“Underemployment” has been increasing since the end of the global financial crisis, impacting a range of people. It particularly impacts young people and older people. And it is currently at 8.5%, the highest rate since the Australian Bureau of Statistics (ABS) started recording underemployment in the 1980s.

So, what exactly is it?

What is underemployment?

Put simply, underemployment is when someone is employed but they aren’t working as many hours as they would like. For someone to be considered underemployed, there are three main components, according to the International Labour Organisation (ILO):

  1. The individual needs to be willing to work more hours, and is actively seeking to work more hours;        
  2. The individual is available to work more hours; and 
  3. The individual has worked less than what is considered normal, in comparison to other people working in similar jobs.

Australia’s current underemployment rate is the highest it’s been since the ’80s at 8.5%. In comparison to other developed countries, it is considered high with Switzerland’s underemployment rate at approximately 4.5% for example. But it is not as high as America’s current underemployment rate at 12.9%.

Although, interestingly, while Australia has a lower underemployment rate than the US, it has a higher unemployment rate. Australia’s unemployment rate is at 5.8%. America’s unemployment rate is at 4.7%. (Switzerland’s unemployment rate is at 4.3%.)

Who is underemployed?

People aged between 15 and 24 have consistently had the highest rate of underemployment since the ABS started to measure underemployment in the 1980s. The current rate of underemployment for 15-to-24-year-olds is at 18%, according to the Brotherhood of St Laurence’s new report in to youth underemployment.

Senior manager of youth transitions at the Brotherhood of St Laurence, Sally James, said “many young people don’t have work experience or networks to get into work”.

On the other side, the underemployment rate has increased for people aged over 45. Between February 2016 and November 2016 the underemployment rate increased by 22,000 people for that age group.

James said that if someone were made redundant, and that person had no other qualifications for another industry, they might move to a casual, low-skilled job — if they can find one.

Business analytics professor at the University of Sydney, John Buchanan, also said that the increased underemployment rate for people over 45 is because “the economy is weaker then indicated”.

Also, 56% of underemployed people are female, with women consistently having a higher level of underemployment than males, according to the ABS.

Which occupations are impacted by underemployment?

All occupations are impacted by underemployment, but some are more significantly impacted than others.

Recently, underemployment for people holding a bachelor’s degree or higher qualification has increased. In fact, 21.1% of the underemployment rate is formed by this group. This is a 5.1 percentage point increase, which is a reflection of the increase in youth underemployment.

The major employment groups with the largest underemployment rate, according to the Australian and New Zealand Standard Classification of Occupations (ANZSCO) in November 2016, are sales workers at 19%, labourers at 17.9% and community and personal care workers at 17.4%. In comparison, managers have a underemployment rate at 2.5%, which is one of the lowest underemployment levels.

How is it different to unemployment?

Unemployment is when someone does not have work, but is actively seeking work. Whereas, someone who is underemployed has work, but they are not working as much as they would like to be.

For example, 19-year-old Aaron is currently searching for full-time work and is unemployed. But so far, he has found “a lot of nothing”. In one month, Aaron applied for 50 jobs but got only one interview. Aaron has started to apply for part-time and casual work, which will make him underemployed. Aaron said that a lot of jobs ask for at least ‘two years of experience’ before considering an applicant, but because of his age, he doesn’t have two years of experience in a particular field. And most of his friends are in a similar position.

But since February 2015, the unemployment rate has fallen from 6.2% to 5.7%.

However, the underemployment rate has remained at a steady 8.5%.

Why is underemployment increasing?

Underemployment increased after the GFC. And it’s been sitting at 8.5% since February 2015, which is a record high. So why hasn’t it decreased?

Buchanan says that after each economic downturn, such as the GFC, underemployment has worsened.

“Underemployment and unemployment is a steadily growing figure of the Australian economy. What’s new is the scale of it. What we’re essentially seeing is a neglect of the government to take full employment seriously.”

Major structural changes to the labour market, which has led to an increase the amount of part-time work created, has also increased underemployment, said the senior manager of youth transitions at the Brotherhood of St Laurence, Sally James. So there are fewer full-time positions for people to go into.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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