This article discusses the causes, effects and solutions of underemployment in Australia. It explains how underemployment is caused by the rising demand for part-time employment, the industrial shift in mainstream sectors of the economy, preference of part-time work over full-time employment, slow rate of wage growth, and technological changes. It also highlights the negative impacts of underemployment such as financial insecurity and instability, low economic living standards, depression, underutilization of labor skillset and psychological problems such as anger and depression. Finally, it suggests measures that the Australian government can take to address the issue of underemployment.