Why Underemployment Is an Issue

Underemployment measured workers who are employed but desire or are capable of doing more hours. The International Labour Organisation defines it as ‘the underutilisation of the productive capacity of the employed population.’ This refers to individuals technically ’employed’ but could be working as little as an hour a week.

Due to an increase in part-time work, despite having the education, training, and desire to work full time, there is a gap in the economy for workers to be able to fulfil their needs.

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“Australia has had a problem with underemployment for quite some time. This is a problem we will need to deal with. It’s too soon to tell whether the pandemic will make this situation worse, beyond the crisis phase,” said Matt Cowgill, a Senior Associate at the Grattan Institute.

Due to job cuts and business closures during COVID-19, many working individuals were displaced. In a desperate plea to find a new source of income, people accepted jobs below their capability, resulting in a misallocation of skills and resources. 

This gap in our labour market is an issue as it could slow Australia’s future productivity. 

In Australia, the ABS labour force data shows almost 1.1 million Australians, or 7.9 per cent of the workforce, were classified as underemployed in March.

As Tony Burke, Manager of Opposition Business stated regarding the new figures in Australia on underemployment, “there will be a lot of people who had permanent secure jobs before the pandemic and are moving onto insecure jobs where they don’t get enough hours on the other side of the pandemic. The nation needs economic growth through spending, if people are underemployed, they are not aiding the economy and that is detrimental.”

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Unfortunately, underemployment is not a case of one easy fix, but rather a suite of policies implemented by the government to address minimum hours worked in casual and part-time roles and avenues that will help underemployed individuals find more work. 

The economy would benefit from people having extra work if they desired it. 

However, airport staff member Ms Levine told ABC, “lack of work makes it difficult to make ends meet. I struggle to pay my bills, I struggle to pay my mortgage.”

Underemployed staff can fit under the below categories:

  • High skills employees in low skilled jobs
  • Part-time workers who want full-time work
  • Skilled workers with low-paying jobs
  • Individuals who are not at or above the median earnings as someone with their skillset historically
  • Employees holding a job that doesn’t utilise their education, experience or training

Unfortunately, through underemployment, the economy is under-utilising the potential of our community to do meaningful work. 

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