6345.0 - Labour Price Index, Australia, Jun 2005
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 17/08/2005
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APPENDIX 2 RE-REFERENCING THE WAGE PRICE INDEX

REFERENCE BASE

The reference base of an index series is that period for which the value of the index is set to 100.0. For the wage price indexes, the September quarter 1997 was used as the original reference base, as it was the first quarter for which data was available. With the introduction of the non-wage and labour price indexes, all indexes are now presented on a reference base of 2003-04.

CONVERTING A SERIES TO THE NEW REFERENCE BASE

The conversion of series from the old base to the new base also involves a rescaling of the index numbers. The conversion factor that should be applied to the index numbers is calculated by obtaining the ratio of the index numbers on the old and new bases for the new reference period.

The conversion factor is calculated using the unrounded index number for the 2003-04 financial year. The calculation of financial year indexes is outlined in paragraph 33 of the Explanatory Notes.

For example, for the total hourly rates of pay excluding bonuses index for Australia, an arithmetic conversion factor is obtained as follows:

Index number for year 2003-04 (on base September quarter 1997 = 100.0) is 123.075
Index number for year 2003-04 (on base 2003-04 = 100.0) is 100.0
Conversion factor 100/123.075 = 0.8125

The factor 0.8125 may be multiplied by any total hourly rates of pay excluding bonuses index number for Australia on the old reference base to give the corresponding number on the new reference base. The procedure shown in the above example may be followed in respect of any specific index series for which index numbers have been published on the old reference base.

ROUNDING

Index numbers and percentage changes are always published to one decimal place, with the percentage changes being calculated from the rounded index numbers. Index numbers for periods longer than a single quarter (e.g. for financial years) are calculated as the simple arithmetic average of the relevant rounded quarterly index numbers. The conversion factor described above is applied to the rounded index numbers.

A consequence of re-referencing price indexes can be that period to period percentage changes calculated using re-referenced index number series may differ slightly from those calculated using the original series. These differences do not constitute a revision of the index but simply reflect the effect of rounding.

CONVERTING THE RE-REFERENCED SERIES BACK TO THE PREVIOUS BASE

The conversion of series from the new base to the old base involves a rescaling of the index numbers. The rescaling factor is obtained by taking the inverse of the previously described scaling factor.

For example, for the total hourly rates of pay excluding bonuses index for Australia, the rescaling factor is obtained as follows:

Index number for year 2003-04 (on base September quarter 1997 = 100.0) is 123.075
Index number for year 2003-04 (on base 2003-04 = 100.0) is 100.0
Conversion factor 123.075/100 = 1.2308

The factor 1.2308 may be multiplied by any total hourly rates of pay excluding bonuses index number for Australia on the new reference base to give the corresponding number on the old reference base.

Conversion factors for most of the published total hourly rates of pay excluding bonuses indexes are provided in table A2. Additional factors can be obtained using the formulas above or by contacting Tim Landrigan on Perth (08) 9360 5151.

CONVERSION FACTORS

 A2 Factors used to convert index numbers, From old reference base (September quarter 1997 = 100.0) to new (2003-04 = 100.0) Private Public All sectors Australia 0.8175 0.7976 0.8125 Sector by state/territory New South Wales 0.8130 0.7765 0.8047 Victoria 0.8167 0.8092 0.8152 Queensland 0.8263 0.8010 0.8193 South Australia 0.8168 0.7992 0.8119 Western Australia 0.8155 0.8187 0.8165 Tasmania 0.8365 0.8225 0.8319 Northern Territory 0.8412 0.8132 0.8299 Australian Capital Territory 0.8165 0.8168 0.8172 Sector by industry(a) Mining 0.8273 . . 0.8268 Manufacturing 0.8078 . . 0.8079 Electricity, gas and water supply 0.7949 . . 0.7803 Construction 0.7979 . . 0.7982 Wholesale trade 0.8304 . . 0.8304 Retail trade 0.8457 . . 0.8455 Accommodation, cafes and restaurants 0.8386 . . 0.8391 Transport and storage 0.8372 . . 0.8316 Communication services 0.8203 . . 0.8229 Finance and insurance 0.8003 . . 0.8013 Property and business services 0.7981 . . 0.7981 Government administration and defence . . 0.8055 0.8055 Education 0.8073 0.7908 0.7960 Health and community services 0.8239 0.7837 0.8056 Cultural and recreational services 0.8290 0.8175 0.8256 Personal and other services 0.8389 0.7900 0.8158 Sector by occupation(b) Managers and administrators 0.8100 0.7998 0.8076 Professionals 0.7998 0.7896 0.7959 Associate professionals 0.8237 0.7971 0.8160 Tradespersons 0.8187 0.7970 0.8157 Advanced clerical and service workers 0.8266 0.7997 0.8229 Intermediate clerical, sales and related workers 0.8256 0.8053 0.8205 Intermediate producation and transport workers 0.8261 0.8066 0.8241 Elementary clerical, sales and service workers 0.8395 0.8035 0.8321 Labourers and related workers 0.8280 0.7981 0.8239 . . not applicable (a) Classified according to Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 (cat. no. 1292.0). (b) Classified according to the Australian Standard Classification of Occupations (ASCO), Second Edition (cat. no. 1220.0).