Underemployment has three meanings: working in a job that requires less qualifications, working part-time when full-time is preferred, and overstaffing. It can lead to worker frustration and a decline in income for employers. Chronic underemployment can also obscure employment statistics and competition for jobs may be fiercer than reported. It is a common problem in developed countries, especially for highly educated individuals. Part-time employment is also a serious issue, especially in areas with seasonal employment. Underemployment due to lack of personnel can occur due to labor laws, union pressures, or retaining skilled workers.
The term “underemployment” has three distinct, related meanings. In a sense, it refers to a situation where someone with excellent professional qualifications is working in a position that requires less qualifications, as for example in the case of a lawyer driving a school bus. In the second sense, underemployment means working part-time, when someone prefers to work full-time. In the third sense, underemployment is a form of overstaffing where employees are not being fully utilized.
All forms of underemployment have repercussions on the economy and the health of the business community. By not allowing people to work to their full potential, underemployment can generate worker frustration, leading to dissatisfaction with a job or employer. For employers, overstaffing can be problematic because it requires paying people who are not producing, potentially leading to a decline in income.
Chronic underemployment can also obscure the truth behind employment situations. When nations compile employment statistics, they usually report a baseline number of individuals who are “unemployed,” using that number to gauge the health of the labor market. This number does not include part-time workers seeking full-time employment, as they are considered employed, and it also does not reflect low-paid workers, given their qualifications. This means that competition for jobs may actually be fiercer than employment statistics suggest.
In the first sense, underemployment is a common problem in much of the developed world. Many people with higher education are working in low-level jobs or in the service industry because the job market is saturated. Furthermore, highly educated individuals from the developing world who immigrate to the developed world in search of work may find themselves working in positions for which they are grossly overqualified; accountants, lawyers and doctors, for example, can work as nannies, janitors or taxi drivers.
The issue of part-time employment, when full-time employment is desired, is also very serious. Some people are forced to work part-time through time cuts, while others find themselves taking a part-time job because there’s nothing else available, even if they really need to work full-time. This problem is especially common in areas with seasonal employment, where employers find it cheaper to retain and fire part-time staff rather than retaining a full-time staff.
In the sense of lack of personnel, underemployment appears in several situations. Some companies, for example, maintain a full staff to be prepared for seasonal work or to retain skilled, well-trained workers so they are available when needed. Labor laws and union pressures can also prevent a company from reducing staff or working hours, leading to a situation where people report to work but have nothing to do. Besides being bad for the company, this can also be very frustrating for employees.
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