6202.0 - Labour Force, Australia, Feb 2015 Quality Declaration
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 12/03/2015
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This article describes revisions made to Labour Force estimates as a result of the population benchmarks being rebenchmarked (updated) to include the latest information from the Estimated Resident Population (ERP) as released in Australian Demographic Statistics, Jun 2014 (cat. no. 3101.0).
BACKGROUND TO REBENCHMARKING
ABS population benchmarks are based on the ERP which reflects data from the Census of Population and Housing adjusted for under-enumeration, and updated for births, deaths, interstate migration and net overseas migration. As Labour Force estimates cover the civilian population aged 15 years and over, the civilian population aged under 15 years and permanent defence personnel are deducted from ERP to create the Labour Force population benchmarks.
Labour Force estimates for the most recent months are released prior to the availability of the relevant ERP. For example, for the February 2015 Labour Force issue, the latest ERP currently available is for June quarter 2014. This lag is due to the time needed to compile the component data for the ERP, namely the overseas and interstate migration, births, and deaths. Of these components, net overseas migration (NOM) is generally the main driver of change in ERP estimates and therefore is explained further. Estimating NOM, and thereby Australia's official ERP count, is based on an international traveller's duration of being in or out of Australia. The ABS employs a '12/16 month rule' where the traveller can be added to, or subtracted from, NOM if they have stayed in, or been absent from, Australia for a period of 12 months or more, over a 16-month period. This 12 month period does not have to be continuous. Travellers who arrive in Australia for a holiday or a short stay are not counted as part of the resident population and conversely those who leave for short periods are not excluded.
The population benchmarks used to compile Labour Force estimates can take on one of four statuses, depending on the availability of the components of ERP. These statuses indicate the quality of the components at a particular point in time, and hence the benchmarks. The population benchmarks used in the estimates presented in this issue can be used to demonstrate how NOM determines the quality of the benchmarks:
Rebenchmarking ensures that the Labour Force estimates are based on the most up-to-date population information. Quarterly rebenchmarking will ensure that short-term projections and preliminary ERP included in the population benchmarks for the most recent periods are regularly replaced by more reliable information. Quarterly rebenchmarking does not generally result in any material change to unemployment rates, participation rates or employment to population ratios at the national or state and territory level. Changes to the population benchmarks impact primarily on the level of the Labour Force estimates (i.e. employed, unemployed and not in the labour force) that are directly related to the underlying size of the population. Changes in population composition such as age, sex or region (as used in the population benchmarks) may result in a different rate of change especially at finer levels of geography. The impact of the current rebenchmarking is described later in this article.
MAINTAINING THE LABOUR FORCE POPULATION BENCHMARKS
The section above describes how over time preliminary ERP estimates are replaced by revised ERP as the 16 month window closes on individuals, and short-term forecasts are replaced by preliminary ERP estimates. This results in continual revision of the estimated resident population, not just for the most recent month but also back throughout the last 25 months.
To ensure that Labour Force series maintain coherence with the latest ERP estimates, the ABS announced in the November 2012 issue of this publication that it would introduce a process of regular rebenchmarking to introduce the latest revised Labour Force population benchmarks. From this issue, February 2015, the population benchmarks will be revised quarterly (in the February, May, August and November issues) with estimates revised for the previous 25 months. This will ensure that the Labour Force population benchmarks are updated with the most recent ERP information available.
The table below shows:
Table 1: Progressive status of Estimated Resident Population in Labour Force Benchmarks by publication issue
As this issue introduces the first benchmarking revision since the January 2014 issue, it updates population benchmarks back to July 2011 i.e. 44 months rather than the 25 months that will occur with regular quarterly rebenchmarking. The revisions to July 2011 are broken down as follows:
Table 2: Status of Estimated Resident Population in Labour Force Benchmarks at the January 2015 issue
DELAY IN RELEASE OF OVERSEAS ARRIVALS AND DEPARTURES STATISTICS
The release of Overseas Arrivals and Departures, Australia (cat. no. 3401.0) for the period October 2014 to April 2015 will be delayed. The delay is due to passenger card processing issues as announced by the Department of Immigration and Border Protection (DIBP). This delay does not impact on the calculation of Labour Force population benchmarks used in the rebenchmarking undertaken for this issue, as only preliminary ERP up to June 2014 is incorporated with subsequent months based on projections. The ABS and the Department are working closely together to manage the issues and to minimise delays to the preparation of these statistics. Further advice will be provided if these delays impact on Labour Force benchmarks.
IMPACT OF REBENCHMARKING ON KEY LABOUR FORCE ESTIMATES
The introduction of the revised population benchmarks does not involve any change to the unit record data collected in the LFS. Changes to the population benchmarks impact primarily on the level of the Labour Force estimates (i.e. employed, unemployed and not in the Labour Force) that are directly related to the underlying size of the population. Changes in population composition such as age, sex or region (as used in the population benchmarks) may result in a different rate of change especially at finer levels of geography. Rebenchmarking does not generally result in any material change to unemployment rates, participation rates or employment to population ratios at the national or state and territory levels. The following table shows the impact of rebenchmarking on key trend and seasonally adjusted estimates for December 2014 and January 2015 as published in the January 2015 issue. The estimates are prior to the incorporation of data for February 2015 which may result in the usual revisions observed with concurrent seasonal adjustment. This shows that for the most recent months, rebenchmarking has had minimal impact on the key level estimates and negligible impact on the rates.
The following charts show the impact of the rebenchmarking over a longer period. While there is an impact on the level of employed persons and the unemployment rate, the extent of the change is relatively constant or evolves gradually and in percentage terms is relatively small.
The largest revision at the Australian level was a downward shift of 30,200 (or 0.26%) employed persons in December 2014, from the published estimate of 11.68 million to the revised 11.65 million. The normal distribution of probable 'real world' values around each of these estimates overlap to an extent that each is within the range of one standard error of each estimate (about 70% of one standard error). When considering the 95% confidence interval around the new revised estimate of 11.65 million for December 2014 (11.56 to 11.74 million), this range overlaps with 90% of the probable values originally covered by the distribution around the previously published estimate of 11.68 million (see graph below). This illustrates that both the original and revised estimates are providing similar profiles of possible 'real world' values for the number of employed persons in Australia. This is consistent with the sample survey approach to estimation - even though the value of the estimate has changed due to revised population benchmarks, the underlying responses that divide the population into employed, unemployed or not in the labour force have not changed, and should not impact on any conclusions based on the estimates.
This article has described the rebenchmarking of Labour Force estimates to the latest available population benchmarks. As anticipated this has not resulted in any material change to unemployment rates, participation rates or employment to population ratios at the national or state and territory levels. Rebenchmarking will continue on a quarterly basis commencing with the May 2015 issue with revisions for the previous 25 months rather than the 44 months on this occasion.
For any queries regarding the implementation of any of these changes to the Labour Force series contact Labour Force Estimates on Canberra 02 6252 6525, or via email at firstname.lastname@example.org.
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