Australian Bureau of Statistics

Rate the ABS website
ABS Home > Statistics > By Release Date
ABS @ Facebook ABS @ Twitter ABS RSS ABS Email notification service
6105.0 - Australian Labour Market Statistics, Jul 2008  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 03/07/2008   
   Page tools: Print Print Page Print all pages in this productPrint All RSS Feed RSS Bookmark and Share Search this Product

This article was published in the July 2008 issue of Australian Labour Market Statistics (cat. no. 6105.0).

VOLUME MEASURES OF LABOUR UNDERUTILISATION


UPDATED VOLUME MEASURES OF LABOUR UNDERUTILISATION

The extent to which the labour supply is used is of interest from a number of perspectives. From a social perspective, there is concern that people whose aspirations for work are not being met may suffer financially, personally and socially. From an economic perspective, interest has focused on the amount of spare capacity in the labour supply and its potential to contribute to the production of goods and services.


Labour underutilisation can be measured in a number of ways - in either population or hours based estimates. ABS produces both types of measure. The population based or headcount measures give an indication of the proportion of the population affected by labour underutilisation. The hours based or volume measures are based on the hours of available labour that are unutilised and these measures may be more relevant for analysing the spare capacity of the labour force.


The annual experimental volume measures have now been updated for September 2007 and are presented in this article. Data for the annual headcount measures are presented in tables 4.1, 4.2 and 4.3 of this publication. In addition, a newly developed series, the quarterly labour force underutilisation rate (a more frequent headcount measure) is introduced in a separate article in this publication.


Three volume or hours based measures have been produced and are summarised in Table 1 below. For a more detailed explanation of these measures please see the article 'Labour Underutilisation' in the July 2003 issue of Australian Labour Market Statistics.

1. ABS experimental volume measures of labour force underutilisation(a)

Measure Description

Volume unemployment rate The hours of labour preferred by unemployed persons, as a percentage of the volume of potential labour in the labour force.
Volume underemployment rate The additional hours of labour preferred by underemployed workers, as a percentage of the volume of potential labour in the labour force.
Volume labour force underutilisation rate The total volume of underutilised labour in the labour force (hours preferred by those in unemployment, plus additional hours preferred by those in underemployment), as a percentage of the volume of potential labour in the labour force.

(a) The volume of potential labour in the labour force is equal to the hours of labour preferred by unemployed persons, plus the hours of labour preferred by underemployed workers (both utilised and unutilised), plus the hours of labour usually provided by employed persons who are not underemployed.


The volume of potential labour preferred by population groups contributing to the volume measures is shown in Table 2. In 2007, hours preferred by the unemployed continued to form the largest component of the volume labour force underutilisation rate, accounting for 63% of the volume of unutilised labour in the labour force in September 2007. For men, hours preferred by the unemployed formed more than two thirds (68%) of the male volume labour force underutilisation rate, compared to 59% for women. About 86% of unemployed men were looking for full-time work, compared to 68% of unemployed women.

2. Volume measures of potential labour in the labour force, Number of weekly hours - September 2007

Males
Females
Persons
'000 hours
'000 hours
'000 hours

Unemployed persons (hours of work preferred)
7 366.0
5 957.2
13 323.2
Looking for full-time work
6 340.8
4 045.2
10 386.0
Looking for part-time work
1 025.2
1 912.0
2 937.3
Underemployed workers (additional hours of work preferred)
3 542.5
4 198.7
7 741.2
Underemployed full-time workers(a)
802.1
138.4
940.5
Underemployed part-time workers
2 740.4
4 060.3
6 800.7
Total volume of underutilised labour in the labour force
10 908.6
10 155.9
21 064.5
Employed persons (usual hours of work performed)(b)
239 374.7
148 249.1
387 623.8
Full-time workers
223 984.0
109 168.5
333 152.5
Part-time workers
15 390.7
39 080.6
54 471.3
Total volume of potential labour in the labour force(c)
250 283.3
158 405.0
408 688.2

(a) Full-time workers who worked less than 35 hours in the reference week for economic reasons (e.g. stood down, on short time or insufficient work).
(b) Actual hours worked in the reference week for underemployed full-time workers and usual hours worked for all other employed persons.
(c) Hours work preferred by unemployed persons, plus the total hours of work preferred by underemployed workers, plus the usual hours worked by employed persons who were not underemployed.
Labour Force Survey, September 2007; Job Search Experience, Australia, July 2007 (cat. no. 6222.0); Underemployed Workers, Australia, September 2007 (cat. no. 6265.0).


On average, unemployed people preferred 28.6 hours a week in September 2007, with men preferring 31.6 hours compared to 25.6 hours for women (see Table 3). Underemployed people are able to offer less additional hours because they are already working. On average underemployed people preferred an additional 14.9 hours of labour per week, with men again preferring more hours (16.9 hours) than women (13.5 hours).

3. Underutilised labour, Mean number of weekly hours preferred by selected groups - September 2007

Males
Females
Persons
hours
hours
hours

Unemployed persons (hours of work preferred)
31.6
25.6
28.6
Looking for full-time work
36.0
31.4
34.1
Looking for part-time work
18.1
18.4
18.3
Underemployed workers (additional hours of work preferred)
16.9
13.5
14.9
Underemployed full-time workers
21.5
12.6
19.4
Underemployed part-time workers
16.0
13.5
14.4

Labour Force Survey, September 2007; Job Search Experience, Australia, July 2007 (cat. no. 6222.0); Underemployed Workers, Australia, September 2007 (cat. no. 6265.0).


Table 4 compares the experimental volume measures of labour underutilisation with the corresponding headcount or population based measures that were updated in the April 2008 issue of 6105.0. For all three measures of labour underutilisation (i.e. unemployment, underemployment and labour force underutilisation), the experimental volume rates for September 2007 were lower than the corresponding headcount rates.


Unlike the headcount measures, the volume measures take into account the number of hours worked or preferred by individuals and this has the effect of weighting people according to the number of hours they either worked or preferred. If the hours preferred by the unemployed and the underemployed were as high as those worked by the employed, then the headcount and volume measures would be of the same magnitude. However, this is generally not the case. For example, the large difference between the headcount and volume underemployment rates (4.7% and 1.9%, respectively) reflects the large difference between the additional hours worked by the employed (36.5 hours a week) and those preferred by the underemployed (14.9 hours a week).

4. Measures of labour underutilisation, Selected headcount and volume measures - September 2007

Males
Females
Persons
%
%
%

Headcount measures
Unemployment rate
3.8
4.6
4.2
Underemployment rate(a)
3.5
6.2
4.7
Labour force underutilisation rate(a)
7.3
10.8
8.9
Volume measures
Volume unemployment rate
2.9
3.8
3.3
Volume underemployment rate
1.4
2.7
1.9
Volume labour force underutilisation rate
4.4
6.4
5.2

(a) To provide greater comparability with the volume measures, in this table data on the number of underemployed full-time workers are sourced from the Labour Force Survey rather than the Underemployed Workers Survey.
Labour Force Survey, September 2007; Job Search Experience, Australia, July 2007 (cat. no. 6222.0); Underemployed Workers, Australia, September 2007 (cat. no. 6265.0).


Graph 5 shows the steady decline in the experimental volume labour force underutilisation rate from 7.6% in September 2002 to 5.2% in September 2007. This is consistent with other measures, including the headcount measures of labour underutilisation, in suggesting a general tightening in the labour market over this period. While the volume labour force underutilisation rate has been consistently lower for men than for women over the five years to September 2007, the decline for men (from 7.0% to 4.4%) has been proportionally greater than that for women (from 8.6% to 6.4%) over the same period.


While there has been a slight fall in the volume underemployment rate between 2002 and 2007 (from 2.5% to 1.9%), most of the decline in the volume underutilisation rate can be attributed to the fall in the volume unemployment rate (from 5.2% to 3.3%).

5. Volume labour force underutilisation rates - September 2002 to September 2007
Graph: 1.  Volume Labour Force Underutilisation Rates—September 2002 to September 2007




For further information

For further information on the concepts behind the volume measures, see the 'Experimental volume measures of labour underutilisation' article in the July 2003 issue of Australian Labour Market Statistics (cat. no. 6105.0).


For further information, please contact Scott Lee on Canberra (02) 6252 7635 or email scott.lee@abs.gov.au.


Bookmark and Share. Opens in a new window

Commonwealth of Australia 2014

Unless otherwise noted, content on this website is licensed under a Creative Commons Attribution 2.5 Australia Licence together with any terms, conditions and exclusions as set out in the website Copyright notice. For permission to do anything beyond the scope of this licence and copyright terms contact us.