One in five Australians do not have enough work to support themselves and their families, a new study shows.

Think tank Per Capita has released a discussion paper looking at the economic cost of underemployment in Australia, before and during the COVID-19 pandemic.

It points to Australian Bureau of Statistics labour force data from April, where the monthly increase of underemployment was 50 per cent, or more than 600,000 people.

The labour force underutilisation rate is about 20 per cent, so one in five Australians does not have sufficient work to support themselves and their families.

The report says that there was a crisis of insecure work before COVID-19, with wages and productivity being suppressed by slack in the labour market.

Report author Matthew Lloyd-Cape says underemployment is one of the biggest drags on the economy.

“(It’s) stifling wages and consumption, fuelling the productivity crisis, and ruining careers,” he said.

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Australia’s 20 per cent youth underemployment was among the highest of any advanced economy before coronavirus.

It’s now at more than 27 per cent, with more than a quarter of young people in the labour market unable to find enough hours.

Per Capita says eliminating underemployment could inject more than $24 billion in wages into the economy each year while providing the government with billions in tax revenue.

AAP.