Underemployment in Australia: What It Means for Workers in 2025

Australia’s job market is a tale of two stories: official unemployment is hovering near historic lows, but for a growing number of Australians, getting a job isn’t the same as getting enough work. Underemployment is on the rise, and it’s reshaping how millions manage their finances, plan for the future, and even think about their careers. In 2025, understanding underemployment is crucial for anyone navigating Australia’s evolving economic landscape.

What Is Underemployment—and Why Is It Growing?

Underemployment refers to people who have jobs but want—and are available for—more hours of work. This includes part-timers eager for full-time roles, casuals searching for more shifts, and gig workers whose income is unpredictable. According to the Australian Bureau of Statistics (ABS), the underemployment rate climbed to 6.5% in early 2025, up from 5.8% a year ago, even as unemployment remained steady around 4%.

• Casualisation of work: More businesses are relying on flexible, casual, or contract labour to manage costs in a challenging economic climate.

• Shift to services and digital roles: Many new jobs are in sectors like hospitality, retail, and gig platforms, which often offer fewer guaranteed hours.

• Cost-of-living pressures: As inflation and housing costs bite, more Australians are seeking extra hours to make ends meet, but can’t always find them.

How Underemployment Impacts Personal Finances

Not having enough paid hours means more than just a smaller paycheck—it’s a financial domino effect. Underemployed workers often struggle to build savings, qualify for loans, or plan for big life goals like buying a home. In 2025, with mortgage rates still high and rental vacancy rates at record lows, the squeeze is real.

• Income uncertainty: Variable hours make budgeting tough and leave many living week-to-week.

• Superannuation shortfall: Irregular work leads to lower super contributions, risking retirement security.

• Access to credit: Lenders may view fluctuating income as risky, making it harder to get approved for credit cards, personal loans, or mortgages.

• Mental health toll: Financial stress from underemployment can spill over into anxiety, depression, and strained relationships.

Case in point: Emily, a 29-year-old university graduate from Perth, works three part-time hospitality jobs. She’s never certain how many hours she’ll get each week, making it impossible to save for a house deposit or plan a holiday. “It’s like running in place,” she says. “I’m always working, but never getting ahead.”

Policy Moves and What’s Next in 2025

Both state and federal governments have flagged underemployment as a policy challenge for 2025. The Albanese government’s recent Fair Work reforms aim to improve job security for casuals, including the right to request permanent employment after 12 months. Meanwhile, the Future Skills Fund, expanded in the 2024-25 budget, is designed to retrain underemployed workers for in-demand sectors like clean energy and digital services.

• Fair Work Act updates: These boost protections for gig workers and casuals, aiming to provide more predictable rosters and the option to convert to permanent roles.

• Skills training incentives: Subsidised courses and micro-credentials target industries with worker shortages, helping underemployed Australians upskill for better opportunities.

• Business incentives: Payroll tax discounts for companies that convert casuals to permanent staff are rolling out in several states.

Still, the challenge remains: Australia’s economy is growing, but much of that growth is in roles offering flexibility for employers, not security for workers. The rise of remote work and digital platforms is likely to accelerate the trend.

What Can Workers Do?

If you’re underemployed, there are steps you can take to improve your financial position in 2025:

• Track all income sources and create a budget that handles fluctuating pay.

• Explore upskilling or retraining in sectors with high demand, such as healthcare, tech, or green energy.

• Check your eligibility for government programs or training subsidies.

• Consider joining a union or worker group for support in negotiating better conditions.

Above all, don’t accept underemployment as the new normal. With smart planning and an eye on policy changes, you can position yourself for better opportunities as Australia’s job market continues to evolve.