effects of seasonal employment, in terms of hours worked
per week and the hours available for work observed on a current basis. Another procedure which might also be used in measuring these characteristics is observation of the employment pattern at several points of time in the year.
14. The tabulation procedures of a survey bearing on employment, unemployment and underemployment can only be determined in the light of the topics covered in the survey and the size of the s~~ple. As a minimum classification, however, the tabulation" scheme should include tables with the
"employed", "unemployed", and "those not in the labour force", the "visibly underemployed" being shown as a separate category within the "employed" group. The visibly underemployed may be classified on the SQffie lines as the other employed accord- ing to the following characteristics: branch of economic activity, major OccupQtional group, status (as to employer, employee, etc.), educational cha~acteristics, age group, sex and family status. l In addition, the visibly underemployed should be classified by hours worked per week and also if possible by the number of extra hours available for work or whether seeking work. A classification of the employed by the typo of enterprise in which they work, as for example, household, small-scale or lqrge-scal~ enterprises, and public or private enterprises as well as a cross-classification of the employed in household and small-scale enterprises by
status (as to employer, ewployee) provide data which are very useful for underemplo;r.nent analysis.
15. Data relating to visible underemployment might be desired for certain purposes in more sum~arised forms such as aggregate figures or indices in addition to tables of frequency distribution. There ~re two forms that deserve special mention. The firs~ is to express the visibly under- employed as a percentage of the employed (or the labour
force). The second is an estimation of the working time
lost due to visible underemployment, expressed as a percentage of total avai.lable working time (sometimes referred to as the rate of visible underemployment). The tot2.l work time lost through both unemployment and visible underemployment may be considered as an indicator of direct loss to the country because of quantitative insufficiency in employment
opportunities.
1 See the classifications and tables for the labourfbrce and the employed recommended in Chapter VII, Employment, of
(footnote continued on p. 7)
16. Although persons outside the labour force are excluded from the scope of the definition of the under-
employed, there is need for studies of labour force behaviour patterns of ~uch persons. This is important as some "persons are outside the labour force only because of lack of employ- ment opportunities and might readily enter or return under changed employment conditions. Such studies help to assess and forecast the changes in labour force participation rates of marginal categories, such as, women in urban areas,
especially the educated, whose relation to the labour force is usually sensitive to economic and cultural change. The necessary data may be obtained by including special questions for the purpose, at intervals, in selected rounds of labour force sample surveys.
INVISIBLE
UNDEREMPLOY}:ENT
17. The definition of invisible underemployment (para.
6 above) specified three criteria for its identification, namely skill, income and productivity. The application of these criteria present formidable problems, of concepts such as the choice of "norms", e.g. at which level the employment
income may be considered abnorm~lly low, as well as of statistical measurement, e.g. what is productivity and how it may be measured for all economic units. It is not
recommended that the African countries, Cit the present stage, undertake special statistical surveys to measure invisible underemployment. They should concentrate instead on its analysis on the basis of labour force" statistics and other available data on production, wages, family living studies, national accounts, etc. A very brief account of the major problems of concepts, measurement and analysis of invisible underemployment is given below.
18. The working out of a precise and operationally meaningful definition of the inability of a worker to
exercise his highest current level of skill or capacity on his job presents great difficulties, as it is difficult to define "capacity" or "highest existing skill". This form of underemployment is not uncommon in African countries, e.g.
an engineer working as a foreman or overseer or a university graduate working as a clerk. But on the whole, its statis- tical measurement is scarcely essential at present.
1 (footnote continued from p. 6)
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the Handbook of Household Surveys. Since the visiblyemployed usually form a small proportion of the labour force, the sample size may not permit separate presentation of
significant data for certain categories of this SUbgroup.
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19. On the income criterion, the objective in establish- ing norms is to identify groups within the labour force whose labour income is so low, in relation to that of other groups, as to indicate the existence of underemployment. The income norm adopted for this purpose has no necessary relationship to minimum living standards or other welfare considerations.
Sharp disparities in wages and incomes in the various sectors, branches end regions ·of the economy in African countries might necessitate a multiplicity of norms. In many cases only family income, rather than individual income,
is meaningful or available. In view of these considerations income norms should be determined in the light of the specific needs of analysis in a given situation. In many cases,
however, the ffiinimum wage of an unskilled worker or that of the most disadvantaged class of worker might serve as useful yardsticks for the purpose.
20. The income approach also presents several measure- ment problems in African countries. Labour force sample surveys do not generally provide reliable data on income except in the case of wage earners. For agricultural
households, income is usually relRted to a year. Moreover households running their own enterprises are often unable to report income and incomes of the self-employed and the
imputed incomes of unpaid family wor-ker-s are generally difficult to deterr.line. Some of these difficulties may, however, be overcome for the purpose of analysis. In many instances, rough estimates of income brackets drawn from family expenditure data m3Y be used for the purpose. For measuring ~~deremployment in agriculture, for example, income might be replaced by a related but more readily
observable variab18 such as output or size or type of holding.
21. Under the productivity approach to underemployment measurement, the problems of norm-setting are som8w~at
similar to those under the income approach. l',easurement problems are, however, even greater. Unlixe the income which can be directly observed, the productivity of a worker must be derived from that of the production unit in which he is employed. Aside from conceptual difficulties, the cost and complexity of productivity studies based on direct
observation of production units are well known. l Sectoral and regional productivity comparisons, which are usually the main focus of interest under the productivity approach, may, however, be made if the relevant statistics of an aggregative nature already exist.
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(1 See, for example, I.L.O.: Statistics of Labour
Eroductivi~y! Geneva, 1949.
LABOUR FORCE RBSERVES
22. A brief mention should be made here of another approach to underemployment measurement which attempts.to estimate '·'labour force reserves" or their variants. These reserves usually represent the difference between the labour force and work time units available and those utilised or required for a given production. The estimates of the former, although usually based on local customs, daylight calendar, etc., may involve normative assumptions as to work participation by household members, e.g. farmer's wife,
children, etc. They are thus often not based on direct observation and may assume work participation by persons who may actually be outside the labour force. This aprroach is primarily used in studies related to agriculture, although it can also possibly be used in other branches, such as retail trade and government services. On the whole, estimates based on this approach are scarcely required in most African countries at present in view of their current
planning needs and the scarcity of available statistical resources.
23. According to the underlying method, this approach may yield estimates confined to visible underemployment or
cut across its invisible category as well. In the former case, it is based on intensive surveys (much more detailed observation but only of a limited number of economic units, usually household enterprises, than in the case of labour force sample surveys) which compare the work time units
available and those actually utilised. This was the method adopted in an Italian study.l In the latter case, i.e.
where the approach covers the whole or parts of visible as well as invisible underemplo:nnent, there can be several variants. But these rest, in essence, on the criterion of time required for a given production. One variant, used for aggregative analysis rather in the nature of perspective
studies, bases its estimates on the labour force reqUired for current output under assumed conditions of productivity, e.g.
if output per worker or per hectare of a given cereal in an African country were equal to that in Greece or Italy. The results of such studies are generally of little operational significance.
1 A brief account of this survey in the English language is provided in I.L.O.: Notes on Underem 10 ment on F§ffiily tioldings (Doc. M.E.M.D. ~.l , Geneva.19 4.
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24. There are, however, other variants yielding
estimates of labour force reserves, properly speaking, which may be used for detailed regional and sectoral planning as in Yugoslavia. These estimates are of two types: the labour force reserve under existing conditions, e.g. existing
patterns of cultivation and structure of production and the future labour force reserve based on assumptions regarding improvements in the social and economical organisation and technology in a future period. While the first type of estimates provides the basis for analysing alternative immediate measures to be taken for a better utilisation of agricultural labour, the second type is intended for medium and long-term planning and for long-range policy decisions concerning not only agriculture but also the non-agricultural industries. The first type of estimates requires detailed technical data on agriculture including norms of time required based on farm management and time utilisation surveys; the second type requires, in addition, estimates of relevant future trends in the light of policy or plan targets.
25. The calculation of the labour force reserve in the agricultural sector involves cor.sideration of seasonal
factors. In simple terms, the agricultural labour force r.eserve represents the total agricultural labour force
available less the labour requirements for a given production.
The labour force reserve is potentially available for either utilisation in other industries, or for additional inputs of labour in agriculture. However, this labour force reserve is not necessarily transferable to other industries on a permanent basis. Only that portion of the labour force
reserve which is the absolute surplus of labour force in peak season may be considered for erriployment in non-agricultural industries, while the labour force which exceeds the labour requirements of slack seasons may be utilised only for
seasonal work outside agriculture.
SfECIAL ~URV~f5
26. While the value of labour force sample surveys as a source of information for measurement and analysis of underemployment is particularly stressed, there exist other types of special surveys as well which might also be utilised for the purpose especially for assessing particular aspects of underemployment. Although euch surveys are designed primarily for other purposes than studying underemployment, they can provide useful data bearing on the subject. For the African countries, surveys relating to agriculture or other rural activities deserve special emphasis. The possi- bility of utilising data made available as a by product of administrative activities should also be borne in mind. Of particular importance is the possible use of data from
agricultural extension records which often provide continuous
detailed statistical series on agricultural holdings. area devoted to each type of crop. equipment. fertilisers used, labour utilisation and crop yields. Family living surveys also provide valuable data for the purpose, especially in rural areas. Three types of special surveys are indicated below.
27. Farm management surveys may include many aspects of farm operations. including time spent in farming and related activities. data for estimating normal time required to
produce given quantities of specified agricultural products, the labour and other costs of production, and other important data. Such surveys thus provide much information which is useful for assessing and measuring underemployment including particularly the application of income. productivity and time required (labour force reserves) criteria for this purpose.
2$. Time utilisation s~rveys may often be carried out in agricultural areas where the more detailed farm management surveys are not undertaken. The data obtained on time
required for various agricultural (and industrial) operations are important, however, as they may throw light not only on the degree of underemployment but also on instances of
improper utilisation of skills.
2S. Rural-urban seasonal migration surveys may be very useful in gauging the extent of seasonal underemployment, as they are usually designed to measure the flow of workers
from farms to urban centres in the slacK agricultural seasons and the counter-~lowwhich occurs with the resumption of peak farming activities during the crop seasons. Adequate
exploitation of data on the characteristics of the seasonal migrants can reveal much useful information on the location,
age, sex, skill and economic status of the underemployed.
30. African countries should concentrate on developing an adequate system of labour force statistics. Serious consideration should be given to the setting up of a system of labour force sample surveys for this purpose. These provide direct measurement of open unemployment and visible underemployment as well as statistics of value in under- employment analysis. The data from this source should be combined with other existing social and economic data to provide a more penetrating analysis of underemployment.
Most Afr<can countries would not find it worthwhile to devote .scarce statistical resources for a direct measurement of
various aspects of invisible underemplo~nent. It is urged that countries plan for adequate programmes of research based on full utilisation of existing data as well as statistics forthcoming from systems of labour force sample surveys that may be initiated. Such research and analysis programmes must be directed towards finding answers to current and urgen4
