Analysis of Underemployment: Causes, Consequences, and Solutions

This essay delves into the multifaceted issue of underemployment, primarily focusing on the Australian context. It defines underemployment as the state where individuals work part-time or in roles below their skill level. The essay meticulously examines various contributing factors, including an oversupply of graduates, economic recessions, technological advancements, and the shift towards part-time job creation in industries like accommodation and healthcare. Furthermore, the essay analyzes the far-reaching consequences of underemployment, such as job insecurity, financial instability, wage stagnation, increased poverty, and the onset of psychological distress. It also highlights the adverse effects on education, mental health, and overall quality of life, underscoring the need for effective strategies and government policies to mitigate these impacts. The essay concludes by emphasizing the importance of understanding the causes of underemployment to formulate effective solutions.

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Underemployment
Underemployment basically occurs when a person does not work full-time. When an
employee works part-time and a level below an individual’s capability then it is defined as
underemployment. It has been a growing concern in developed countries from all over the
world. Even, according to the report of Australian Institute of Health and Welfare, 10% of
employees in Australia work fewer hours than they wish to (Mavromaras, Sloane & Wei,
2015). Also, the number is increasing. In such cases, the employees are willing to work but
cannot get full-time of employment. According to researchers of many studies,
underemployment includes everyone who earns $11.83 per hour.
Causes of underemployment
Several factors may cause underemployment. Most common reason is the number of
candidates. According to many researchers, Australia has a lot of recent graduates but there
are not enough jobs for all of them (Milner & LaMontagne, 2017). As a consequence, all of
them are being hired for part-time job purpose. The employees who were already working
full-time are shifted to part-time works in order to share their working hours with other new
employees. Also, the employees who are working part-time, will never gain full-time work
experience and thus they are perpetuating underemployment. Again, the period, during or
after the recession, when most of the companies lay off qualified workers were characterized
by underemployment. During the recession period, the underemployment jumped to its
highest level due to financial crisis. Researchers mentioned another cause of
underemployment which is advancement of technology. Changes in the job market due to
the shifts in technology are another reason of underemployment. When job descriptions
changed and new technologies are integrated into working settings, the laid off workers

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retrained or retired from the workplaces. According to studies, those, who do not have any
kind of resources to retrain themselves with the advancement of working settings, were
generally susceptible to underemployment (Pollard et al., 2019). In some other reports it has
been found that the number of part-time jobs is growing faster than the number of full-time
jobs in Australia, and it is one of the major causes of underemployment. It is due to the
change in the nature of jobs as lots of full-time jobs are getting replaced by the part-time jobs.
The transition from the full-time jobs to the part-time jobs is quite clear. From the year 2012
to 2018, the accommodation as well as food service industry is creating most of the jobs
behind healthcare and construction. In these industries, the number of part-time workers is
the highest. In the middle of 2018, it has been reported that more than 60% jobs in Australia
are part-time jobs. On the other hand, healthcare industry is more likely to provide job
opportunities. However, in a research it has been found that 45% of workers in healthcare
industry are working part-time (Milner et al., 2017). Competition, change and uncertainty in
the market place have transitioned the full-time jobs into the part-time jobs. However, apart
from all these reasons, people choose to be a part of underemployment due to their personal
reasons such as lack of transportation from their house, disability and many others.
Effects of underemployment
The first and foremost effect of underemployment is that it creates job insecurity among the
workers. It is also responsible for the occurrence of financial instability among them. Even,
the studies reported that he number of workers and their income perceived can vary from one
week to the next depending on the situation of the business as well as the need of workers
(Li, Duncan & Miranti, 2015). Jobs, which offer variable income and irregular working
hours, put workers at risk when they do not have any other sources of revenue. For example,

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while applying any mortgage, it can be extremely problematic. Another major consequence
of underemployment is that it creates obstacles on the growth of wages. People basically
think that a part-time job is way better than not having any jobs at all and thus they are less
likely to negotiate their wages and ask the employers to raise their pay. As a result, the
numbers of workers are increasing who work more hours and holds wages down which in
turn eventually creates negative impact on the economy. Therefore, underemployment
contributes to the rising poverty level since people are paying for training or schooling but do
not get jobs to compensate them in paying off their debts (Milner, Smith & LaMontagne,
2015). Also, another major effect is that it can create psychological problems among the
people. When people are underemployed and not getting their wages to fulfil their regular
needs may experience high stress as well as anxiety (Crowe & Butterworth, 2016). On the
top of that, they might also feel that they are wasting their money as well as time when they
are not able to utilize their skills in the right work (Pollard et al., 2019). Another important
effect of underemployment is that many students leaving their schools or not attending their
schools or universities regularly as they are doing part-time jobs which are affecting the
education industry and their knowledge. The researchers in their studies found that
underemployment may lead to unemployment since the underemployment workers cannot
update their resumes with new skills (Gunasekara, Grant & Rajendran, 2019). This can hinder
them from allying in new full-time jobs in the future. In this pay, people are unable to find
work in their chosen field. Therefore, underemployment increases the risk of poorer mental
health as well as relationship status which contributes to the occurrence of physical health
issues. All these above mentioned issues lead to poorer life satisfaction and it also adversely
impact the overall quality of life.

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The adverse effects of low pay, skills under utilization as well as unemployment
experience may cause significant issues among the people of Australia (Mavromaras, Sloane
& Wei, 2015). The underemployment affects the education of people and also the educated
people are sufferer due to underemployment. From the point of view of policy,
underemployment has long-term effects on the people and their lives. However, it can be
reduced with effective strategies. It is important to integrate government policies and
regulations upon the cause of underemployment and if causes are found properly, then it will
be possible to sort out the effects easily.

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