6202.0 - Labour Force, Australia, Jan 2016 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 18/02/2016   
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The Labour Force Survey sample can be thought of as comprising eight sub-samples (or rotation groups), with each sub-sample remaining in the survey for eight months, and one rotation group "rotating out" each month and being replaced by a new group "rotating in". This sample rotation is important in ensuring that seven-eighths of the sample are common from one month to the next, to ensure that changes in the estimates reflect real changes in the labour market, rather than the sample. In addition, the replacement sample is generally selected from the same geographic areas as the outgoing one, as part of a representative sampling approach.

To understand movements in the original estimates, it is important to consider the contributions from the three components of the sample:

  • the matched common sample (survey respondents who responded in both December and January),
  • the unmatched common sample (respondents in January but who did not respond in December, or vice versa), and
  • the incoming rotation group (who replaced respondents who rotated out in December).

This issue of Labour Force, Australia (cat. no. 6202.0) includes an additional spreadsheet table titled "Insights from the original data", which complements the analysis provided in this section. This spreadsheet table contains information regarding the contribution of each component of the sample to the original level estimates for the current and previous month, and by extension their contribution to movements in original estimates between months. Information shown in the spreadsheet table is the same as provided for employment estimates in the December 2015 issue of Labour Force, Australia (cat. no. 6202.0), and is now presented in a table format and for all labour force statuses (i.e. employed, unemployed and not in the labour force). The data in the spreadsheet table can be replicated by comparing the previous month weighted estimate to the current month weighted estimate, both of which are available in data cube GM1. This spreadsheet table will continue to be provided in the same format with each subsequent issue. For further information regarding the specific calculations contained in the table, refer to the December 2015 issue of Labour Force, Australia (cat. no. 6202.0).

The matched common sample made the largest contribution towards the movement in original terms from December 2015 to January 2016 for both employment and not in the labour force estimates, contributing over 70% of the movement in both cases. The contribution from the three sample components was more even for the unemployment estimates, with the matched common sample contributing over 40%, while the unmatched common sample and the change in rotation groups each contributed just under 30%.

In considering the three components of the sample, it is important to remember that the matched common sample describes the change observed for the same respondents between December and January, while the other two components reflect differences between the aggregate labour force status of different groups of people.

While the rotation groups are designed to be representative of the population, the outgoing and incoming rotation groups will almost always have somewhat different characteristics, as a result of the groups representing a sample of different households and people. The design of the survey, including the weighting and estimation processes, ensures that these differences are generally relatively minor and seeks to ensure that differences in characteristics of rotation groups do not affect the representativeness of the survey and its estimates.

In original terms the rotation group which was new to the sample in January 2016 (the incoming rotation group) displayed less tendency towards employment but a stronger tendency towards participation than the group it replaced (the outgoing rotation group in December), with a higher participation rate (63.5% for the incoming group, compared to 62.9% for the outgoing group) and lower employment to population ratio (58.8% for the incoming group, compared to 59.7% for the outgoing group). A decreased employment to population ratio was observed across all survey rotation groups, with an average decrease of 1.6 percentage points seen for the seven common rotation groups. The incoming rotation group in January 2016 further displayed a stronger tendency towards unemployment than the group it replaced, with the unemployment rate for the incoming group 7.3%, compared to a rate of 5.1% for the outgoing group and the average of all rotation groups of 6.5%. An increased unemployment rate was observed across all survey rotation groups, with an average increase of 0.8 percentage points seen for the seven common rotation groups.

In looking ahead to the February 2016 estimates, the outgoing rotation group in January 2016, which will be replaced by a new incoming rotation group in February 2016, had a similar employment to population ratio (60.1% in January) to other rotation groups. In original terms if the incoming group in February 2016 has an employment to population ratio that is equally similar to the average (60.5% for all rotation groups in January 2016), this rotation group change is unlikely to contribute significantly to employment growth. This will be summarised in the February 2016 issue. The outgoing rotation group in January 2016 also had a relatively high unemployment rate (7.2% in January 2016) compared to the other rotation groups (6.5% for all rotation groups in January 2016). If the incoming group in February 2016 has an unemployment rate that is more similar to the average, or is relatively lower than the average, there may be some degree of contribution to the unemployment rate from this rotation group change.

As the gross flows and rotation group data are presented in original terms they are not directly comparable to the seasonally adjusted and trend data discussed elsewhere in the commentary.