Feature Article: Spotlight: Annual measures of labour underutilisation
The extent to which the labour supply is used is an important issue from both economic and social perspectives. From an economic perspective, interest has been focussed on the amount of spare capacity in the labour supply. From a social viewpoint, there is a concern that people whose aspirations for work are not being met may suffer financial hardship.
The ABS produces a range of supplementary measures of labour underutilisation that include groups of people such as the unemployed, the underemployed and discouraged jobseekers. Headcount measures of labour underutilisation are based on the number of people whose labour is underutilised. These measures provide an indication of the proportion of the labour force affected by labour underutilisation. The ABS has also developed experimental volume measures of labour underutilisation, based on the number of hours of available labour that are unutilised.
In the July 2004 issue of Australian Labour Market Statistics these measures were explained in detail in an article 'Labour underutilisation'. Here the measures of labour underutilisation are updated for the reference period September 2004.
HEADCOUNT MEASURES OF LABOUR UNDERUTILISATION
With the exception of the underemployment rate, which remained at 5.6%, the rates of labour underutilisation declined between September 2003 and September 2004. The labour force underutilisation rate (which is obtained by adding the unemployment rate and the underemployment rate) was 11.1% in September 2004, down from 11.5% in the previous year. The extended labour force underutilisation rate (which also includes some of those marginally attached to the labour force) was 12.2% at September 2004, down from 12.5% in September 2003.
Overall, women have a higher rate of labour force underutilisation than men (12.7% for women, compared with 9.8% for men in 2004). This is due to women's higher rate of underemployment, which, in turn, is related to the larger proportion of women who are in part-time employment.
1. Headcount Measures of Labour Underutilisation
|Long-term unemployment rate|
|Labour force underutilisation rate|
|Extended labour force underutilisation rate|
|Labour Force, Australia, September 2004 (cat. no. 6202.0); Persons Not in the Labour Force, Australia, September 2004 (cat. no. 6220.0); Underemployed Workers, Australia, September 2004 (cat. no. 6265.0).|
Movement in unemployment is the primary driver of movements in the headcount measures. Levels of unemployment, and the unemployment rate, fluctuate with the economic cycle. The unemployment rate decreased from 9.0% in September 1994 to 5.5% in September 2004 and this decline is reflected in the labour force underutilisation rate and the extended labour force underutilisation rate over the same period (see graph in the Labour Market Summary of this publication 'Labour Underutilisation Rates - 1994-2004').
EXPERIMENTAL VOLUME MEASURES OF LABOUR FORCE UNDERUTILISATION
Labour underutilisation can also be measured in terms of the number of hours of available labour in the economy that are not utilised. Unlike the headcount measures, the volume measures take into account the number of hours offered or sought by individuals and this has the effect of weighting people according to the number of hours of work they either worked or sought. The volume underemployment rate is considerably lower than the volume unemployment rate, even though the headcount measures are of a similar magnitude. This is because the additional hours sought by the underemployed are far fewer than the hours sought by the unemployed (on average 15 and 30 hours, respectively).
2. Experimental volume measures of Labour Underutilisation - September 2004
|Volume unemployment rate|
|Volume underemployment rate|
|Volume labour force underutilisation rate|
|Labour Force, Australia, September 2004 (cat. no. 6202.0); Job Search Experience, Australia, July 2004 (ABS cat. no. 6222.0); Underemployed Workers, Australia, September 2004 (ABS cat. no. 6265.0)|
The ABS is continuing to develop both the headcount and volume measures of labour underutilisation. Within the next year ABS plans to introduce a quarterly series of the (headcount) labour force underutilisation rate and to further develop the experimental volume measure of labour force underutilisation.
FOR FURTHER INFORMATION
For further information on the concepts behind the volume measures, see the 'Labour underutilisation' article in the July 2004 issue of Australian Labour Market Statistics (cat. no. 6105.0). For further information, please contact the Assistant Director, Labour Market Statistics Section on Canberra (02) 6252 5603.
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DATA AVAILABLE IN SPREADSHEETS
The headcount measures are presented in tables 4.1 and 4.2 of this publication. A spreadsheet containing the headcount measures is available from the ABS web site. Follow the link to [AusStats - Publications and Data], then [Data cubes]. The spreadsheet is listed as Table 1 under catalogue number 6105.0.