Underutilised labour rate at its peak

Cem Oyvat- Greenwich University

Unemployment rate is falling, but underutilised labour rate has reached its highest level since reporting began in late 2014. Seasonally adjusted data shows it at 28.5% and unadjusted data at 29.4%, even higher than during the Covid period.

So what does this mean? What are the factors pushing the underutilised labour rate upwards?

The underutilised labour rate doesn’t just include the unemployed. It also covers those who are not actively looking for work but want to work and those working part-time who would prefer full-time employment if possible. In this sense, it reflects a larger pool of potential labour than the unemployment rate and can be said to better represent the Marxist concept of the reserve army of labour.

The formula for the underutilised labour rate is:
Underutilised labour rate = [(Time-related underemployment + Unemployed + Potential labour force) / (Labour force + Potential labour force)] x 100

Definitions: Unemployed, actively seeking work and ready to start.

Time-related underemployment:

i) Working fewer than 40 hours per week

ii) Stating a desire to work more hours

Potential labour force: Not working but

i) Looking for work yet unable to start in the short term, or

ii) Not looking but wanting and able to work

97% of the potential labour force is made up of people who are not looking for work either due to loss of hope or other reasons but who want to work and are capable of doing so.

Chart 1 shows underutilised labour rates and their components by first quarters over the years. As seen, the rate has sharply increased since 2019 and peaked in 2025.

Yes, unemployment is going down. But the increase in the potential labour force, those not currently working is outpacing the decline in unemployment.

So, the primary reason behind the rise in the underutilised labour rate is the increase in the potential labour force. While only 34% of the labour force consists of women, 59% of the potential labour force is made up of women. This highlights the gender inequality dimension of the issue. In recent years, women’s school enrolment has caught up with and even surpassed men’s. However, this progress has yet to be reflected adequately in employment. There is a growing number of women who want to work but cannot enter the labour market.

Since the pandemic, there has also been a significant rise in time-related underemployment. Between the first quarters of 2019 and 2025, the share of underemployment within the total of labour force and potential labour force rose from 1.2% to 9%.

Of course, part of this increase is due to the rise in the proportion of part-time workers. While the share of those working between 1–39 hours a week was 23.9% in early 2019, it increased to 27.4% in 2025. This makes the second reason behind the rising underutilised labour rate the growing share of those working fewer than 40 hours per week—that is, the spread of part-time employment. Although this rate remains higher for women, the increase between 2019 and 2025 is mainly due to the rise among men working under 40 hours (see Chart 2).

But the rise in part-time work alone is not the only factor. A much larger share of those working under 40 hours a week are now dissatisfied with this situation and want to work more. In the first quarter of 2019, only 6% of those working 1–39 hours per week wanted longer hours. In 2025, this rate jumped to 41.2%. This forms the third reason: more people are now unhappy with their current working hours and are seeking full-time jobs.

In short, the underutilised labour rate is not a straightforward unemployment figure. It is directly shaped by workers’ livelihood struggles, the rising cost of living and increasing rents. It also reflects the situation of part-time workers in particular. As life becomes more expensive for part-time workers, their jobs become increasingly insufficient to make ends meet, pushing them to seek longer hours.

In summary, the official drop in unemployment does not fully reflect the reality of the labour market. On the empty side of the glass, we have a growing problem of underutilised labour. Behind this increase lie a significant rise in the potential labour force, a surge in part-time employment, and a sharp growth in dissatisfaction among this group of workers.

The current economic conditions clearly show that we are failing to fully utilise our labour potential and still have a long way to go in improving working conditions.

Note: This text has been translated from the original Turkish version titled Atıl işgücü oranı zirvede, published in BirGün newspaper on May 21, 2025.