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1991 Feature Article - Measuring Employment and Unemployment
Other supplementary topics scheduled for this year include:
The results of each of these supplementary surveys are published by ABS within a few months of the survey being conducted.
THE AUSTRALIAN LABOUR FORCE FRAMEWORK
The dynamic structure and characteristics of the labour market requires a labour force framework which enables policy analysts and others to respond to evolving socio-economic conditions and policy concerns. The array of data available from the monthly Labour Force Survey and its supplementary surveys supports the conceptual framework set out in Diagram 1. Such a framework enables issues such as underemployment and the transition from education to work to be analysed in depth.
DIAGRAM 1. THE AUSTRALIAN LABOUR FORCE FRAMEWORK
The Australian Bureau of Statistics closely follows the international standards set out by the International Labour Organisation (ILO) for measuring employment and unemployment. The ILO convenes the International Conference of Labour Statisticians (ICLS) periodically to discuss and reach conclusions upon concepts and definitions and to ensure international comparability as far as possible. Australia is an active participant in ICLS meetings. The international standards relating to employment and unemployment were reviewed most recently by the 13th ICLS in 1982. To a large extent the current definitions are as adopted by the 8th ICLS (1954).
Information on the labour force concepts and definitions used by the ABS, including a glossary of terms, is provided each month in "The Labour Force, Australia (cat. no. 6203.0)". Some of the key definitions are included below.
Labour Force Status:
This the measure which classifies the civilian population aged 15 and over according to whether they are employed, unemployed or not in the labour force.
Employed persons are persons aged 15 and over who, during the reference week:
(a) worked for one hour or more for pay, profit, commission or payment in kind in a job or business or on a farm (comprising employees; employers and self-employed persons); or
(b) worked for one hour or more without pay in a family business or on a farm (ie unpaid family helpers); or
(c) were employees who had a job but were not at work and were: on paid leave; on leave without pay for less than four weeks up to the end of the reference week; stood down without pay because of bad weather or plant breakdown at their place of employment for less than four weeks up to the end of the reference week; on strike or locked out; on workers’ compensation and expected to be returning to their job; or receiving wages or salary while undertaking full-time study; or
(d) were employers, self-employed persons or unpaid family helpers who had a job, business or farm, but were not at work.
Full Time and Part Time Workers:
Full time workers are employed persons who usually worked 35 hours or more a week (in all jobs) and others who, although usually working less than 35 hours a week, worked 35 hours or more during the reference week.
Part time workers are employed persons who usually worked less than 35 hours a week and who did so during the reference week.
Unemployed persons are persons aged 15 and over who were not employed during the reference week, and:
(a) had actively looked for full-time or part-time work at any time in the four weeks up to the end of the reference week and
b) were waiting to be called back to a full-time or part-time job from which they had been stood down without pay for less than four weeks up to the end of the reference week (including the whole of the reference week) for reasons other than bad weather or plant breakdown.
Not in the Labour Force:
Persons are defined to be not in the labour force if they were not employed or unemployed, as defined.
The labour force, expressed as a proportion of the civilian population aged 15 and over, for either the whole population or a defined group.
SOME CURRENT ISSUES
As a result of the steep growth in unemployment in recent months, there has been a good deal of public comment on the meaning and measurement of employment, unemployment and underemployment. This section provides answers to six questions which are often raised in this context.
1. Are CES Registrations a Reliable Measure of Unemployment?
The Commonwealth Employment Services (CES) collects data on CES registrants who claim to be unemployed and who are awaiting placement (UAP) at local CES office level. Such data are frequently quoted as an alternative measure of unemployment.
As an indicator of the number of persons actively seeking employment, the CES register has a number of deficiencies. The UAP data is based on records of registrations held in CES Offices. While the CES removes individuals from the register when it becomes aware that they are no longer seeking work, registrants are not required to inform the CES when this is the case. Hence persons who register with the CES and who then subsequently find a job or leave the labour force but do not advise the CES, will continue to be counted for some time.
There are other important deficiencies. At times when the demand for CES services is increasing the CES is less able to keep the administrative records up to date. Not all people seeking employment register with the CES but the proportion who do so is itself a function of labour market conditions. Finally, the numbers on the CES register of job seekers vary over time not just as a result of changes in labour market conditions but also because of variations in administrative procedures and amendments to legislation.
For these reasons, most analysts accept that CES data are neither an accurate measure of the level of unemployment nor a reliable indicator of changes in unemployment. In recognition of these limitations, the Government decided in 1978 to recognise the Labour Force Survey estimates as the “official” measure of unemployment in Australia.
2. Can Unemployment be Measured by Numbers on Benefit?
The Department of Social Security (DSS) compiles statistics of persons who receive Unemployment Benefits (UB). These statistics are useful in their own right but they do not provide an accurate measure of the number of unemployed persons. Many Unemployed persons do not receive UB (e.g., because their spouse is employed) and many persons receiving UB are not unemployed (e.g., because their earnings from part-time employment are not sufficient to exclude them from UB).
3. Are Persons Who Undertake Unpaid Work Counted as Employed?
In measuring labour force status, the Labour Force Survey counts as employed those who are economically active, using the concept of economic activity as defined by the System of National Accounts (SNA). For this reason, employees, employers and self-employed persons are only regarded as “employed” if, during the reference week, they work for one hour or more for pay, profit, commission or payment in kind in a job or business or on a farm. For the same reason as the SNA does not include activities such as unpaid domestic work and voluntary community services within the scope of economic production (gross domestic product), the Labour Force Survey does not count persons engaged in these activities as “employed”.
The definition of employed persons does, however, include “unpaid family helpers” - i.e. those who, during the reference week, worked for one hour or more without pay in a family business or on a farm.
The reason for this is that remuneration arrangements generally differ in employment situations where a family business operates. While not receiving payment in cash, such persons will generally receive some benefit in kind.
It is for this reason that unpaid family helpers are included in the ILO definition of “employed persons”: They are persons who performed some work for family gain, in cash or in kind.
The inclusion or exclusion of unpaid family workers does not significantly affect the total number of employed persons in Australia but is of much greater importance in some other countries. For example, in 1988 such workers represented over 9 per cent of civilian employment in Japan, compared with less than 1 per cent in Australia.
In March 1991, only 0.8 per cent of employed persons in Australia were unpaid family helpers. The reported average hours worked of these people was 18.3 hours, with 63% of them reporting working less than 15 hours.
Any persons who are doing unpaid work other than as family helpers are not regarded as employed. Thus volunteer workers and persons on work experience placements from an educational institution, would not on that account be regarded as “employed”.
4. Are You Employed if you do just One Hour's Work?
The definition of employment (see above) is based on the criterion of having worked for one hour or more for pay, profit or commission or without pay in a family business. The “one-hour” criterion is consistent with lLO standards and serves to ensure that all civilians whose employment contributes to aggregate production as defined in the SNA are counted as “employed”.
However to ensure that the size, composition and aspirations of the part time component of the labour market are understood, each month the ABS compiles and publishes statistics on the number of hours worked by part-time workers; whether they would prefer to work more hours; whether they have taken active steps in the previous four weeks to look for full time work; and the average and total hours worked by part-time and full-time workers in various categories.
In March 1991, 14% of those who worked part time hours actually worked between one and five hours per week during the reference week (with seven in ten of them preferring not to work any more hours). Table 1 below shows the hours worked, gender and preference for working more hours of part time workers.
TABLE 1. PART-TIME WORKERS: WHETHER PREFERRED TO WORK MORE HOURS, BY HOURS WORKED, MARCH 1991 ('000)
In April 1986, the ABS implemented a change in definition of employed persons to align its survey more closely with the international standards. Prior to that time, unpaid family helpers working less than 15 hours per week had not been included as employed persons. The effect of the change was a small discontinuity in some series which is shown in published material. The major aggregates, on both bases, for March 1986 are as shown in Table 2. In total, the adjustments to the estimates of employed and unemployed persons were an increase of 34,800 and a decrease of 5,300, respectively.
TABLE 2. CIVILIAN LABOUR FORCE: SEASONALLY ADJUSTED SERIES,
EFFECT OF CHANGE OF DEFINITION OF EMPLOYED PERSONS, MARCH 1986
5. Is the Sample Too Small To Provide Accurate Information?
The Labour Force Survey obtains information from about 71,000 persons each month through a sample of about 31,000 private dwellings and a further sample of non-private dwellings (including hotels, motels and caravan parks). The survey is designed and the sample is selected in such a way that each dwelling in a State or Territory has the same chance of selection and the probability of selection is known.
One measure of the statistical accuracy of the estimates is the standard error. Each month the standard errors of labour force estimates are published with the survey estimates (see, for example, the Technical Note in The Labour Force (cat. no. 6203.0)).
For April 1991 the estimated standard error of the total numbers of employed persons was 17,800 (i.e. 0.2% of the estimate). This means that there is a 95% probability that the true number of employed persons is within a range 7,721,000 ± 35,600. For the estimate of unemployed persons, the standard error was 7,800 (0.9%), which means there is a 95% probability that the number of unemployed persons is within the range 844,000 ± 15,600.
The Labour Force Survey sample is by far the largest household survey conducted by the ABS. While each month the ABS cautions users to take care with the interpretation of month-to-month movements the ABS is confident that, taking one month with another, this survey reliably reflects labour market levels, movements and trends.
6. Can A Full-Time Student Be Employed Or Unemployed?
The definitions of employment and unemployment are applied in exactly the same way to students as they are to all other persons aged 15 and over in the population. They recognise that many students obtain or seek employment while others do not become economically active while pursuing their studies.
A student enrolled full time at an educational institution may also be employed part time or even full time (if he or she worked 35 hours or more in the survey week or usually did so). Alternatively a full-time student may be actively looking for and available to commence work, in which case he or she will be counted as “unemployed”.
In March 1991, over 52 per cent of students who were attending a tertiary educational institution full-time were classified as in the labour-force - i.e. either “employed” or “unemployed”.
Because of the special interest in the labour force status and participation in education of young people, ABS monthly publications contain detailed tabulations of labour force status and educational attendance of persons aged 15 to 24 years. Table 3 presents data for 15-19 year olds.
TABLE 3. LABOUR FORCE STATUS OF THE CIVILIAN POPULATION AGED 15 TO 19: MARCH 1991
For more information about the Labour Force Survey or the statistics produced from it, please contact The Director, Labour Force Surveys on (02) 6252 5489. Copies of the publications from the monthly Labour Force Survey or any of the supplementary surveys can be purchased at any ABS Bookshop. A range of unpublished data is available on request, according to the individual needs of clients.
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