Survey of Employment and Earnings
SLA Statistical Local Area
Like any other market the labour market has considerable specialist
vocabulary and terms such as unemployment rate, labour force
participation rate and underemployment are in frequent
use. However there is some confusion about the precise meaning of
these and other terms and as a result they are occasionally misused.
The purpose of this paper is to
- clarify the terms and concepts used in describing the labour market;
- outline sources of labour market data including regional labour
force statistics; and
- present a range of current labour force data.
As the paper is concerned only with labour force statistics no reference
is made to labour related statistics such as earnings and industrial
disputes.
Labour force statistics are measures of the economic activity of
the population aged 15 years and over in providing their labour services.
In this context economic activity refers to those aged 15 years
and over working in-or looking for-paid employment. This definition
also includes unpaid family helpers in a family business or on a family
farm.
Labour force statistics describe people and their labour-related
economic activity in many ways. For example, in the case of employed
people they describe the kind of people they are-employee, employer,
own account workers (self-employed); what they do-occupation; where
they work-industry; how many hours they work; and many other aspects.
That having been said, labour force statistics do not entirely neglect
those people who are not considered to be part of the labour force
for whatever reason. For example statistics on those people not in
the labour force describe the time since their last job and their
main activity.
The conceptural framework of the labour force currently in use in
Australia is shown at Figure 1. This framework generally conforms
with the standards for labour force classification adopted at international
conferences of labour statisticians and as recommended by the International
Labour Office of the International Labour Organisation (ILO).
The category within this framework in which people aged 15 years
and over are classified is determined in terms of their activity during
a specified period of one week. This week is called the reference
week.
In the Australian context this framework specifically excludes
- members of the permanent defence forces;
- certain diplomatic personnel of overseas governments who are customarily
excluded from census and estimated populations;
- overseas residents in Australia; and
- members of non-Australian defence forces (and their dependants)
stationed in Australia.
The labour force definitions following are drawn largely from those
used by the Australian Bureau of Statistics (ABS).
Employed
Employed people are all those aged 15 years and over who during
the reference week-
- worked for one hour or more for pay, profit, commission or payment
in kind in a job or business or on a farm-including employees, employers
and own-account (self employed) workers; or
- worked for one hour or more without pay in a family business or
on a family farm; or
- were employees who had a job but were not at work and were either:
- on paid leave;
- on leave without pay for less than four weeks up to the end
of the reference week;
- stood down without pay because of bad weather or plant breakdown
at their place of employment for less than four weeks up to
the end of the reference week;
- on strike or locked out;
- on workers' compensation and expected to be returning to their
job; or
- receiving wages or salary while undertaking full time study;
or
- were employers, own-account (self-employed) workers or contributing
family workers who had a job, business or farm but were not at work.
The above definition has been in use from April 1986. Prior to this
date, people who worked without pay in a family business or on a family
farm were required to work 15 hours or more per week to be counted
as employed. The current expanded definition of employment is consistent
with changed international definitions adopted by the 13th International
Conference of Labour Statisticians which was held in October 1982.
It is interesting to note than by the above definition a person
who attended school as their main activity but who also worked one
hour for pay-or without pay in a family business or family farm-would
be counted as employed. Similarly a person whose main activity was
looking for work but who also did one hour or more of paid work would
be counted as employed. In this context the ABS definition is biased
towards counting a person as employed rather than as unemployed.
Employment/Population Ratio
The employment/population ratio for any group of the population
aged 15 years and over is the number of employed people in the group
as a proportion of the number in the population in the same group.
The employment/population ratio is useful for examining trends in
employment over time because it allows for population growth. Although
described as a ratio this figure is usually quoted as a percentage.
Unemployed people are those who are aged 15 years and over who were
not employed during the reference week and who:
had actively looked for full-time or part-time work at any time in
the four weeks up to the end of the reference week, and were either:
- available for work in the reference week or would have been
available except for temporary illness; or
- waiting to start a job within a month from the end of the reference
week and would have started in the reference week if the job had
been available then; or
- waiting to be called back to a full-time or part-time job from
which they had been stood down without pay for less than four
weeks for reasons other than bad weather or plant breakdown.
The ABS definition of unemployment has remained basically unaltered
since February 1975. Prior to this date people were counted as unemployed
if they had actively looked for work during the previous week instead
of during the previous four weeks.
Note that the ABS definition of unemployment counts as unemployed
a school student or a person on a labour market training program provided
they were actively looking for work and had not worked for one or
more hours during the reference week.
There are three different types of unemployment. While there are
no statistics on the number of people in each category the concepts
are useful for distinguishing between the various causes of unemployment.
The categories are
- Frictional unemployment: Unemployment which results from
the fact that it often takes time for someone who leaves one job
to find another. The greater the number of people between jobs the
higher will be the level of frictional unemployment. The main cause
of frictional unemployment is lack of information-workers have to
learn about vacancies and employers have to search for suitable
applicants.
- Structural unemployment: Unemployment which results from
changes in the structure of the economy induced by such factors
as technological change, shifts in demand or changes in government
industry policy. Structural unemployment arises because mismatches
occur between the skills available and the skills required, and
between the location of workers and the location of jobs.
- Cyclical unemployment: Unemployment which results from
movements in the business cycle.
Unemployment rate
The unemployment rate for any group of the population aged 15 years
and over is the number of unemployed people in the group expressed
as a percentage of the number of people in the labour force in the
same group.
Note that the changing demographic composition of the labour force
influences the interpretation of any given unemployment rate. As the
unemployment rate is an aggregate measure an increase in the proportion
of young people in the labour force-assuming that young people have
a higher than average unemployment rate-will cause the unemployment
rate to rise.
In addition, the interpretation of a given unemployment rate as
an indicator of labour market tightness depends also on the average
duration of unemployment. If most unemployment is of short duration
the degree of labour market tightness would be interpreted as much
lower than in a situation where most unemployment was of longer duration,
all other things being equal.
Discouraged Jobseekers
Discouraged jobseekers are people who may have withdrawn
from the labour force because they perceived their job prospects as
poor in the light of prevailing labour market conditions.
Underemployment
Underemployment is classified into two categories-visible underemployment
and invisible underemployment.
Visible underemployment arises when people have employment which
they regard as insufficient in terms of hours of work.
The ABS identifies two categories of visible underemployment:
- part-time workers who indicate that they prefer to work more hours;
and
- full-time workers who work less than 35 hours in the reference
week for economic reasons. These economic reasons include being
stood down, on short time or having insufficient work.
Invisible underemployment arises when available work does not match
the skills or training of those unemployed. In this category the term
disguised underemployment is applied when a person's skills
are insufficiently utilised and potential underemployment is
applied when a person's time is insufficiently utilised.
Underemployment Rate
The underemployment rate is the number of underemployed people expressed
as a percentage of the number of people in the labour force.
Labour Force
For any group the sum of employed and unemployed people. The labour
force is also know as the work force.
Labour Force Participation Rate
For any group the number of people in the labour force expressed
as a percentage of the population in the same group.
Youth Unemployment
Youth unemployment is generally taken to mean unemployment among
people aged 15 to 19 years. Statistics of major interest in this context
are those relating to people in this age group looking for full time
work. These statistics can be presented in several ways-as numbers
of youth unemployed, as a youth unemployment rate, or as the number
of youth unemployed as a percentage of the youth population.
Long-term Unemployment
The long-term unemployed are those people who have been unemployed
for a period of 52 weeks or more.
Part-Time Employment
Part-time employed persons are the number of employed people who
usually work less than 35 hours and did so during the reference week.
Vacancies
The ABS defines a job vacancy as a job available for immediate filling
on the survey reference date and for which recruitment action has
been taken. Recruitment action includes efforts to fill vacancies
by advertising, by factory notices, by notifying public or private
employment agencies or trade unions and by contacting, interviewing
or selecting applicants already registered with the enterprise or
organisation. Excluded are jobs available only to persons already
employed by the enterprise or organisation. This point is particularly
relevant to the Australian Public Service and the public services
of each of the States and Territories.
Excluded are vacancies:
- of less than one day's duration
- to be filled by persons already hired, or by promotion or transfer
of existing employees
- to be filled by employees returning from paid or unpaid leave
or after industrial dispute(s)
- not available for immediate filling on the survey reference date
- not available within the particular State or Territory to which
the return relates
- for work to be carried out under contract
- for which no effort is being made to fill the position
While these vacancy figures are methodologically sound they are
only compiled on a quarterly basis. For this reason the monthly ANZ
Job Advertisement series is often quoted by those wishing to keep
a closer watch on this aspect of the labour market.
Overtime
Overtime is work paid in excess of award, standard or agreed hours
of work for which payment is received. Excluded is any overtime for
which employees would not receive payment. This includes unpaid overtime
worked by managerial and executive staff, normal shift work and standard
hours paid for at penalty rates.
Not in the Labour Force
People who are not in the labour force are those people who are
not classified as being employed or unemployed as defined above. They
include people who were in the reference week:
- keeping house-unpaid;
- retired;
- voluntarily inactive;
- permanently unable to work;
- persons in institutions-hospitals, gaols, sanatoriums etc;
- trainee teachers;
- members of contemplative religious orders; and
- persons whose only activity during the reference week was jury
service or unpaid voluntary work for a charitable organisation.
Like much economic activity, labour force activity is subject to
regular fluctuations which are often due to seasonal influences. These
seasonal effects make comparisons over time more difficult and statisticians
have developed techniques to modify the base data series to take account
of these fluctuations. For example, measured unemployment increases
regularly in January and December of each year as school leavers come
onto the labour market.
A seasonally adjusted series is one in which predictable
seasonal influences have been removed from the original series. These
seasonal influences include holidays, harvest cycles and taxation
cycles. It is usually considered easier to determine how a series
is moving over time by using seasonally adjusted data.
Seasonally adjusted data however still incorporate random fluctuations
which are irregular or short-term variations that do not follow a
seasonal cycle. These variations may be large or small depending on
the series. If the variations are large, interpretation of short-term
movements in the series may be affected. A trend estimate is
one which is derived by calculating a weighted moving average from
the seasonally adjusted estimate. This process smooths out the irregular
component. Such irregular and non-seasonal components could include,
e.g., the change to employment resulting from the Sydney Olympic Games.
To show how seasonally adjusted and trend data smooth out fluctuations
in original data the graphs below show unemployment since July 1982
in original, seasonally adjusted and trend terms.
Australian Bureau of Statistics
The Labour Force Survey
The Labour Force Survey (LFS) is the most widely used source of
labour force statistics. These labour statistics are collected by
regularly surveying households currently covering about one half
of one per cent of the population of Australia. The LFS was conducted
quarterly from 1960 to November 1977 and monthly from February 1978.
These surveys have traditionally been conducted by face to face
interviews by ABS contractors. A more recent trend has been to initially
interview survey households in person and to undertake subsequent
surveys by telephone.
Survey information is used to classify the labour force status
of the population according to the concepts and definitions recommended
by the ILO. The labour force category to which a person belongs
depends on their actual activity during the reference week. This
category is determined by the person conducting the interview to
ensure consistency. A range of demographic information is also collected
so that cross-classifications within the labour force data can be
made.
As part of the monthly LFS the ABS also conducts a range of supplementary
surveys which cover a range of labour force related topics.
Publications:
Australian Bureau of Statistics, Labour Statistics Australia
(Catalogue 6201.0).
Australian Bureau of Statistics, The Labour Force, Preliminary
(Catalogue 6202.0).
Australian Bureau of Statistics, The Labour Force (Catalogue
6203.0).
Australian Bureau of Statistics, Persons not in the Labour
Force (Catalogue 6220.0).
Australian Bureau of Statistics, Underemployed Persons Australia
(Catalogue 6265.0).
Survey of Employment and Earnings
The Survey of Employment and Earnings (SEE) is designed to obtain
from employers information on the number of wage and salary earners
employed each month and their earnings for the quarter. The survey
is conducted each quarter and is based on a sample of approximately
7 500 private and 2 500 public employer units. The survey was
introduced in the September quarter 1983 replacing an earlier
civilian employees series which was discontinued after April 1980.
SEE provides estimates of wage and salary earners classified
by sex, full-time/part-time status, industry and sector for Australia
and the States and Territories. The survey is the main source
of information on public sector employment.
It is worth noting however that considerable delays have been
experienced in the publication of SEE results. The ABS suspended
publication of quarterly employment and earnings statistics following
the release of figures for the March quarter 1995.
The decision to suspend publication of these statistics was
made pending:
- the redevelopment of the quarterly survey of private and public
sector employers and adoption of the new Australian and New
Zealand Standard Industrial Classification; and
- the incorporation of revisions to previously published statistics,
the need for which had become apparent.
In the event the exercise of determining the nature and size
of the revisions to employment and earnings statistics has proved
to be a complex and time consuming exercise. It is still not completed.
It is now anticipated that the publication of employer survey
estimates of employment and earnings will recommence in September
1997, with the publication (in ABS Catalogue 6248.0) of summary
statistics for the period June quarter 1995 to March quarter 1997
and with details of revisions made to previously published estimates.
These will be made respective to the introduction of the Series
in 1983-84.
Publication:
Australian Bureau of Statistics, Employed Wage and Salary
Earners (Catalogue 6248.0).
Censuses of Population and Housing
There is an important distinction between surveys and censuses.
Surveys take samples from the entire population and use these
as representative of that population. Censuses gather data from
the entire population.
The regular five yearly Censuses of the population and housing
are an important source of labour force statistics. Census questions
have traditionally covered the labour force status and characteristics
of the population and this information can be related to other
demographic and social data collected in the Census.
One of the principal advantages of the Census is that it provides
data at small area levels and for particular groups in society
and is able to provide detailed disaggregations by such classifications
as occupation, industry and educational attainment. The main
disadvantage of Census data, however, is the lack of timeliness
caused by the huge processing effort involved. Thus 1996 Census
results are not expected to begin to become available until
late in 1997.
It is worth noting that the labour force definitions used
in the census are different from those used in the ABS LFS.
Publications:
Australian Bureau of Statistics, various.
Department of Social Security
The Department of Social Security (DSS) uses administrative
records to compile monthly statistics on the number of people
in receipt of labour market payments. In particular it provides
information on Newstart Allowance (NSA) and to a lesser extent
on Youth Training Allowance, Mature Age Allowance, Partner Allowance
and Widow Allowance.
NSA recipient statistics are cross-classified by major characteristics
including age and sex.
Publications:
Department of Social Security, Labour Market and Related Payments:
a Monthly Profile.
Department of Social Security, DSS Customers: a Statistical
Overview.
Data sources for Regional Statistics
As part of its Labour Force Survey the ABS provides on a monthly
basis labour force estimates for 58 geographical regions. These
estimates are available on microfiche approximately two weeks
after the release of the preliminary monthly labour force figures.
A range of these figures is also available through ABS state
office publications. A list of these regions is provided as
an Appendix.
The major source of labour market information at the more
disaggregated local government area (LGA) level is the Census
which is undertaken every 5 years.
In response to a demand for more regular small area labour
market data, the Department of Employment, Education, Training
and Youth Affairs (DEETYA) prepares estimates of unemployment
and unemployment rates for Statistical Local Areas. Estimates
have been produced for May 1984, 1985 and 1986 and the June
quarter 1987, 1988, 1989, 1990 and 1991. From the June quarter
1991 these estimates became available on a quarterly basis.
Each quarter DEETYA also produces a brochure which presents
labour force data tables for the States and Territories and
for each of the 58 ABS geographic regions. These tables show
averages of the respective ABS regional estimates over the three
months of the quarter.
A further source of labour force data disaggregated by region
is the Department of Social Security. Each month since January
1991 DSS has published monthly averages of the number of people
in each DSS office region who received labour market payments.
In addition, DSS publishes for June of each year the number
of people who received labour market payments classified according
to the postcode district in the postal address held on Departmental
records.
Publications:
Australian Bureau of Statistics, microfiche data from the
Labour Force Survey.
Department of Employment, Education, Training and Youth Affairs,
Small Area Labour Markets: Australia.
Department of Employment, Education, Training and Youth Affairs,
Regional Labour Markets.
Department of Social Security, Labour Market and Related Payments:
a Monthly Profile.
The ABS produces the official unemployment statistics. These
statistics are collected by means of a sample survey and are
based on the labour market activity of the population during
the reference week.
Other measures of unemployment are also produced as a by-product
of the administrative system of the Department of Social Security.
These other measures are often quoted in the media and differ
substantially from the ABS statistics.
DSS regularly publishes statistics on the number of people
who are receiving labour market payments. The criteria used
by DSS for determining eligibility for these payments do not
match those the ABS uses to determine whether a person is officially
classified as unemployed.
Since DSS labour market payment recipients may either be looking
for full-time or part-time work, DSS figures should be compared
with ABS total unemployed people. In comparing the two sets
of figures it should be noted that:
- the ABS classifies a person as unemployed if he or she is
15 years and over, was not employed for at least one hour
during the week before the interview, has actively looked
for full-time or part-time work and is available to start
work. The NSA series counts people in receipt of that allowance
who are between the ages of 16 years and 64 years in the case
of men and 16 years and 59 years in the case of women;
- the DSS figures include many people who are working part-time
or doing casual work even if it excludes them temporarily
from NSA. They exclude people whose family incomes are above
the income test thresholds but who may be unemployed;
- the ABS series includes unemployed people whose spouse is
working, irrespective of income, whereas NSA recipients are
subject to an income and assets test;
- the ABS series includes people being paid a pension-e.g.
sole parent's pension-but looking for work;
- NSA recipients must be registered with the Commonwealth
Employment Service whereas this is not a requirement of the
ABS series;
- the ABS series includes people who are serving a waiting
period before being granted NSA or whose allowance was deferred.
The graph below shows DSS NSA statistics in the period since
July 1982 compared to ABS unemployment series. Note the break
in the DSS series at November 1995.
ABS unemployment statistics are the official unemployment
statistics and are produced in accordance with international
standards. As such these are the statistics which should be
used in assessing the unemployment situation in Australia.
While the DSS also provide valuable information about the
unemployed, these statistics are the by-product of administrative
systems whose primary purpose is not the measurement of unemployment.
ABS Labour Force Regions
New South Wales
Sydney
Inner Sydney and Inner Western Sydney
Inner Sydney
Eastern Suburbs
St. George-Sutherland
Canterbury-Bankstown
Fairfield-Liverpool and Outer South Western
Fairfield-Liverpool
Central Western Sydney
Outer Western Sydney
Blacktown-Baulkham Hills
Lower Northern Sydney
Hornsby-Ku-ring-gai
Northern Beaches
Gosford-Wyong
Balance of New South Wales
Hunter
Newcastle Statistical District
Illawarra and South Eastern
Illawarra
Wollongong Statistical District
Richmond-Tweed and Mid-North Coast
Northern, North-Western and Central West
Murray and Murrumbidgee
Total New South Wales
Victoria
Melbourne
Outer Western Melbourne
North Western Melbourne
Inner Melbourne
North Eastern Melbourne
Inner Eastern Melbourne
Southern Melbourne
Outer Eastern Melbourne
South Eastern Melbourne
Mornington Peninsula
Balance of Victoria
Barwon-Western District
Central Highlands-Wimmera
Loddon-Campaspe-Mallee
Goulburn-Ovens-Murray
All Gippsland
Total Victoria
Queensland
Brisbane
Brisbane City Inner Ring and Brisbane City Outer Ring
Brisbane City Inner Ring
Brisbane City Outer Ring
South and East BSD Balance and North and WestBSD Balance
South and East BSD Balance
North and West BSD Balance
Balance of Queensland
South and East Moreton
North and West Moreton
Wide Bay-Burnett
Darling Downs-South West
Mackay-Fitzroy-Central West
Northern-North West
Far North
Total Queensland
South Australia
Adelaide
Northern Adelaide
Western Adelaide
Eastern Adelaide
Southern Adelaide
Balance of South Australia
Northern and Western
Southern and Eastern
Total South Australia
Western Australia
Perth
Central Metropolitan
Eastern Metropolitan
North Metropolitan
South-West Metropolitan
South-East Metropolitan
Balance of Western Australia
Lower Western
Remainder-Balance
Total Western Australia
Tasmania
Hobart and Southern
Hobart
Northern
Mersey-Lyell
Total Tasmania
Northern Territory
Total Northern Territory
Australian Capital Territory
Total Australian Capital Territory
Maps of ABS Labour Force Regions
Cyclical unemployment
Unemployment which results from movements in the business
cycle.
Employment
See page 4 above.
Employment/population ratio
For any group of the population aged 15 years and over the
number of employed people in the group as a proportion of the
number in the population in the same group.
Frictional unemployment
Unemployment which results from the fact that it often takes
time for someone who leaves one job to find another.
Discouraged jobseekers
Discouraged jobseekers are people who may have withdrawn
from the labour force because they perceived their job prospects
as poor in the light of prevailing labour market conditions.
Labour force
For any group the sum of employed and unemployed people. The
labour force is also know as the work force.
Labour force participation rate
For any group the number of people in the labour force expressed
as a percentage of the population in the same group.
Marginal attachment to the labour force
People are defined as marginally attached to the labour force
if they are not in the labour force during the reference week
and they want to work and are available to start within four
weeks, or they are actively looking for work but are not available
to start work within four weeks.
Not in the labour force
People who are not in the labour force are those people who
are not classified as being employed or unemployed. They include
people who were keeping house-unpaid; retired; voluntarily inactive;
permanently unable to work; persons in institutions-hospitals,
gaols, sanatoriums etc; trainee teachers; members of contemplative
religious orders; and persons whose only activity during the
reference week was jury service or unpaid voluntary work for
a charitable organisation.
Own account worker
Own account workers are self-employed workers.
Reference week
The category in which people aged 15 years and over are classified
is determined in terms of their activity during a specified
period of one week called the reference week.
Seasonal adjustment
A seasonally adjusted series is one in which predictable
seasonal influences have been removed from the original series.
These seasonal influences include holidays, harvest cycles and
taxation cycles.
Structural unemployment
Unemployment which results from changes in the structure of
the economy induced by such factors as technological change,
shifts in demand or changes in government industry policy. Structural
unemployment arises because mismatches occur between the skills
available and the skills required and between the location of
workers and the location of jobs.
Trend estimates
A trend estimate is one which is derived by calculating
a weighted moving average from the seasonally adjusted estimate.
This process smooths out the irregular component.
Underemployment
Underemployment is classified into two categories-visible
underemployment and invisible underemployment. Visible
underemployment arises when people have employment which they
regard as insufficient in terms of hours of work. The ABS identifies
two categories of visible underemployment: part-time workers
who indicate that they prefer to work more hours, and full-time
workers who work less than 35 hours in the reference week for
economic reasons. These economic reasons include being stood
down, on short time or having insufficient work. Invisible underemployment
arises when available work does not match the skills or training
of those unemployed. In this category the term disguised
underemployment applies when a person's skills are insufficiently
utilised and potential underemployment applies when a
person's time is insufficiently utilised.
Underemployment rate
The number of underemployed people expressed as a percentage
of the number of people in the labour force.
Unemployment
Unemployment rate
For any group of the population aged 15 years and over the
number of unemployed people in the group expressed as a percentage
of the number of people in the labour force in the same group.
Australia and New Zealand Banking Group Limited, 'ANZ Job
Advertisements', (Media Release).
Australian Bureau of Statistics, Employed Wage and Salary
Earners (Catalogue No. 6248.0).
Australian Bureau of Statistics, A Guide to Labour Statistics
(Catalogue No. 6102.0).
Australian Bureau of Statistics, The Labour Force (Catalogue
No. 6203.0)
Australian Bureau of Statistics, The Labour Force Preliminary
(Catalogue No. 6202.0)
Australian Bureau of Statistics, Persons not in the Labour
Force (Catalogue No. 6220.0).
Australian Bureau of Statistics, microfiche data from the
Labour Force Survey.
Australian Bureau of Statistics, Job Vacancies and Overtime
(Catalogue 6354.0).
Department of Social Security, Monthly Job Search and Newstart
Allowance Statistics, various issues.
Department of Employment, Education, Training and Youth Affairs,
Small Area Labour Markets-Australia, June Quarter 1991.
Department of Employment, Education, Training and Youth Affairs,
Small Area Labour Markets: Australia.
Department of Employment, Education, Training and Youth Affairs,
Regional Labour Markets.
Department of Social Security, Labour Market and Related Payments:
a Monthly Profile
Daniels, Dale and Geoff Winter, Why are ABS and DSS Unemployment
Figures Different? Research Note No. 52 1995-96, Department of
the Parliamentary Library.
