San Francisco Frontiers - Nearly Half of Australian Workers Overqualified, Survey Finds

Close to half of Australians believe they possess more education than their current roles require, a dynamic that is associated with lower job and life satisfaction. A quarter of people also cannot fully use their skills and abilities in their current job.

These figures come from the latest annual report from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, released in September, with data through to 2024. It presents new insights on how well people’s educational level, skills, and abilities match the jobs they work in.

The HILDA survey has been following the same group of about 17,000 people every year since 2001, which makes it possible to examine how the lives of Australians are changing over time. The survey is one of Australia’s most valuable social research tools.

Over the last two decades or so, access to tertiary education has dramatically improved for Australians. The proportion of people aged 18 to 64 with a bachelor’s degree has increased from about 14 per cent in 2001 to almost 22 per cent in 2024, making it the most prevalent level of education.

On the downside, people’s educational qualifications, skills, and abilities often do not perfectly match their jobs. The data show that 49.5 per cent of workers aged 18 to 64 were overeducated in 2024, meaning they held a higher educational level than they believed is the minimum required to successfully do their job.

In addition, 25.7 per cent of workers were “overskilled”, meaning they told us they do not use many of their skills and abilities in their job.

Young people and casual employees are more affected by both of these kinds of mismatch. Certain occupations, like retail workers, labourers, and machinery operators and drivers, are also more affected, as well as people working in accommodation and food services.

Both overeducation and overskilling are associated with lower job satisfaction, including pay and the work itself, and with lower life satisfaction, our study found. These workers are also more likely to consider quitting their jobs.

These findings suggest that being unable to make full use of one’s education or skills in the job can lead to feeling bored, unappreciated, or underpaid – and thereby hurt overall wellbeing.

And things are not getting any better. Admittedly, we do see a shift towards more jobs that require higher levels of education. But that growth has merely kept up with the growth in people’s actual levels of education. So the overall proportion of people experiencing labour market mismatches has remained roughly stable.

What is more, this apparent stability hides structural changes in the labour market towards occupations and industries that tend to have relatively few overeducated workers, such as professional occupations or the health care and social assistance sector. Once we take that into account and compare workers with similar types of jobs, we do see a weak, rising trend in both overeducation and overskilling.

The poorer wellbeing outcomes for mismatched workers are all the more concerning because these mismatches can last for a long time. Of those workers who are overeducated in one year, almost two thirds (65 per cent) are still working in jobs for which they are overeducated four years later. And about 40 per cent of overskilled workers are still overskilled four years later.

What is more, mismatched workers are more likely to stop working altogether – about 11 per cent of overeducated workers and 12 per cent of overskilled workers are no longer employed four years later. That compares with only about 8 per cent of workers well matched to their jobs.

The increase in workers who are not well matched to their jobs, and the likelihood they will stay in this situation for some time, suggests more must be done to ensure workers are well matched by education and skills.

There are multiple avenues to improve job matches. For example, schools and higher education providers can support young people through targeted career advice and internships in choosing a career path that strikes a balance between their interests, skills, and employer demands. Workers who are already in the labour market benefit from employer investment in on-the-job training and government financial support for retraining, ensuring their skills remain aligned with labour market needs.

Finally, people must be able to access suitable jobs from where they live. This requires coordinated urban policy, such as mixed-use zoning and affordable housing, as well as investments in transport infrastructure, while employers can reduce distance-related barriers by offering working from home arrangements.

B.Johnson--SFF