Underemployment is defined as working less than 35 hours in a given week and preferring to work more paid hours. In Australia, underemployment is well above the OECD average (OECD Employment Outlook 2010), is more widespread than unemployment and is prevalent amongst women, the young and unskilled. Most experiences of underemployment are temporary, but up to a third of people are still underemployed a year later. Jobs associated with underemployment tend to be low income, but also intermittent and casual with volatile earnings.

This project sought to see what impact this might have on housing security as measured by housing payment arrears or housing payment risk (i.e. whether the household is paying more than a threshold amount in housing costs). The study used ABS labour force statistics and the Household Income and Labour Dynamics in Australia (HILDA) survey.

Underemployed persons living in single-earner households tend to be lone persons or lone parents concentrated in the private rental market, while those in multiple-earner households tend to be couples and home-purchasers. Underemployment is significantly linked with the risk of housing payment arrears and housing payment risk, but this is especially the case for those in single earner households (and for young tenants in particular). Renters are more likely than mortgage holders to face long-term problems with housing insecurity because of underemployment—possibly because mortgage holders are more likely to extend forbearance than rental investors.

The presence of other earners in a household cushions but does not reverse housing insecurity for underemployed households. For this reason, policy interventions or assistance are most appropriately targeted at households where underemployment is severe, sustained or recurrent—especially single earner households. Policy interventions could be at the labour market end, such as improved minimum employment standards for casual and contract workers and welfare reforms to increase personal income protection. Housing market interventions might include changes to Commonwealth Rent Assistance to widen eligibility to those presently employed but earning low or intermittent amounts, and other programs to improve security of tenure for underemployed households.