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8558.0 - Employment Services, Australia, 2001-02  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 05/08/2003   
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  • Explanatory Notes

INTRODUCTION

1 This publication presents results from a survey of employment services organisations for the reference year 2001-02. This is the second time the ABS has conducted this survey. Previous statistics were released for 1998-99.


SCOPE

2 The scope of the survey was all employing units on the ABS Business Register, classified to class 7861 - EMPLOYMENT PLACEMENT SERVICES or class 7862 - CONTRACT STAFF SERVICES of the Australian and New Zealand Standard Industrial Classification (ANZSIC). ANZSIC class 7861 consists of organisations mainly engaged in personnel search, selection, referral and placement in connection with any field. ANZSIC class 7862 consists of organisations mainly engaged in supplying their own employees to other businesses on a fee or contract basis, mainly on short-term assignments and under the supervision of staff of the client business.

3 References to 'government supported schemes' cover some but not all of the activities of the Job Network scheme. The Job Network scheme is a Commonwealth Government employment services program administered by the Department of Employment and Workplace Relations (DEWR), which contracts other organisations to provide employment services to job seekers and the unemployed, as referred by Centrelink. It is important to note that not all organisations which were participants of the Job Network scheme were included in the results of this survey. Organisations which were participants of the DEWR Job Network scheme were included in scope of the survey only if their predominant activity was employment placement or contract staff services. As not all organisations under the Job Network scheme were included in the survey results, a difference may exist between any data published by DEWR and the Employment Services publication. Differences in estimates may also be attributable to differences in the definition of a job placement.


STATISTICAL UNITS DEFINED ON THE ABS REGISTER

4 The ABS uses an economic statistics model on the ABS Business Register to describe the characteristics of businesses, and the structural relationships between related businesses. The units model is also used to break groups of related businesses into relatively homogeneous components that can provide data to the ABS.

5 In mid-2002, to better use the information available as a result of The New Tax System (TNTS), the ABS changed its economic statistics units model. The new units model allocates businesses to one of two sub-populations. The vast majority of businesses are in what is called the Australian Taxation Office (ATO) Maintained Population, while the remaining businesses are in the ABS Maintained Population. Together, these two sub-populations make up the ABS Business Register population.


ATO Maintained Population

6 Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN), and are then included on the ATO Australian Business Register. Most of these businesses have simple structures; therefore the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS is aligning its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO Maintained Population, and the ABN unit will be used as the economic statistics unit for all economic collections.


ABS Maintained Population

7 For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS will maintain its own units structure through direct contact with the business. These businesses constitute the ABS Maintained Population. This population consists mainly of large, complex and diverse businesses. The new statistical units model described below has been introduced to cover such businesses:

        Enterprise Group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts, and partnerships. Majority ownership is not required for control to be exercised.

        Enterprise: The enterprise is an institutional unit comprising (i) a single legal entity or business entity, or (ii) more than one legal entity or business entity within the same Enterprise Group and in the same institutional sub-sector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia sub-sector).

        Type of Activity Unit (TAU): The TAU is comprised of one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment data for similar activities. When a minimum set of data items are available, a TAU will be created which covers all the operations within an industry sub-division (and the TAU will be classified to the relevant subdivision of the ANSZIC). Where a business cannot supply adequate data for each industry, a TAU will be formed which contains activity in more than one industry subdivision.

8 For more information on the impacts of the introduction of the new economic statistics units model, refer to Information Paper: Improvements in ABS Economic Statistics [Arising from the New Tax System] (cat. no. 1372.0).

9 Prior to the 2001-02 cycle, the Employment Services Survey used the management unit as the statistical unit. For issues of this publication relating to 2001-02 onwards, the statistical unit in the Employment Services Survey is the ABN unit for businesses with simple structures, and the TAU for businesses with complex structures. In most cases, ABN/TAU units concord with the management units used in the 1998-99 cycle. The impact of the change to the economic statistics units model on the survey estimates was minimal. The survey estimates would have been approximately 3-4% less than the estimates published in the 2001-02 Employment Services if the survey was produced using the old statistics units model. Other differences are outlined in paragraph 24.


COVERAGE

10 The frame used for the Employment Services Survey, like most ABS economic surveys, was taken from the ABS Business Register. The ABS Business Register is primarily based on registrations to the Australian Taxation Office's Pay As You Go Withholding (PAYGW) scheme (and prior to 1 July 2000, the Group Employer (GE) scheme). The frame is updated quarterly to take account of new businesses and businesses which have ceased employing.

11 Businesses which have ceased employing are identified when the Australian Taxation Office cancels their PAYGW registration (or previously their GE registration). In addition, from July 1999 to the end of June 2000, businesses which did not remit under the GE scheme for the previous five quarters were removed from the frame. A similar process has recently been adopted to remove businesses which do not remit under the PAYGW scheme.

12 The introduction of The New Tax System has a number of significant implications for ABS business statistics, and these are discussed in: Information Paper: ABS Statistics and The New Tax System (cat. no. 1358.0) and Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System] (cat. no. 1372.0).


IMPROVEMENTS TO COVERAGE

13 Data in this publication have been adjusted to allow for lags in processing new businesses to the ABS Business Register, and the omission of some businesses from the register. The majority of businesses affected, and to which the adjustments apply, are small in size.

14 Adjustments have been made to include new businesses in the estimates in the periods in which they commenced operations, rather than when they were processed to the ABS Business Register. Adjustments of this type will continue to be applied in future periods.

15 For more information on these adjustments, please refer to the ABS publication Information Paper: Improvements to ABS Economic Statistics, 1997 (cat. no. 1357.0).


COMPARISON WITH OTHER ABS STATISTICS

16 Annual data for the employment placement services and contract staff services industries are published in Australian Industry (cat. no. 8155.0). There are important differences between the statistics published in the Australian Industry and Employment Services publications and users should exercise caution when making comparisons between the two sets of estimates.

17 The Australian Industry publication presents annual summary statistics at the ANZSIC class level. It shows the relative performance of each industry class, and allows patterns of change or growth to be analysed across particular segments of the Australian economy. The industry estimates presented in Australian Industry are used in the compilation of the National Accounts, and in the derivation of economy-wide indicators such as gross domestic product (GDP).

18 The Employment Services publication supplements the annual industry summary statistics with a detailed examination of the structure and performance of organisations involved in employment services activities for the reference year of the survey.

19 One reason the two sets of estimates are different relates to the use of different industry coding practices. For the Australian Industry publication, businesses are coded to ANZSIC industry classes on the basis of the activity reported to the ATO when they registered for an ABN, or for more complex businesses, information reported directly to the ABS (see paragraphs 4-7). On the other hand, Employment Services presents estimates for industry classes based on detailed financial data reported in the survey. For the Employment Services industries, approximately 30% of businesses originally coded to ANZSIC Classes 7861 and 7862 were found to be predominantly involved in activity outside these boundaries, and have consequently been excluded from the results presented in this publication.

20 Differences in results also occurred because there were differences in the scope and coverage of the two surveys. Firstly, non-employing units were included in the scope of Australian Industry, but generally excluded from Employment Services. Also, external sources such as listings of Job Network contract holders from the Department of Employment and Workplace Relations were used to improve the coverage of the Employment Services Survey. This would have the effect of adding employment services organisations to the results in this publication that might have been incorrectly coded on the ABS Business Register and therefore excluded from Australian Industry estimates.


HISTORICAL COMPARISONS

21 While comparisons are made between 2001-02 survey results and the earlier iteration of the Employment Services Survey, the reader should bear in mind that the survey has not been designed to support accurate estimates of change, and should exercise caution when comparing 2001-02 results to 1998-99 results.

22 Changes were made to the definitions of permanent and temporary/contract job placements. In 1998-99, all placements into positions where the client/host business paid the wages and other labour costs directly to the successful candidate, were classed as permanent placements, regardless of whether the placement was long or short-term. Placements, where the wages and other labour costs were paid by the recruitment organisation and recovered from the client or host business as fees, were referred to as on-hired placements. Consultation with organisations within the employment placement services and contract staff services industries during the development of the 2001-02 survey indicated that this was not the preferred way to categorise placements. For 2001-02, a new job placement category of 'Temporary/contract placements' was created, combining on-hired placements with short or fixed term placements where the labour costs were paid directly by the client business. Total job placements are conceptually the same as for the 1998-99 survey, however the other categories presented are not comparable between time periods.

23 The 1998-99 survey included a small amount of data for organisations contracted under the Job Network scheme, whose major activity was not employment services. These organisations were presented as 'Other organisations providing employment services' in published output. These organisations have not been included in the 1998-99 estimates that have been reproduced in this publication. Job Network organisations classified to ANZSIC classes outside 7861 and 7862 have been excluded from the 2001-02 survey.

24 In most cases, ABN/TAU units in the 2001-02 survey would concord with the management units used in the 1998-99 cycle, however, in some cases, a management unit would have consisted of one ABN/TAU that collected the income paid to an organisation (and therefore was assigned an employment services ANZSIC code), and a separate service entity ABN/TAU that was established to provide administrative services to the organisation. The service entity would often hold all the direct employment of the organisation. This could have resulted in ABN/TAU units with large income values, but no direct employment. In these cases, the employment and financial data of the service entities were not in scope of the 2001-02 collection, but would have been in scope and covered through the use of the management unit in 1998-99.

25 Minor changes were made to the processing rules that were used to classify units to ANZSIC classes 7861 and 7862 since the 1998-99 survey. For the 2001-02 survey, the primary activity that was used to determine if a unit belonged to these ANZSIC classes was the placement of staff with a client business. Units that did not primarily make placements, but primarily provided ancillary employment services, such as assistance to job seekers in preparing curriculae vitae or career counselling, were not in scope of the 2001-02 survey. However, many of these units primarily offering ancillary services were considered to be in scope in 1998-99, and contributed to 1998-99 estimates. These units were usually very small organisations, and did not make a large contribution to estimates.

26 The ANZSIC coding of single-person organisations that managed the business activities of the single person has been clarified since 1998-99. In the past, some of these units were considered as deriving their income from employment placement. An example would have been a fruit picker who negotiated a number of short-term placements picking fruit for a season. Single-person businesses have become more common since 1998-99, in part because of two recent developments: the introduction of Australia's New Taxation System in July 2000, which encouraged many individuals to apply for an Australian Business Number (ABN), and the introduction of the Australian Workplace Reform Act and associated activity which encouraged individual employment contracts. This in turn established more single-person businesses where the sole person employed works for, and is ultimately paid by, a separate business entity. These types of single-person entities are no longer coded to ANZSIC classes 7861 and 7862.


RELIABILITY OF THE DATA

27 When interpreting the results of a survey it is important to take into account factors that may affect the reliability of estimates. Such factors can be classified as either sampling or non-sampling error.

28 The estimates are based on information obtained from a randomly selected stratified sample of employment services organisations in the Australian business population. Consequently, the estimates in this publication are subject to sampling variability, that is, they may differ from the figures that would have been obtained if all units had been included in the survey, that is if a census was conducted. One measure of the likely difference is given by the standard error (SE), which indicates the extent to which an estimate might have varied by chance because only a sample of units was included.

29 There are about two chances in three that a sample estimate will differ by less than one SE from the figure that would have been obtained if a census was conducted and approximately 19 chances in 20 that the difference will be less than two SEs.

30 Sampling variability can also be measured by the relative standard error (RSE), which is obtained by expressing the SE as a percentage of the estimate to which it refers. The RSE is a useful measure in that it provides an immediate indication of the sampling error in percentage terms, and this avoids the need to refer also to the size of the estimate.

31 The following table contains estimates of RSEs for a selection of the statistics presented in this publication.


RELATIVE STANDARD ERRORS FOR TABLE 1 SUMMARY OF OPERATIONS

For profit
Not for profit
Total
%
%
%


Placements during year ended 30 June

9.7

3.6

9.1

Organisations at end June

3.0

9.2

2.8

Locations at end June
Capital city
4.4
7.0
4.0
Other
7.5
5.9
5.2
Total
3.9
4.6
3.2

Employment at end June
Direct employment
Recruitment/employment consultants
2.8
4.0
2.3
Other direct employees
3.4
3.4
2.5
Total
2.6
3.4
2.1

Indirect employment

5.0

6.7

4.7
Total
4.7
5.0
4.3

Income
Income received from clients
3.0
7.1
2.9
Income from government supported schemes
0.1
0.3
0.2
Other income from sales of goods and services
11.6
8.2
8.3
Other sources of income
14.3
6.5
6.2
Total
2.9
4.0
2.7

Expenses
Labour costs
3.2
4.7
2.9
Other expenses
4.0
2.7
3.3
Total
3.0
4.1
2.7

Operating profit/surplus before tax

10.8

6.4

9.2
Operating profit/surplus margin
11.0
5.8
9.5

Industry value added

3.1

4.7

2.8

32 As an example of the above, an estimate of total income for employment services organisations in 2001-02 was $10,228.5m and the RSE was estimated to be 2.7%, giving a SE of approximately $276.2m. Therefore, there would be two chances in three that, if all units had been included in the survey, a figure in the range of $9,952.3m to $10,504.7m would have been obtained, and 19 chances in 20 (i.e. a confidence interval of 95%) that the figure would have been within the range of $9,676.1m to $10,780.9m.

33 The sampling variability for estimates at the state/territory level was higher than for Australian level aggregates. Within states/territories, the sampling variability, and therefore the RSEs of estimates for smaller states and territories are higher than for the largest states. Survey estimates for the smaller states and territories should therefore be viewed with more caution than those for other states. RSEs for New South Wales, Victoria and Queensland are typically 1.0 to 1.3 times greater than the corresponding national figure for employment and financial estimates, and 1.5 to 2.5 times higher for estimates of numbers of organisations or placements. RSEs in the other states and territories are typically 0.5 to 3.5 times greater than the corresponding national figure for employment and financial estimates, and 0.5 to 5.5 times higher for estimates of numbers of organisations or placements (the wide range of values is a result of the different market shares of small and large organisations in each state/territory).

34 Errors other than those due to sampling may occur in any type of collection and are referred to as non-sampling error. For this survey, non-sampling error may result from such things as deficiencies in the register of businesses from which the sample was drawn, non-response, imperfections in reporting and/or errors made in compiling results. The extent to which non-sampling error affects the results of the survey is not precisely quantifiable, but its impacts can be broadly identified. One such example is in relation to the occupations of placements made by an employment services organisation. Many organisations did not keep records of the occupations they placed candidates into, hence they provided an estimate of the distribution across occupation groupings. Every effort was made to minimise non-sampling error by careful design and testing of the questionnaire, efficient operating procedures and systems and the use of appropriate methodology. Survey estimates subject to a high level of non-sampling error have been suppressed or provided with relevant cautions.

35 Estimates that have an estimated relative standard error between 10% and 25% are annotated with the symbol '^' . These estimates should be used with caution as they are subject to sampling variability too high for some purposes. Estimates with an RSE between 25% and 50% are annotated with the symbol '*', indicating that the estimate should be used with caution as it is subject to sampling variability too high for most practical purposes. Estimates with an RSE greater than 50% are annotated with the symbol '**' indicating that the sampling variability causes the estimates to be considered too unreliable for general use.

36 Where figures have been rounded, discrepancies may occur between the sum of the components and the total. Similar discrepancies may occur between a proportion or ratio, and the ratio of the separate components.


REFERENCE PERIOD

37 Data contained in the tables in this publication related to all employment placement services organisations in Australia during the year ended June 2002. Financial estimates included the activity of any organisation that ceased or commenced operations during the year. Counts of organisations and locations included only those that were operating at 30 June 2002. Employment included only those persons working for an employment services organisation during the last pay period ending in June 2002.


ACKNOWLEDGMENT

38 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated; without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.


DATA AVAILABLE ON REQUEST

39 Inquiries about these statistics and more detailed statistics than those presented in this publication should be made by telephoning the contact shown on the front page.


ABBREVIATIONS

ABNAustralian Business Number
ABSAustralian Bureau of Statistics
ANZSICAustralian and New Zealand Standard Industrial Classification
ATOAustralian Taxation Office
CESCommonwealth Employment Service
DEWRDepartment of Employment and Workplace Relations
GDPgross domestic profit
GEgroup employer
IVAindustry value added
OPBToperating profit before tax
PAYGWpay as you go withholding
RSErelative standard error
SEstandard error
TAUType of activity unit
TNTSThe New Tax System


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