Q.Victor is able to get work only for two hours in a day. Rest of the day, he is looking for work. Is he unemployed? Why? What kind of jobs could persons like Victor be doing?

Underemployment: Working, but Not Working to Your Full Capacity

Imagine a farmer who owns a small plot of land. He works on it every day from sunrise to sunset, alongside his two sons. Together, the three of them produce exactly what one person working with modern tools could produce in half the time. Are they employed? Yes. Are they working as productively as they could? No.

That gap — between being employed and being employed at your full potential — is the heart of underemployment.

The Everyday Intuition

You have probably seen this in your own neighbourhood. The chai-wala who has three assistants, but only one is actually needed. The family-run shop where four family members sit around, but the work could be done by two. These people are not unemployed — they have work. But their work does not use their time, skills, or energy properly. They are underemployed.

In economics, we distinguish between two kinds of underemployment:

Visible underemployment — when a person works fewer hours than they want to (e.g., a construction worker who gets work only 3 days a week but wants 6).

Invisible underemployment — when a person works full hours, but their skills are wasted or their productivity is very low (e.g., an engineer driving a rickshaw, or three workers doing a job that one could do).

The Precise Meaning

Underemployment is a situation where labour is not used to its full capacity. The worker is part of the employed workforce, but the contribution to output is far below what it could be. In national-income terms, this means the economy is producing less than its potential because human resources are being wasted.

Why It Matters for the Economy

Underemployment is a hidden problem. Official unemployment statistics often miss it because they only count people who are actively looking for work and cannot find any. A person who is underemployed may not show up in those numbers at all.

Yet underemployment has serious consequences:

• Low income: Even if you work full days, if your productivity is low, your earnings stay low. This is one reason poverty persists even when employment numbers look good.
• Wasted human potential: A graduate forced into manual labour represents years of education that the economy fails to use. …