Underemployment is scenario a in economics where an overqualified individual works in a low-paid or low-skilled job that doesn't match their skills and experience.
This situation indicates talent underutilization due to the lack of suitable employment. Sometimes, a person might take up part-time work involuntarily, leading to underemployment.
Underemployment is when a highly skilled person is unable to find a job that matches their qualifications. For instance, a person with a Ph.D. degree working as a sales assistant is a clear case of underemployment.
Reasons for Underemployment
Underemployment often happens when jobs decrease due to overstaffing or seasonal work. It can hinder a country's economic growth and lead to poverty. In some cases, underemployment can lead to mental health issues like stress and anxiety.
Key reasons for underemployment include technological advances and an imbalance in supply and demand. Economic downturns can also cause underemployment, as companies downsize and lay off skilled workers, forcing them to take up lower-level jobs.
There are two types of underemployment:
Visible Underemployment: This is when a person works fewer hours than a full-time job requires, often leading them to take up multiple part-time jobs.
Invisible Underemployment: This is when a person can't find a job that suits their skills. As a result, they take up a job that doesn't match their qualifications and often pays less than their usual wage.