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6105.0 - Australian Labour Market Statistics, Jan 2011  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 07/01/2011   
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Contents >> Articles and Analysis >> Measures of labour underutilisation

Measures of labour underutilisation

The ABS produces a range of measures of labour underutilisation including the official unemployment rate. The official unemployment rate and the three supplementary measures are strongly correlated through the economic cycle. The supplementary measures cover a number of population groups who are generally considered to be underutilised labour resources including:

  • unemployed people;
  • underemployed people; and
  • people with a marginal attachment to the labour force.

This wider coverage helps overcome some of the limitations inherent in the official unemployment rate for measuring the degree to which available and potential labour resources are not being utilised in the economy.

To understand the structure and the dynamics of the labour market, the ABS provides a range of data on available labour resources in the form of labour underutilisation, which consists of five measures.

FIVE MEASURES OF LABOUR UNDERUTILISATION

Unemployment rate

The number of unemployed persons as a percentage of the labour force of the same group, where the labour force is the sum of employed and unemployed persons. This measure is available monthly from Labour Force, Australia (cat. no. 6202.0).

Long-term unemployment rate

The number of persons who have been unemployed continuously for 12 months or more, as a percentage of the labour force. This measure is available monthly from Labour Force, Australia (cat. no. 6202.0).

Labour force underutilisation rate

The unemployed plus the underemployed, as a percentage of the labour force. This measure is available quarterly from Labour Force, Australia (cat. no. 6202.0).

Extended labour force underutilisation rate

The broadest measure of underutilised labour which adds together:

  • Unemployed;
  • Underemployed; plus
  • Two groups of people marginally attached to the labour force:
    • (i) persons actively looking for work, not available to start work in the reference week, but available to start work within four weeks; and
    • (ii) discouraged jobseekers

The rate is calculated as a percentage of the labour force augmented by the marginally attached populations described above in (i) and (ii).

This measure is available annually from Australian Labour Market Statistics (cat.no.6105.0).
    The following graph shows these five measures and how they have changed over recent years.


    Volume measures of labour underutilisation

    While the rate measures described above count each individual person whose labour is underutilised, volume measures are calculated by dividing the number of hours of underutilised labour in the labour force into the sum of actual and underutilised hours. Volume measures can be derived for each of the corresponding underutilisation rates.

    Volume measures of labour underutilisation are available annually as datacubes from Australian Labour Market Statistics (cat. no. 6105.0).

    VOLUME MEASURES

    Volume unemployment rate

    This refers to the hours of labour sought by unemployed people, as a percentage of the potential hours in the labour force (those hours worked by employed people and those hours sought by unemployed people).

    Volume underemployment rate

    This refers to the additional hours of labour preferred by underemployed workers, as a percentage of the potential hours in the labour force.

    Volume labour force underutilisation rate

    This refers to the total volume of underutilised labour in the labour force (hours sought by unemployed people, plus additional hours preferred by underemployed people), as a percentage of the potential hours in the labour force.

    The following graph shows the three volume measures of underutilisation.





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