Underemployment: Meaning, types, causes and more

Underemployment can lead to a range of negative outcomes, including financial strain, reduced job satisfaction, and mental health issues. This article explores the meaning of underemployment, its prevalence, and the various types of underemployment that individuals may experience. 

What is Underemployment

Underemployment is a phenomenon that occurs when individuals are employed in jobs that are below their skill level or working fewer hours than desired. 

Types of underemployment

Underemployment can be categorized into several different types, each with its unique characteristics and consequences. 

1. Inadequate hours underemployment

The first type is called “inadequate hours underemployment” which occurs when individuals work fewer hours than they desire or need. This can lead to financial difficulties, as well as a lack of benefits, job security, and opportunities for advancement.

2. Overqualification underemployment

Another type of underemployment is “overqualification underemployment”, which happens when individuals are employed in positions that are below their skill or education level. This can result in feelings of frustration, underutilization of skills, and a lack of career growth.

It can also make it difficult for individuals to secure future employment in their desired field, as their skills and experience may become outdated or irrelevant over time.

3. Occupational skill mismatch underemployment

The third type of underemployment is “occupational skill mismatch underemployment”, which occurs when individuals are employed in jobs that do not align with their education or training. This can lead to feelings of dissatisfaction, as well as a lack of opportunities to develop or utilize skills that are relevant to their desired career path.

Understanding the different types of underemployment is crucial in addressing this issue. By recognizing the unique characteristics and consequences of each type, individuals and policymakers can develop more targeted strategies and solutions to address this challenge.

The impact of underemployment 

The impact of underemployment can be significant and far-reaching, affecting not only individuals, but also their families, communities, and the broader economy. One of the most immediate consequences of underemployment is financial strain, as individuals may struggle to make ends meet or support themselves and their families. This can lead to increased debt, poverty, and even homelessness in some cases.

Underemployment can also have negative impacts on mental health, as individuals may experience feelings of frustration, stress, and anxiety as a result of their work situation. This can lead to a range of mental health issues, including depression, anxiety disorders, and substance abuse.

Furthermore, underemployment can have long-term consequences for career development and overall job satisfaction. Underemployed individuals may experience a lack of opportunities for career growth, skill development, and networking, which can hinder their ability to secure more desirable and fulfilling employment in the future.

The consequences of underemployment are not limited to individuals alone, as it can also have broader societal impacts. When individuals are underemployed, they may not be contributing to the economy in the same way as they would if they were fully employed, leading to reduced productivity and economic growth.

To address the impact of underemployment, policymakers need to prioritize job creation and workforce development initiatives that focus on providing individuals with the skills and training they need to secure meaningful employment. This can help to reduce underemployment and support economic growth and stability.

Prevalence and causes of underemployment 

Understanding the prevalence and causes of underemployment is essential in developing effective strategies to address this issue. Underemployment is a widespread problem that affects individuals across various sectors and industries. According to a report by the National Bureau Statistics, the underemployment rate in Nigeria was 34.3% in 2021, representing millions of individuals who are not fully utilizing their skills or working the desired number of hours.

There are several root causes of underemployment, including technological advances, changing industry needs, and economic factors such as recession and automation. Technological advancements have led to the automation of many jobs, reducing the number of available positions and requiring individuals to have more advanced skills to secure employment. This can result in a skills mismatch, where individuals may not have the skills necessary to secure employment in their desired field.

Changes in industry needs can also contribute to underemployment. For example, the decline of manufacturing jobs has left many individuals without employment opportunities, leading to an increase in underemployment. Similarly, economic factors such as recession and job market saturation can lead to a surplus of job seekers, making it difficult for individuals to secure employment that meets their qualifications and preferences.

To address the root causes of underemployment, policymakers can focus on developing programs that support workforce development, education, and training, as well as provide job seekers with access to career counselling, networking opportunities, and job placement services. These strategies can help individuals to acquire the skills and knowledge needed to secure fulfilling and well-paying employment.

Addressing underemployment 

There are several strategies that individuals and policymakers can use to address underemployment. For individuals, seeking out opportunities for skill development and training can help secure more meaningful employment. Additionally, networking and taking advantage of job placement services can help to connect individuals with available job opportunities.

On the policy side, policymakers can focus on developing workforce development programs that provide individuals with access to training, education, and job placement services. Providing incentives for businesses to create new jobs and invest in workforce development can also help reduce underemployment.

Another approach to addressing underemployment is to focus on job creation, particularly in sectors that are experiencing growth or have a high demand for labour. For example, investing in infrastructure projects can create new jobs and stimulate economic growth.

Addressing underemployment requires a multi-faceted approach that involves both individuals and policymakers. By focusing on strategies that support skill development, job creation, and workforce development, it is possible to reduce underemployment and support the economic well-being of individuals and communities.

Overcoming underemployment

One important aspect of addressing underemployment is to ensure that individuals have access to accurate and timely information about available job opportunities. This can be achieved through a variety of means, such as job search websites, career fairs, and job placement services.

Additionally, it is important to provide individuals with access to career counselling and guidance, which can help them to identify their strengths, interests, and potential career paths. This can be particularly beneficial for individuals who may be unsure of their career goals or who have experienced setbacks in their employment journey.

Policymakers can also play a role in addressing information asymmetry by providing resources and support for job seekers. This can include funding for job training programs, financial assistance for those seeking education or training, and information about available job opportunities in high-demand fields.

Finally, it is important to recognize that underemployment can be a complex and multi-faceted issue that requires a comprehensive and nuanced approach. By prioritizing strategies that support skill development, job creation, and access to information and resources, it is possible to reduce underemployment and improve the economic well-being of individuals and communities.

Conclusion 

underemployment is a significant issue that affects millions of individuals and has far-reaching consequences for individuals, families, communities, and the broader economy. Addressing underemployment requires a multi-faceted approach that involves both individuals and policymakers, focusing on strategies that support job creation, workforce development, access to information and resources, and career counselling.

By prioritizing these strategies, it is possible to reduce underemployment and support the economic well-being of individuals and communities.

Frequently asked questions

What is the underemployment rate in the US?

The underemployment rate in the US is 9.3% as at 2022.

Which country is the underemployment rate in Africa?

Africa currently has the highest underemployment rate in Africa at 90%.