6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Aug 2006  
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Contents >> Methods >> Business Collections >> Chapter 28. Survey of Major Labour Costs

Labour Statistics: Concepts, Sources and Methods was originally released in 2001 in both electronic and paper versions (cat. no. 6102.0). The paper publication will not be rereleased. However, the web version (cat. no. 6102.0.55.001) is being updated on an ongoing basis. This chapter was updated on 15 December, 2005.


28.1 The Survey of Major Labour Costs has been conducted on an irregular basis since 1985-86 and was most recently conducted in respect of 2002-03. The survey produces statistics on the main costs incurred by businesses as a consequence of employing labour. Data from the survey are used by a wide range of users for labour market analysis. In particular, they are used by Governments for employment, prices and income policy development, for monitoring changes in the cost of labour, and for wage determination purposes.


28.2 Estimates are published in Labour Costs, Australia (cat. no. 6348.0.55.001). More detailed estimates are available through data requests.

28.3 The population of interest is civilian employee jobs based in Australia, for which payments in relation to certain labour costs were made during the survey reference period (i.e the financial year ending 30 June). A number of series are compiled from the survey based on various components of employer labour costs:

    • employee earnings;
    • superannuation;
    • payroll tax;
    • workers' compensation; and
    • fringe benefits tax.

28.4 Costs are measured on a cash accounting basis, net of any reimbursements, subsidies or rebates.

28.5 Data can be classified by State or Territory, sector (public/private), level of government, public institutional sector, industry and employer size. The following units of measure are available: total costs; costs per employee; and costs as a proportion of total labour costs.

28.6 Data from the survey are available on an original basis only.

28.7 Data collected in the survey are compiled according to concepts and definitions outlined in
Chapter 12. All labour costs are collected on a cash basis i.e. they reflect actual payments made in the survey reference period. As such they do not reflect costs incurred in the reference period for which payments are made in a later period, but they include payments made in the survey reference period for costs incurred in a prior period.

28.8 Earnings estimates from the survey are broader than, and thus not directly comparable with, earnings estimates from the Survey of Average Weekly Earnings (AWE), and the Survey of Employee Earnings and Hours (EEH). For more details on the earnings definition in MLC, see Chapter 12.

28.9 A number of other labour costs are not covered by this survey. These include training costs, costs associated with employee welfare services, and recruitment costs. With the exception of training costs, these items are not considered to make a significant contribution to total labour costs. Training costs were collected in the Training Expenditure and Practices Survey, conducted for the financial year 2001-02, and in the earlier Training Expenditure Survey conducted for September quarters of 1989, 1990, 1993 and 1996. Costs covered in these surveys are for structured training provided by employers. For information see
Employer Training Expenditure and Practices, Australia (cat. no. 6362.0).


28.10 The scope of the survey is restricted to employing organisations in Australia. The standard scope exclusions for ABS labour-related business surveys (outlined in Chapter 25)apply to this survey.


28.11 Detailed information is obtained about labour costs from selected employers using a mail-out/mail-back collection methodology.

28.12 The survey reference period is the financial year ended 30 June.

28.14 Respondents who do not mail back their completed questionnaire within a reasonable period of time after the survey reference date are followed up by mail and then telephoned if necessary. The response rate for the 2002-03 survey was 93%.


28.15 The sampling unit for the survey comprises all the activities of an employer in a particular state or territory based on the Australian Business Number (ABN) unit or Type of Activity Unit (TAU). The collection and reporting units used in the survey usually correspond to the sampling unit. However, where the ABN/TAU unit is unable to provide information required for the survey, it may be split into a number of 'reporting units'. For further information on statistical units used in ABS business surveys refer to Chapter 25.

28.16 A probability sample of employing businesses (ABN/TAU units) is drawn from the ABS Business Register using the process outlined in
Chapter 25. Variables used to stratify the survey frame are:
    • state or territory;
    • sector - the public and private sectors are stratified separately;
    • industry - industry stratification is based on ANZSIC division; and
    • employment size - the ranges used vary between states and territories, sectors and industries.

28.17 A Workers' Compensation Insurer type identifier was unavailable for inclusion in the initial stratification, but the sample was effectively post stratified for this classification (re-weighting for workers' compensation data items only) during output processing.

28.18 Strata on the survey frame that are completely enumerated include those containing selection units with benchmark employment greater than a set cut-off (this cut-off will vary for different states/territories) and strata with a very small number of selection units in the population.

28.19 In addition to constraints outlined in
Chapter 25, sample selection is constrained by ensuring there is minimum overlap with other labour-related business surveys.


28.20 For the 2002-03 survey, approximately 7,500 employer units were selected to ensure adequate industry and state/territory representation. Of these, approximately 5,600 units were in the private sector and 1,900 were in the public sector.


28.21 The ABS reselects the sample for the Survey of Major Labour Costs each time it is conducted. At the same time the overall design of the sample is examined to ensure that it remains efficient and cost-effective.


28.22 Both ratio estimation and number-raised estimation (for some strata) are used.

28.22 Survey outliers are handled by using the 'surprise outlier' technique.

28.23 Aggregate Ratio imputation is applied to all non-responding units that are not identified as being defunct. The unit is imputed by applying the aggregate ratio of each item to benchmark from respondent units of a similar type (e.g state, industry, size, not-for-profit status, workers' compensation arrangement) as relevant to each item.

28.24 Partial clerical imputation is carried out for units that can only provide part data. The missing item(s) is imputed using the relationship between that item and a relevant provided item as per responding units of similar type. Where relevant and available, employment and earnings data obtained from the SEE or AWE survey are used to assist clerical imputation.

28.25 Adjustments are made to survey estimates to account for births and deaths of businesses that have occurred up to the end of the survey reference period but which are not reflected on the survey frame.

28.26 For further information on estimation methods used in ABS Business Surveys, refer to Chapter 25.


28.27 Estimates from the survey are subject to both sampling and non-sampling error. The relative standard errors of survey estimates are published in Labour Costs, Australia (cat. no. 6348.0.55.001).

28.28 The 'jack-knife' approach is used to calculate estimates of variance for this survey. For further information on variance estimation techniques, or on sampling and non-sampling error, refer to Chapter 17.


28.29 In order to provide a high degree of consistency and comparability over time, changes to survey methods, survey concepts, data item definitions, and frequency of collection, are made as infrequently as possible. Significant changes have included:

1983-84Annual survey commenced for this reference year.
1991-92Last year for which survey was conducted on an annual basis.
1993-94Survey conducted for this reference year. Survey redesigned on an ANZSIC industry basis. Collection methodology for superannuation coverage and collection of fringe benefits/fringe benefits tax improved.
1996-97Survey repeated with increased sample size. Collection form redesigned. Introduction of Live Respondent Mean imputation for the sampled sector. Jack-knife variance estimation system introduced. Change in reporting arrangements for superannuation by Commonwealth general government organisations. Introduction of Aggregate Ratio imputation for all units.
2002-03Employer superannuation costs excluded superannuation contributions made under an employee's salary sacrifice arrangement. Earnings estimates included, for the first time, the value of salary sacrificed. Also, the derivation of earnings included the ungrossed value of fringe benefits, whereas the grossed up value of fringe benefits was used for this derivation in 1996-97. Introduction of Aggregate Ratio imputation for all units.

28.30 Although many estimates from previous collection cycles are on a consistent basis, care should be taken in using data from this survey as a time series. The survey is designed to give an accurate 'snapshot' of data rather than an ongoing series of observations over time. Hence the survey methodology and sample design are not specifically set up to provide time series data e.g. the sample is not set up to necessarily have the same businesses in it for more than one year. Also changes in definitions and treatments for data items can occur, as for the 2002-03 survey. The Explanatory Notes of the publication provides detail on such changes.


28.31 For further details contact the Labour Market Statistics Section, on Canberra (02) 6252 7206.

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