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Introducing the new employment size item on business survey frames

A new set of employment benchmarks is being introduced to the business survey frames to replace the current Derived Size Benchmarks (DSBs). The new data item will be known as the Stratification Derived Employment Size (SDES), since one of its main uses will be as a size stratification variable, in addition to other uses for frame, provider load and estimation purposes.

The new benchmarks are derived using an item called number of payees, which is essentially a total count of payment summaries issued by a business over the course of a year. Number of payees is sourced from the Summary of Payment Summaries form which businesses are required to submit to the Tax Office at the end of a financial year. An adjustment factor is then used to bring it to a level equivalent to employment. This is a change from the methodology used for DSBs, where the numbers were modelled from Business Activity Statement (BAS) wages and salaries information, and only used number of payees when BAS data were not available, as in the case of new businesses. However, BAS wages and salaries information will still be used to derive SDES when the number of payees is not available.

Another feature of the new methodology is the application of consistency checks between the SDES value that has been derived from the number of payees and a corresponding employment benchmark derived from BAS wages and salaries. A large proportion of these inconsistencies is resolved via an automated process. A small proportion of significant inconsistencies that cannot be resolved automatically is manually inspected as part of a quality assurance process for the new benchmarks.

Updating of SDES in the future will be controlled to manage the potential impact on sample rotation and consequently, on relative standard errors of movement estimates. SDES will only be updated subject to the business crossing thresholds set around its current employment size range. Moreover, annual updates to SDES will be spread across four quarters to manage the potential impact on quarterly collections.

It is planned to make a second version of this data item, called the Latest Derived Size Benchmark (LDES), also available on frames. LDES will be updated without any restrictions and as soon as new information becomes available, and will be more useful than SDES for some purposes.

The Methodology Unit in the ABS Victoria Office is currently working on the details of the implementation of the new benchmarks, particularly the update strategy. One of the issues under consideration is whether SDES should be a categorical sizing variable to make it appear distinct from LDES, thereby minimising the risk of any confusion between the two. Other details being investigated include the size group boundaries and appropriate thresholds around these boundaries for updating SDES.

SDES was introduced on the December 08 Common Frame (from which individual business survey frames are drawn) alongside the current DSBs. The current DSBs will be removed from common frames starting with the September 09 Common Frame. The ongoing update strategy for SDES is expected to commence in December 2009. LDES is also expected to be introduced into the common frames starting with the December 09 Common Frame.

For more information, contact Elsa Lapiz on (03) 9615 7364 or elsa.lapiz@abs.gov.au