Over-skilling and job satisfaction in the Australian labour force

In a not-too-uncommon scenario individuals may find themselves in a job where they feel their qualifications (over-educated) or skills (over-skilled) or both are greater than are required to do the work. Previous research has found that people who work in jobs which do not make full use of their education and training earn lower wages than those in jobs that provide a good match to the education and training.

Using data from the Household Income and Labour Dynamics in Australia (HILDA) survey, the work of Mavromaras and colleagues extends previous research on the effect of over-skilling on wages in two ways: by expanding the categories of mismatch to also include over-education; and by looking at the effect of mismatch on job satisfaction as well as wages. Further, this study distinguishes between 'genuine' mismatch—where wages and job satisfaction are both low—and 'apparent' mismatch—where a job may pay less but is accepted because it has some other redeeming attribute, such as greater flexibility in work hours.

Key messages

• Irrespective of the type of post-school qualification, becoming mismatched in a job almost always results in lower job satisfaction, especially with the actual work that is done. This is particularly the case for those with vocational qualifications.
• Mismatch is more detrimental for those with intermediate vocational qualifications (certificate III/IV). However, over-skilling is less likely to occur amongst this group and, if it does, will not last long. The same does not hold true for university graduates.
• Being over-skilled as opposed to over-educated is the greater driver of the adverse consequences of lower wages and job satisfaction.
• Gender matters when it comes to experiencing mismatch—compared with their well-matched peers, women who are either over-skilled or over-educated suffer wage penalties and lower job satisfaction. Such differences between well-matched and mismatched males are not as apparent.

Tom Karmel
Managing Director, NCVER