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6105.0 - Australian Labour Market Statistics, Apr 2006  
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This article was published in the April 2006 issue of Australian Labour Market Statistics (cat. no. 6105.0).


UPDATED VOLUME MEASURES OF LABOUR UNDERUTILISATION


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


Labour underutilisation can be measured in a number of ways - in either population or hours based estimates. ABS produces both types of measure on an annual basis. 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 headcount and experimental volume measures have now been updated for September 2005. The data for the headcount measures are presented in tables 4.1, 4.2 and 4.3 of the April 2006 issue of Australian Labour Market Statistics (cat. no. 6105.0). The data for the experimental volume measures are presented in this article.


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 2004 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 sought by unemployed persons, as a percentage of the volume of potential labour in the labour force.
Volume underemployment rate The additional hours of labour offered 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 unutilised labour in the labour force (hours sought by those in unemployment, plus additional hours offered 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 sought by unemployed persons, plus the hours of labour offered 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 sought or offered by population groups contributing to the experimental volume measures is shown in table 2. In 2005, hours sought by the unemployed formed the largest component of the volume labour force underutilisation rate, accounting for two-thirds (66%) of the volume of unutilised labour in the labour force in September 2005.

2. Volume of potential labour in the labour force, Number of weekly hours: Experimental measures - September 2005

Males
Females
Persons
‘000 hours
‘000 hours
‘000 hours

Unemployed persons (hours of work sought)
9 646.0
6 807.1
16 453.0
Looking for full-time work
8 649.3
4 928.5
13 577.8
Looking for part-time work
996.7
1 878.6
2 875.2
Underemployed workers (additional hours of work offered)
3 835.8
4 787.9
8 623.6
Underemployed full-time workers(a)
962.4
243.3
1 205.6
Underemployed part-time workers
2 873.4
4 544.6
7 418.0
Employed persons (usual hours of work performed)(b)
228 278.0
139 669.5
367 947.5
Full-time workers
214 222.6
102 654.1
316 876.7
Part-time workers
14 055.4
37 015.4
51 070.8
Total volume of potential labour in the labour force(c)
241 759.8
151 264.4
393 024.1

(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 of work sought by unemployed persons, plus the total hours of work offered by underemployed workers, plus the usual hours worked by employed persons who were not underemployed.
ABS Labour Force Survey, September 2005; Job Search Experience, Australia, July 2005 (cat. no. 6222.0); Underemployed Workers, Australia, September 2005 (cat. no. 6265.0).


On average, unemployed people sought 30 hours of work a week in September 2005, with men seeking 33 hours compared to 27 hours for women (see table 3). Underemployed people are able to offer less additional hours because they are already working. On average underemployed people offered 15 hours of additional labour a week, with men again offering more hours (18 hours) than women (14 hours).

3. Underutilised Labour, Mean number of weekly hours sought/offered by selected groups - September 2005

Males
Females
Persons
hours
hours
hours

Unemployed persons (hours of work sought)
32.6
27.1
30.1
Looking for full-time work
37.2
32.7
35.4
Looking for part-time work
15.8
18.8
17.6
Underemployed workers (additional hours of work offered)
17.7
13.6
15.2
Underemployed full-time workers
23.8
22.6
23.5
Underemployed part-time workers
16.3
13.3
14.4

ABS Labour Force Survey, September 2005; Job Search Experience, Australia, July 2005 (cat. no. 6222.0); Underemployed Workers, Australia, September 2005 (cat. no. 6265.0).


Table 4 compares the experimental volume measures of labour force underutilisation with the corresponding headcount or population based measures. For all three measures of labour underutilisation (i.e. unemployment, underemployment and labour force underutilisation), the experimental volume rates for September 2005 were lower than the corresponding headcount rates.


Unlike the headcount measures, the volume measures take into account the number of hours worked or sought by individuals and this has the effect of weighting people according to the number of hours they either worked or sought. If the hours offered or sought by the unemployed and underemployed were as high as those worked by the employed, then the headcount and volume measures would be of the same magnitude. For example, the large difference between the headcount and volume underemployment rates (5.3% and 2.2% respectively) reflects the large difference between the additional hours offered by the underemployed (15.2 hours a week) and those worked by the employed (36.5 hours a week).

4. Measures of Labour Underutilisation, Selected headcount and volume measures - September 2005

Males
Females
Persons
%
%
%

Headcount measures
Unemployment rate
5.1
5.2
5.1
Underemployment rate(a)
3.7
7.3
5.3
Labour force underutilisation rate(a)
8.8
12.6
10.5
Volume measures
Volume unemployment rate
4.0
4.5
4.2
Volume underemployment rate
1.6
3.2
2.2
Volume labour force underutilisation rate
5.6
7.7
6.4

(a) To provide greater comparability with the experimental volume measures, data on the number of underemployed full-time workers are sourced from the Labour Force Survey rather than the Underemployed Workers Survey.
Source: ABS Labour Force Survey, September 2005; Job Search Experience, Australia, July 2005 (cat. no. 6222.0); Underemployed Workers, Australia, September 2005 (cat. no. 6265.0).



FOR FURTHER INFORMATION

Information Paper: Measures of labour Underutilisation (cat. no. 6296.0) describes the concepts behind the ABS headcount measures of labour underutilisation in detail. 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). A spreadsheet containing the headcount measures is available from the ABS web site. To find the spreadsheet go to <http:/www.abs.gov.au> [Statistics - By Catalogue Number - 6. Labour Statistics and Prices - 61. Labour statistics - general]. The spreadsheet is listed under the Details tab in this April 2006 issue of Australian Labour Market Statistics (cat. no. 6105.0).


For further information, please contact Assistant Director, Labour Market Statistics on Canberra (02) 6252 5603.


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