Underemployment: Causes, Effects and Solutions in Australia

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Underemployment 1
Fundamentally, underemployment is a form of unemployment. Equally, the causes of
underemployment and unemployment are similar. Specifically, underemployment is a type of
unemployment. Noteworthy, 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. Notably,
underemployment is revered because it promotes poverty, causes job dissatisfaction, financial
insecurity, and financial instability. Further, underemployment is responsible for psychological
problems such as depression, anger and low esteem. Also, underemployment is brought about by
downturn in business cycles .Overall, Underemployment causes lead to negative personal and
economic outcomes globally.
Worth noting, underemployment rates have risen due to the rapid growth of
part time employment opportunities as compared to full time employment (Berger, 2019).The
availability of more part-time jobs has contributed to underemployment. The rapid growth of
part-time employment has been supported by the rising demand of the same according to ABS
labor force statistics of 0ctober 2018(Hobday, 2019).Also, industrial shift of former dominant
industries such as manufacturing to health and tourism sectors has contributed to the part time
nature of employment thus underemployment (Berger, 2019).According to the Australian bureau
of Statistics, there are much underemployment in the Retail Trade, Accommodation, and food
service industries thus raising the perception that an industrial shift in the economic sector is
partly responsible for underemployment in Australia.

Underemployment 2
Further, the lack of full-time employment has contributed to the rise of underemployment.
The ready availability of part-time employment has enhanced underemployment in the sense that
laborers are able to work fewer hours or choose a job they are not skilled to do just because they
are available. Apart from the availability of part-time jobs, preference is to blame for the
flourishing nature of part-time work. Arguably, some workers choose to work part-time
(Campbell 2013).Despite the existence of full-time employment, some laborers choose part-time
employment due to the flexibility of working time. Also, low business cycles, a slow growth rate
of employment opportunities and technological relations (Lacmanovic, Buric & Tijanic, 2016).
Usually, harsh business cycles might require businesses to let go of staff or reduce their working
hours hence underemployment and unemployment. Equally, if the creation of more employment
opportunities slows down there will be more laborers and fewer jobs hence unemployment and
underemployment. Due to advanced technological advancement, lack of tech-savvy laborers
might lead to unemployment or underemployment.
Consequently, from underemployment stems financial insecurity at the workplace. That
is to mean unlike full-time employment, part-time jobs lack long term employment benefits such
as longer working hours, insurance and pensionable schemes thus creating a state of insecurity
(Berger, 2019).Moreover, part time employment causes instability of finances. This is to mean
due to the few working hours, workers are not assured of a stable income. Basically,
underemployed workers are paid an hourly rate as contrasted with full time employees who are
paid on a stable monthly rate Also, underemployment is responsible for the slow growth of
wages According to the Reserve Bank of Australia, underemployment has contributed to the
slow rate of wage growth due to the rapid growth of labor market for the existing employment
opportunities (Bell & Keating, 2019). Alongside, slow wage growth, underemployment leads to