LABOUR FORCE SURVEY POPULATION BENCHMARKS


INTRODUCTION

Estimates from the Labour Force Survey (LFS) are calculated to add to the independent estimates of the civilian population aged 15 years and over, referred to as population benchmarks. The use of population benchmarks ensures that estimates from the sampled survey align with an independent measure of the population, at a specific level of disaggregation, thereby reducing the sampling error on the estimates.

The June 2009 and June 2010 LFS population benchmark projections were influenced by large revisions made to Net Overseas Migration estimates for the 2006-07 and 2007-08 reference years released in Australian Demographic Statistics (cat. no. 3101.0) in March 2009 and March 2010 respectively. These revisions were subsequently included in the LFS population benchmarks in the July 2010 issue of Labour Force, Australia (cat. no. 6202.0).

LFS population benchmarks are currently based on an assumption that the last year's net overseas migration (for the required quarter) movements are representative of the current year's movement. From the December 2010 quarter, the LFS population benchmarks will be derived with assumptions which have more regard to a range of available supplementary data sources and relevant information so as to better forecast population changes in the short-term.

This article describes how LFS population benchmarks are calculated; the challenges in using current assumptions to calculate LFS population benchmarks in a rapidly changing environment; and the changes to these assumptions the ABS will be undertaking to reduce the impact on LFS estimates.


BACKGROUND

The population benchmarks used in the LFS are a projection of the most recently released estimates of the Estimated Resident Population (ERP). The ERP is projected forward, one quarter past that needed for the current population benchmarks, with the projection based on the historical pattern of each population component - births, deaths, interstate migration and net overseas migration. By projecting one quarter past that needed for the current population benchmarks, demographic changes are smoothed in, thereby making them less noticeable in the population benchmarks.

Two sets of population benchmarks are used in the calculation of LFS estimates. These are population counts cross classified by:

• state, capital city/balance of state and age (standard population benchmarks); and
• region and sex (LFS dissemination region benchmarks).

CALCULATING LFS POPULATION BENCHMARKS

Currently, the major driver of quarterly movements in the ERP estimates is net overseas migration, which accounts for over half of the population growth at the national level.

Commencing from March 2010, the ERP series is revised twice-yearly in the March and September quarter issues of Australian Demographic Statistics (cat. no. 3101.0). This biannual revision cycle incorporates more up to date information available, in particular, for net overseas migration. The revised ERP estimates are then used to update the quarterly population projections used in creating the LFS population benchmarks.

Net overseas migration is a volatile phenomenon, with a wide range of demographic, social, economic and political determinants and consequences. In recent years many factors have presented challenges in accurately deriving estimates of net overseas migration, including:

• changing Australian immigration policies;
• increasing volumes of international movements across Australia's borders, particularly long-term temporary entrants to Australia;
• changes to the composition of international visitors and their duration of stay behaviour; and
• international travel patterns of Australian residents (including duration of absence and frequency of travel).

While ERP series are now revised on a six monthly basis, the LFS population benchmarks have historically only been revised once every 5 years. Note that the LFS rebases its population benchmarks three years after the Census of Population and Housing, and backcasts a long time series, to ensure that the introduction of revised population benchmarks reduces the potential risk of a break in series.

Over time, due to differing revision cycles between net overseas migration and LFS population benchmarks, it is possible that the time series of ERP and LFS population benchmarks may not align in terms of level and change.

To ensure that LFS estimates are based on the best estimate of ERP at the time they are published, the ABS will be adjusting the assumptions used as inputs into creating the LFS population benchmarks.


CURRENT ASSUMPTIONS USED TO CALCULATE LFS POPULATION BENCHMARKS

The current method utilises the most recently released quarterly population estimates (ERP), and projects the movement forward one quarter past the period for which they are required. The assumption used for this short-term projection is that the components of population growth (births, deaths, interstate migration and net overseas migration) for the future will be consistent with those of the most recently completed 12 month period. Demographic changes are smoothed in, by projecting one quarter past that needed for the current population benchmarks, thereby reducing the visible impact on the population benchmarks.


REVISED ASSUMPTIONS USED TO CALCULATE LFS POPULATION BENCHMARKS

The ABS will revise the assumptions used to calculate the net overseas migration component when calculating LFS population benchmarks. However, the revised method will leave the assumptions for the components of births, deaths and interstate migration unchanged.

For net overseas migration arrivals and departures, recent trends in the relationship between overseas arrivals and departures and net overseas migration are analysed. A ratio of overseas arrivals and departures to net overseas migration will be formulated to take account of the most recent leading indicator data available to the ABS.

Recent changes in the ratio of overseas arrivals and departures to net overseas migration will be used to forecast the current quarter of net overseas migration (required by LFS), having regard to the appropriate quarter to quarter movement from the previous year.

The method takes account of both the latest available data, and the seasonal shift observed one year previously so that, for example, the March to June movement one year ago will be taken into account to forecast the current March to June movement.


FURTHER INFORMATION

For any queries regarding the implementation of any of these changes to the LFS, contact Labour Force Estimates on Canberra 02 6252 6525 or via email at labourforce@abs.gov.au.