Despite excellent education and a rich working experience in their home countries, skilled expatriates struggle to find employment that matches their qualifications. This article goes beyond the dominant stress and emotions' perspective on underemployment and presents the challenges of skilled migrant labour through the lens of the Common In-group Identity Model. It draws from the voices of expatriates and host-country nationals, and employs interviews and personal narratives to study the role of inter-group bias in social and occupational adaptation of skilled expatriates with focus on their underemployment. Its contribution lies in that expatriate employment challenges are examined not from a psychological but from a societal perspective. Thus, it increases our understanding of the factors that lead to underemployment among skilled workers. It also offers solutions to how the problem of underemployment can be overcome through recategorisation, as well as, points to differences in expatriate adaptation among self-initiated expatriates and international assignees.