6150.0 - Australian Labour Account: Concepts, Sources and Methods, July 2017  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 18/07/2017  First Issue
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LABOUR VOLUME QUADRANT


The Labour Volume quadrant describes the relationship between the hours of labour that are supplied by individuals, and the hours of labour that are used or demanded by businesses. These data have a direct link to National Accounts and productivity statistics.

Figure 8: Labour Volume, Identity Relationship Diagram

Graphic: Labour Volume, Identity Relationship Diagram

LABOUR VOLUME CONCEPTS

Labour volume is expressed as hours worked, and has been defined in ILO conventions in terms of the time when (paid) employees were at the disposal of an employer; that is, when available to receive work orders from an employer or person in authority, with hours worked covering all jobs. During such periods of availability, workers are expected to be ready to work if work is possible, requested or necessary. This general concept is made meaningful for the self-employed if it is taken to mean time when the self-employed are available to do their work, such as being at the disposal of clients, ready to receive purchase orders or available to make sales, etc. Further information is available in the ILO Resolution concerning the measurement of working time (Eighteenth International Conference of Labour Statisticians, 2008).

Measuring the levels and trends of hours worked for different groups of employed persons is important in order to monitor working and living conditions, as well as analysing economic cycles. Information on hours of work enables various analytical insights such as: classification of employed persons into full-time and part-time status; the identification of underemployed persons; and the creation of aggregate monthly hours worked estimates. The general notion of hours of work encompasses a number of related concepts: hours usually worked; hours actually worked; hours paid for; and normal hours of work.

Figure 9: Usual hours worked and actual hours worked

Graphic: Usual hours worked and actual hours worked

Hours usually worked

Hours usually worked is the typical number of hours worked in a job for a short reference period (such as one week) that is representative of a longer reference period (e.g. a month, quarter, season or year). Usual hours may differ from actual hours worked at a given time if employed persons are away from work due to illness, vacation, strike, a change of job or other reasons, or are at work for more hours than normal due to overtime, extra shifts and so on (ILO, Surveys of Economically Active Population, Ch.5).

Hours actually worked

International resolutions relating to actual hours worked adopted by the Eighteenth International Conference of Labour Statisticians (ICLS) in 2008 refer to wage and salaried employees. There are no international recommendations relating to actual hours worked for all categories of the employed population. However the ILO, in its manual Surveys of Economically Active Population, Employment, Unemployment and Underemployment, suggests that actual hours worked in a given job should be defined to cover all types of employment in labour force surveys. Hours actually worked is the time spent in a job for the performance of activities that contribute to the production of goods and services during a specified short or long reference period.

According to the ILO resolution, actual hours of work measured within the 2008 SNA production boundary includes all time spent directly on, and in relation to, productive activities; down time; and resting time such as:

    • time spent in addition to hours worked during normal periods of work (including overtime);
    • time spent at the place of work on activities such as the preparation of the workplace, repairs and maintenance, preparation and cleaning of tools, and the preparation of receipts, time sheets and reports;
    • time spent at the place of work waiting or standing by due to machinery or process breakdown, accident, lack of supplies or power or internet access, etc.; and
    • time corresponding to short rest periods (resting time) including tea and coffee breaks or prayer breaks.

Excluded are:
  • hours paid for but not worked such as paid annual leave, public holidays or paid sick leave;
  • meal breaks; and
  • in respect of paid employment, time spent on travel to and from work when no productive activity for the job is performed (even when paid by the employer).

Monthly hours worked in all jobs

Monthly hours worked in all jobs is a measure of the total number of hours worked by employed persons in a calendar month. Monthly hours worked in all jobs are modelled estimates.

Seasonally adjusted monthly hours worked in all jobs estimates are produced by combining two series.

The first series is the seasonally adjusted actual hours worked in the reference week, adjusted for holiday timing. These estimates provide an indication of movements across months.

The second series is an annual benchmark series containing original estimates of actual hours worked in each financial year. The annual actual hours worked original estimates are calculated by determining the actual hours worked for each week of the financial year. As actual hours worked are only collected in respect of the reference week of the Labour Force Survey, actual hours worked for weeks not covered by the Labour Force Survey are imputed based on the actual hours worked for the adjacent reference weeks. The imputation accounts for, amongst other things, the effect of public holidays on hours worked; that is, it accounts for holidays that occur in the reference week of the Labour Force Survey as well as holidays that occur in weeks other than the reference week.

These two series are then combined to produce the seasonally adjusted monthly hours worked in all jobs series. A trend series is also subsequently produced. This approach ensures that:

    • The level of the monthly hours worked in all jobs (seasonally adjusted) series is consistent with the level of the annual benchmarks; and
    • The movements in the series are consistent with the movements in the seasonally adjusted actual hours worked in the reference week series.

Estimates of monthly hours worked in all jobs are available from the Labour Force Survey. For more information on monthly hours worked in all jobs, refer to the Information Paper: Expansion of Hours Worked Estimates from the Labour Force Survey (ABS. cat. no. 6290.0.55.001).

Figure 10: Actual and aggregate hours worked

Graphic: Actual and aggregate hours worked diagram

Hours paid for

Hours paid for applies to a paid-employment job and to a self-employment job paid on the basis of time units. For a paid-employment job, hours paid for is the time for which payment has been received from the employer (at normal rates, in cash or in kind) during a specified short or long reference period, regardless of whether the hours were actually worked or not.

Hours paid for:
    • includes time paid but not worked such as paid annual leave, paid public holidays and certain absences such as paid sick leave; and
    • excludes time worked but not paid by the employer, such as unpaid overtime, and absences that are not paid by the employer, such as unpaid educational leave or maternity leave that is paid through transfers by government from social security systems.

As such, hours paid for will differ from the number of hours actually worked if an employee works more or less hours than their paid hours. Hours paid for will also differ from usual hours in some cases, for example if an employee performs long hours in some weeks to have rostered days or weeks off.

Measures of hours paid for are collected from business payroll records in the ABS Survey of Employee Earnings and Hours (EEH). EEH also collects information on the following components:
    • ordinary time hours paid for - defined as the award, standard or agreed hours of work paid for at the ordinary rate. Ordinary hours paid for include: stand-by or reporting time hours, which are part of standard hours of work, and hours of paid annual leave, paid sick leave and long service leave taken during the reference period (ASNA, 23.167). Ordinary time hours paid for at penalty rates (e.g. for shift work) are not converted to their ordinary time equivalent; and
    • overtime hours paid for - defined as hours paid for in excess of award, standard or agreed hours of work, at both standard and penalty rates.

Applying the concept in practice, the Australian Labour Account makes no estimate for hours paid and not worked, or hours worked but not paid for, as this is currently a known data gap.

Figure 11: Actual hours worked and hours paid for

Graphic: Actual hours worked and hours paid for

Normal hours of work

Normal hours of work is defined in a 2008 ICLS resolution as ‘the hours fixed by or in pursuance of laws or regulations, collective agreements or arbitral awards to be performed in specified paid-employment jobs over a specified reference period, such as per day, week, month or year (within the 2008 SNA production boundary). Normal hours of work may also apply to a job in self-employment when the hours are in accordance with the hours fixed for all jobs in a specific industry or occupation (such as for drivers to ensure public safety)’ (ICLS 2008, 13(1)).

Measures of normal hours of work are not produced by the ABS. However, the concept is used to assist in allocating respondents in the full-time/part-time status classification in ABS business surveys.

LABOUR VOLUME SOURCES

Source data for quarterly and industry estimates of Labour Volume

All statistics used to populate the Labour Volume quadrant are derived based on calculations involving the average weekly hours paid for rate sourced from underlying data from the publication Employee Earnings and Hours, Australia (ABS cat. no. 6306.0). The Survey of Employee Earnings and Hours (EEH) is conducted every two years.

No adjustments have been made to the average weekly hours paid for rate, as the necessary adjustments to correct for survey data scope limitations are included in the filled jobs estimate used in the calculations to derive hours paid for estimates . See the Jobs section for an explanation of the scope adjustments made to filled jobs estimates.

The number of hours actually worked, on the household side, is sourced directly from underlying National Accounts data which are based on Labour Force, Australia (ABS cat. no. 6202.0). The National Accounts uses the seasonally adjusted monthly hours worked series to derive a quarterly hours actually worked estimate. Sourcing hours actually worked data from the National Accounts, rather than from the Labour Force Survey, means the adjustment for hours worked by defence force personnel is consistent in both Accounts, as well as creating a direct link to the labour productivity statistics published in the Australian System of National Accounts (ABS cat. no. 5204.0).

For the Australian Labour Account, the hours actually worked data are further adjusted for the number of hours worked by child workers, non-residents living in Australia employed by Australian companies, and Australian residents living in Australia employed by overseas companies.

The number of hours sought by the unemployed is sourced from the publication Labour Force, Australia, Detailed, Quarterly (ABS cat. no. 6291.0.55.003) from 2014. For earlier periods, a derived average number of hours sought per unemployed person is applied to the relevant number of unemployed people. A similar methodology is applied to derive the number of additional hours sought by underemployed persons.

Table 5 below summarises data sources used in compiling quarterly estimates in the Volume quadrant.

Table 5: Description of quarterly data sources and uses for the Labour Volume Quadrant

Source data
Use in compiling quarterly data

Employee Earnings and Hours, Australia (ABSácatáno.á6306.0)Used in compiling estimates of hours paid for.

Hours worked information (National Accounts)Used in compiling estimates of hours actually worked.

Labour Force, Australia, Detailed, Quarterly (ABSácat. no. 6291.0.55.003)Used in compiling estimates of hours sought by unemployed persons, and additional hours sought by underemployed persons.

Child Employment, Australia, 2006 (ABSácat.áno.á6211.0)Used to estimate the number of hours worked by employed children.

Migration, Australia (ABS cat. no. 3412.0) and Overseas Arrivals and Departures, Australia (ABSácat.áno.á3401.0)Used to estimate hours worked by out of scope non-residents working in Australia.

Balance of PaymentsUsed to estimate hours worked by out of scope Australian residents living in Australia employed by overseas companies/business entities.


Source data for annual estimates of Labour Volume

Source data for the annual estimates of Labour Volume are the same as those described above for quarterly estimates.

LABOUR VOLUME METHODS

Graphic: Labour Volume Quadrant Diagram

Methods for the compilation of quarterly estimates of Labour Volume

Hours actually worked

Hours actually worked are collected in the Labour Force Survey. Respondents report the hours worked in their main job and the hours worked in all their jobs in the survey reference week. The aggregate number of hours worked by all employed persons in all jobs (including secondary employment) and main jobs, classified by industry, is calculated for the reference week.

Hours actually worked during the reference week are used to derive modelled estimates of total hours worked by industry across a quarter. The results are published in Labour Force, Australia (ABS cat. no. 6202.0), and are combined with an estimate of hours worked by permanent defence personnel in the hours actually worked series published in quarterly ABS National Accounts data.

In the hours worked series published in both Labour Force, Australia (ABS cat. no. 6202.0) and quarterly ABS National Accounts data, hours worked are allocated to industry on the basis of an employed persons’ self-reported industry of main job. The Australian Labour Account, while maintaining consistency with the total number of hours worked published in quarterly ABS National Accounts data, reallocates hours worked among industries to account for instances of secondary job holding.

Permanent defence force personnel hours are allocated to Public Administration and Safety (ANZSIC Division O), as conditions of employment assume that secondary jobs are not allowed.

The method used to allocate the remaining civilian hours worked to industry in the Australian Labour Account is described below:
    1. Average actual hours worked in main jobs (in the reference week) by industry from LFS are multiplied by the number of main jobs from the Labour Force Survey, to derive the total number of hours worked in the reference week in main jobs by industry.
    2. Average actual hours worked in secondary jobs (in the reference week) by industry from LFS are derived by taking average hours worked in all jobs, less average hours worked in main jobs.
    3. Total hours worked (in the reference week) in secondary jobs by industry are derived by multiplying average actual hours worked in secondary jobs by the number of secondary jobs from the Jobs quadrant of the Australian Labour Account.
    4. Total hours worked (in the reference week) in all jobs by industry is derived as the sum of hours worked in both main and secondary jobs.
    5. A set of industry proportions are derived, based on the total hours worked (in the reference week) in all jobs by industry.
    6. Industry proportions are applied to total hours worked by civilians, and combined with hours worked by permanent defence personnel already allocated to Public Administration and Safety (ANZSIC Division O), to derive total hours actually worked during the quarter by industry.

Scope adjustments

Hours actually worked in all jobs derived from the Labour Force Survey are adjusted to align with the production and residence boundaries of the 2008 SNA by including estimates of hours worked by child workers, non-residents living in Australia employed by Australian resident enterprises, and members of the permanent defence forces, and excluding hours worked by Australian residents employed by non-resident enterprises. The estimated numbers of jobs held by persons in each category are taken from the Jobs Quadrant.

Estimates for the number of hours actually worked by non-residents living in Australia employed by Australian resident enterprises are based on visa type. For short term students, the number of hours is capped at twenty hours per week as this is a work condition of student visas during university/school semesters. For other short term arrivals (excluding students), an average hours actually worked per job is estimated at half (50%) of the hours actually worked by the general resident population. While half is a crude estimate, it is assumed that non-residents would work less than the average hours worked by residents, to account for a holidaying component of their trip to Australia. Quarterly hours actually worked by Australian residents living in Australia employed by non-resident enterprises are also based on the quarterly by industry average hours worked per job estimates.

Hours worked by child workers are derived based on data from the 2006 Survey of Child Workers. Quarterly hours actually worked by child workers are calculated by multiplying the relevant quarterly estimate of employed children by the average number of hours worked from the 2006 Survey of Child Workers.

Hours worked by permanent defence force personnel are not specifically adjusted for in the Australian Labour Account, as the underlying National Accounts estimates used in the labour account include an estimate of hours worked by permanent defence personnel. The National Accounts estimate of hours worked assumes that permanent defence personnel work the same number of hours in their jobs as average hours worked in main jobs by the general population.

Hours worked by the adjusted scope populations are allocated to industry as described in Table 6 below.

Table 6: Allocating adjustments to hours worked to industry


Scope Adjustment
Allocation to industry

Australian residents working in Australia employed by non-resident enterprisesHours worked are deducted from the Public Administration and Safety (ANZSIC Division O) industry, as most people in this category are locally engaged by foreign embassies, consulates and so on.

Students on short term visasHours allocated in the same proportions as the calculated estimates of main jobs held by short term students, i.e. based on resident full-time tertiary students aged 15-24 years.

Short term working visa holdersHours allocated in the same proportions as the calculated estimates of main and secondary jobs held by short term non students.

Child workers under 15 yearsHours allocated in the same proportions as the calculated estimates of employed children, i.e. based on 15 year old employed persons from the LFS. Child workers under 15 years are assumed to hold only main jobs.

Hours Sought but not Worked

Hours sought but not worked are estimated by aggregating hours sought by the unemployed and additional hours sought by the underemployed. Hours sought by unemployed persons are the hours unemployed persons could work if they were employed. Additional hours sought by underemployed persons are the potential hours of employed people that are not fully utilised. It includes people employed part-time who want to and are available to work more hours, as well as people employed full-time who worked part-time hours in the survey reference week for economic reasons. Both series are sourced from Labour Force, Australia, Detailed, Quarterly (ABS cat. no. 6291.0.55.003). These data are multiplied by 13 to derive a quarterly estimate from the weekly data representative of the Labour Force Survey reference week.

It should be noted that industry estimates for the unemployed population (and therefore the hours sought by those unemployed) are based on industry of last job worked (within the past two years) from the Labour Force Survey. This does not necessarily equate to the industries in which the unemployed are currently seeking work, nor do they include those who have never held a job previously. Similarly, it is assumed that any additional hours sought by the underemployed are sought in the same industry as the main job of each underemployed person. As such, care should be exercised when interpreting estimates of hours sought on an industry basis.

No adjustments have been made to align the labour force hours sought with the 2008 SNA residence and production boundary, as there is no reliable information to derive estimates of additional hours of work sought by short term working visa holders. It is also assumed that defence force personnel and child workers are fully employed.

Available Hours of Labour Supply

Available hours of labour supply are the total number of hours for which people in the labour force are prepared to make themselves available for work. It is the sum of hours actually worked in all jobs, including adjustments for scope, and hours sought but not worked.

Hours Paid For

Total hours paid for, at both an industry and total economy level, is calculated by adding quarterly estimates of ordinary and overtime hours paid. In addition, ordinary time hours paid is calculated separately for Owner Managers of Unincorporated Enterprises to other Status in Employment types.

Hours Paid For – Owner Managers of Unincorporated Enterprises

To calculate hours paid for Owner Managers of Unincorporated Enterprises, it is assumed that hours paid for in this group are equivalent to the number of hours actually worked, as they would generally have no entitlement to any form of paid leave.

As such, the total number of hours paid for Owner Managers of Unincorporated Enterprises are calculated for each industry by taking the average number of hours actually worked in the reference week by this group from the Labour Force Survey, and multiplying the weekly average by the number of Owner Managers of Unincorporated Enterprises in that industry. The result is then further multiplied by 13 weeks to derive a quarterly estimate. These figures, estimated at an industry level, are summed to produce a ‘whole of economy’ total.

Hours Paid For – Other Status in Employment Types

In calculating hours paid for other Status in Employment types, average weekly ordinary time hours paid and average weekly overtime hours paid for each industry are derived from underlying data from the EEH. To calculate both overtime and ordinary hours paid for, average weekly measures are multiplied by the number of filled jobs in each industry, less Owner Managers of Unincorporated Enterprises. The filled jobs data are taken from the Jobs quadrant, while the number of Owner Managers of Unincorporated Enterprises is taken from the Persons quadrant. As the survey data reflects a ‘typical week’, quarterly estimates of total ordinary and overtime hours paid for are derived by multiplying the average weekly data by 13 weeks. Similar to the hours paid for Owner Managers of Unincorporated Enterprises, figures estimated at an industry level are summed to produce a ‘whole of economy’ total.

Prior to 2014, the two average weekly hours series for ordinary time hours paid and paid overtime were only available for non-managerial employees (refer to Labour Payments Concepts for a definition). From the 2014 release of the publication Employee Earnings and Hours, Australia (ABS cat. no. 6306.0), these series are available for all employees, which includes managerial employees where there is a link between pay and hours worked. The all employees series are used in Australian Labour Account hours paid for estimates where available. Internal analysis conducted during the development of the Australian Labour Account showed that the all employees series did not differ noticeably from the non-managerial employees series, therefore no adjustments have been made for scope for years prior to 2014.

In addition, as the EEH is a biennial survey, average weekly hours paid data for years where EEH survey data are not available are estimated as the average of the two neighbouring years. For example, average weekly hours paid data for 2013 are calculated as the average of EEH data for 2012 and 2014.

As Division A is out of scope of the Survey of Employee Earnings and Hours, the calculation of hours paid for the Agriculture Forestry and Fishing Industry (ANZSIC Division A) applies the average hours paid for Division I (Transport, Postal and Warehousing).

Annual Labour Volume Method

As all data contained in the Labour Volume quadrant are flow data, which represent a measure of activity over a given period, data across time periods are additive. Therefore, annual data in the Labour Volume quadrant are derived as the sum of the four quarterly estimates.

It should be noted that the Labour Volume quadrant includes a derived annual Average Hours Worked per Job estimate. This is calculated using a flow as the numerator (i.e. Hours Actually Worked), divided by an annual average level of four quarterly stocks for the denominator (i.e. the annual average level of Filled Jobs). Therefore, caution must be exercised when comparing this result with other estimates measured at the same point in time. This data is intended for comparison across time and industries within the Australian Labour Account, and to provide a link between the Jobs and Labour Volume quadrants.