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Uses and Limitations 

Underemployment reflects underutilization of the productive capacity of the labour force. While conceptually, a person working in a job below his qualifications or capability can also be deemed in a sense to be “underemployed”, in practice this is difficult to measure because of the subjectivity involved. Internationally, there is no consensus on how to measure this type of underemployment as the statistical concepts to describe such situations have not been sufficiently developed. As time-related underemployment has been properly defined and agreed on internationally, it is therefore, the best measure of underutilisation of the labour force.

A high Underemployment Rate suggests an inadequate use of the economy’s human resources. It reveals an excess capacity as people who are willing to work more are unable to do so. Underemployment rates by demographic characteristics such as age, sex and educational attainment are useful in identifying groups of workers vulnerable to underemployment.

Statistics on Time-related Underemployment are useful as a supplement to information on employment and unemployment, as they measure the ability of the economy to provide full employment for those who want it.