What Is Underemployment? A Complete Guide With Types

By Indeed Editorial Team

Updated 6 November 2022 | Published 8 November 2021

Updated 6 November 2022

Published 8 November 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

If you work in any job but do not use your skills to your capabilities, you may face underemployment. Often, employees who remain underemployed may find it challenging to find full-time employment. Understanding the factors that cause underemployment can help you avoid getting underemployed. In this article, we answer “What is underemployment?”, explore its types, understand the difference between unemployment and underemployment, learn the effect of underemployment and discover ways to avoid it.

What Is Underemployment?

In order to answer the question, "What is underemployment?", consider the following information:

Underemployment occurs when a candidate does not use their skills, qualification, experience and availability to the best of their potential. In such a situation, the job of a candidate does not reflect their skills and financial requirement. For instance, underemployment is when a lawyer is maintaining a part-time job desire full-time work. In underemployment, an employee works part-time or remains idle for a long time. Overqualification is also underemployment because an employee cannot use their skills, qualification and experience in a job role. Often, underemployed employees work in several jobs to make enough money for their living.

Related: What Are Benefits Of Employment? Definition And Types

Types Of Underemployment

Here are different types of underemployment:

Invisible underemployment

Invisible underemployment is when an employee works full time, but their work cannot use their skills, availability to work and experience. This can happen if an employee gets hired for a job role different from their education or skills. For instance, when a chemical engineer works as a software developer in the IT field, it can be invisible underemployment.

Visible underemployment

Visible underemployment is when an employee works for fewer hours than their availability. These employees earn more but fail to get hired for a full-time job. Often, underemployed professionals simultaneously work for two or more jobs to meet their financial requirements.

How Is Unemployment Different From Underemployment?

Unemployment is when you do not have a job, but underemployment is when your job is inadequate or you are working at a lower capacity than your qualification. In underemployment, you do not work to the best of your skills, capabilities and qualification. Usually, underemployment is when a candidate works in a part-time job instead of a full-time job. It can occur when a candidate is eligible for a senior position but works in a lower-level job. For instance, an MBA graduate working as an administrative clerk.

Unemployment occurs when a candidate cannot find a job at any level. Voluntary unemployment is when an employee remains unemployed because of a lower salary. Involuntary unemployment is when an employee is ready to work for a lower job but cannot find an open position.

Cause Of Underemployment

Several factors can contribute to underemployment. Some common factors are:

  • Change in the job market: A shift in technology can make current technology obsolete, resulting in a shift in the job market. Companies can prefer using software over hiring individuals for completing job-specific work.

  • Cyclical unemployment: When a labour market recovers from a recession, the number of unemployed individuals is far more than the job openings, resulting in high underemployment and unemployment.

  • Obsolete skills: Often, employees leave an organisation to master a skill set and after gaining a desired skill, they return to the office only to find that their new skill is obsolete. It makes an employee take up jobs that can leave them underemployed.

  • Occupational immobility: Occupational immobility refers to a candidate's inability to learn new skills. For instance, a farmer may find it challenging to get a job in a fashion house, resulting in high underemployment.

  • Geographical constraints: Underemployment because of this reason occurs when a candidate finds it difficult to move to another location. For instance, there may be jobs for Orissa, but finding suitable rental accommodation can be challenging.

  • Change in the business cycle: Seasonal staffing can affect underemployment. For instance, a wedding videographer can only work during the wedding season. After the wedding season, these professionals may take up one or two jobs to meet their financial requirements.

  • Increases poverty levels: When an employee takes up a job that does not match their skills, they receive a low income and as a result, their families cannot consume many goods and services. It reduces the demand for products, slows business growth and increases the poverty levels.

Effects Of Underemployment

Here are a few effects of underemployment:

  • Reduces bargaining power: When certain job roles are high in demand, your bargaining power reduces. It can result in lower pay and you may get hired for a position that does not match your skills and experience.

  • Increases unemployment: Often, underemployment results in higher unemployment. Many employees may leave part-time or underpaying jobs and remain unemployed.

  • Reduces career trajectory: Long-term underemployment can affect a candidate's career path. It can result in missed employment opportunities and a candidate may remain underemployed for a long time.

  • Increases financial losses: In underemployment, candidates receive a lower salary than they would receive in full-time employment. It could cause potential financial losses.

  • Increases psychological problems: Candidates who remain underemployed for a long time may experience stress and anxiety, resulting in psychological problems.

  • Reduces motivation: Often, prolonged underemployment can reduce the motivation level of a candidate and they may prefer to quit their part-time job. Such candidates may not seek job positions based on their skills, education and qualification.

6 Ways To Avoid Underemployment

To prevent getting hired in a job that does not pay according to your skills, focus on these six ways:

1. Develop a job search strategy

Develop a job search strategy listing your career objectives based on your skills, experience and educational qualification. This strategy lists the job roles you want to work in and the minimum salary you expect. After listing the company or industry, you want to work in, apply to jobs that match the qualities you mentioned. This can help in preventing underemployment.

2. Consider visiting a job fair

If you cannot find jobs that match your skills and qualifications, consider visiting a job fair. Job fairs are an excellent place for face-to-face interactions with hiring managers. Employers do not screen your resumes among thousands of other candidates in a job fair because you can walk up to the employers or hiring managers and explain your experience and goals. Employers can gauge your soft skills, which increases your chances of getting hired for a desirable role.

Related: What Is A Job Fair? (Definition And Tips For Finding A Job)

3. Gain experience

Often, recent college graduates can find it challenging to find jobs with many applications. Another way to increase your employability is gaining experience. For example, if you seek a writer's position, you may work as an entry-level freelance writer. It shows an employer that you are continually working on skills that the job requires.

Related: What Is A Freelancer? Definition, Skills And Popular Jobs

4. Build a strong network

Another great way to get hired for a full-time job is by networking with others. Focus on attending different networking events that can help you connect with a desirable job. These people may connect you with open positions and help you get hired for a full time and high-paying job.

5. Revamp your resume

If you cannot add new skills to your resume, consider revamping or re-creating your resume. Revamp your resume so that it contains all the skills and experience. If you are using a functional format, change it to a chronological format. Also, for ensuring your resume gets shortlisted, use keywords from the job description. So, when applying for a job, personalise and tailor your resume. This makes your resume applicant tracking system (ATS) compliant and enhances your chances of getting an interview call.

6. Focus on vocational training

Often, vocational training is a great way to increase your skill set and become an expert in the desired skill. So, look for vocational training or apprenticeship in your industry to gain additional skills. Having relevant training on your resume can make you a desirable candidate for a job role.

How College Graduates Can Avoid Underemployment

Here are a few ways a college graduate can avoid underemployment:

  • Understand the underemployment risk of a career: Often, professions like legal or business have a higher underemployment rate. So, before choosing a career path or industry, focus on understanding the underemployment risk associated with a career.

  • Build the required skills: Focus on building high-demand skills to earn a higher salary and remain employed full time.

  • Pursue a master's degree: A master's degree in a relevant field can help you get hired for a desirable job. Often, employers prefer hiring candidates with a master's degree.


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