Working out the numbers—Unemployment

The Australian Bureau of Statistics (ABS) provides monthly updates of labour force data, but what do these numbers mean and how are they interpreted? Previous posts have provided background information on the Labour Force Survey and on employment figures. This post focuses on the key unemployment numbers and rates.

What are the key unemployment figures?

Headline figures released by the ABS include the number of unemployed people and the unemployment rate. Unemployment data is available by age, sex and regions, as well as other characteristics. The ABS also publishes a long-term unemployment rate (i.e. unemployed for 52 weeks or longer), duration of unemployment (including medians), unemployment ratio and estimates of people seeking full-time or part-time work.

Who is considered unemployed?

Through the Labour Force Survey, the ABS collects information on whether a person is employed or not. If a person is not employed, they are asked about their job seeking behaviour in the four weeks prior to the survey. To be classified as unemployed, a person must have undertaken particular steps, considered to be ‘active search’. For example, looking through a newspaper is seen as insufficient to gain a job, but ringing about a job advertisement would be an ‘active’ step. For more information see the Library’s publication, Unemployment statistics: a quick guide.

Not all job seekers are ‘unemployed’, who else is there?

In terms of the labour force framework, there are some people who could not be classified as unemployed as they did not meet the criteria in some way. To the outside observer, these people display very similar characteristics to the unemployed. For example, someone who has expressed a willingness to work, is available to start work, but is not taking any active steps to find work is not unemployed. Another example is someone who wants to work, has taken active steps to find work, but is not available to start work within the required timeframe (of the definition). These people are described by the ABS as ‘marginally attached’ and technically, they are outside of the labour force.

There are also people labelled as ‘discouraged job seekers’, who like the aforementioned groups do not meet the criteria for unemployed, but their reasons for not actively seeking work relate to some labour market condition (e.g. not enough jobs available).

How is the unemployment rate calculated?

The unemployment rate is the number of unemployed people expressed as a proportion of the labour force (the labour force being the sum of employed plus unemployed). The rate tells you what part of the labour force has the potential to work, in comparison to all those who are actively working and looking for work; it seeks to identify available capacity.

The ABS generally publishes the rate for people aged 15 years and over. However, it is sometimes published for a narrower age range to represent part of the group of unemployed. For example, the youth unemployment rate usually refers to people aged 15 to 24 years. The Department of Jobs and Small Business provides the ‘youth unemployment rate’ by regions on the dashboard of their Labour Market Information Portal (see ‘ABS Labour Force Regions – SA4 data’).

What does change look like?

Generally, the change in the level of unemployment (i.e. number of people) is measured in thousands (increase or decrease) and the unemployment rate is measured in percentage points. The ABS provides estimates of monthly and annual change in the ‘Key figures’ segment of the Labour Force release (cat. no. 6202.0).

How do these figures line up with job seekers on Newstart?

The group of people counted as unemployed in the Labour Force Survey is not the same as to those who receive Government allowances, such as Newstart. Recipients of Newstart are subject to different criteria to determine their status as a job seeker. They are subject to age restrictions, asset/income tests and, in most cases, activity rules. A major difference is that people receiving Newstart may be working temporarily (for a short spell) or for a small number of hours per week. In the Labour Force Survey, undertaking any work of one hour or more would mean a person is classified as employed, rather than unemployed. Newstart recipients may also undertake education or training to meet their activity requirements. In the Labour Force Survey, people who are studying full-time and therefore not actively looking for work (nor available to work), would be considered outside of the labour force. More information is available from the Department of Social Services publication, Labour market and related payments: monthly profile.

How are job vacancies measured?

There are various sources of counts of available jobs. The Parliamentary Library publishes the ANZ series of monthly job advertisements in the Monthly Statistical Bulletin (see section 1.6). The ABS publishes estimates of available private and public sector jobs in Job Vacancies (cat. no. 6354.0). The Department of Jobs and Small Business publish a monthly Internet Vacancy Index, through their Vacancy Report. The Department also produce a more detailed annual publication, Australian Jobs, which includes future estimates of jobs by location, industry and occupation.

What about potential vacancies?

Business surveys are used to measure confidence in the Australian labour market. They feature a number of indicators to assist in analysing future expansion (or contraction) of the labour market. The NAB publishes a quarterly business survey and the Australian Chamber of Commerce and Industry (ACCI) publishes the Westpac Survey of Industrial Trends. The RBA paper, ‘Indicators of Labour Demand (Bulletin, Sep Qtr 2013), provides useful background and comparisons for most of the listed measures.

For more information

Clients of the Parliamentary Library can request assistance to interpret ABS statistics, navigate the ABS website or find relevant ABS surveys and products by contacting the Statistics and Mapping Section via Library Enquiries.

Previous related posts… the Labour Force Survey and Employment


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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