Economists at Curtin University used data from the Household, Income and Labour Dynamics in Australia Survey to calculate the size of the skills mismatch involving migrants.
The survey collects household-based data on 17,000 Australians each year since 2001.
Researchers concluded that only 60 per cent of migrants from a non-English speaking background are working in jobs well-matched with their skills and educational qualifications.
The report found 48 per cent of immigrants from non-English speaking countries had a tertiary degree, compared to 33 per cent of Australian-born citizens.
Author Professor Alan Duncan says there is a huge untapped potential.
The report also found an increase of one percentage point in the share of migrants within an industry leads to a rise in real wages for Australian-born workers -- by 2.4 percentage points.
Professor Duncan explains how it does this:
The Federation of Ethnic Communities' Councils of Australia has welcomed the findings.
The group's CEO, Mohammad Al-Khafaji, says he hopes governments and employers take action to tap into the unrealised potential of migrants.
The report found that compared to Australian-born workers, the wages of migrants from non-English backgrounds were typically 5.5 per cent lower.
English language proficiency accounted for a very small fraction of the lower wage, pointing to more systemic issues.
Mr Al-Khafaji says that is not surprising.
Matt Kunkel, from the Migrant Workers Centre in Victoria, says the visa system is a big reason why there is a skills mismatch.
FECCA CEO Mohammad Al-Khafaji says if left unaddressed, the skills mismatch could see the best and brightest head back overseas.
Listen to the feature in Bangla in the audio player above.
