Weekly Payroll Jobs and Wages in Australia methodology

The STP data are reported on a cash basis (the time when the payment was made) rather than an accrual basis (the time when the payment was earned). Production of real time estimates require the conversion of STP data from a cash basis to an accrual basis. This is done through a “calendarisation” method. This method breaks down all records to a common period (daily), which allows the data to be aggregated and analysed for any longer period (e.g. weekly).

The calendarisation method includes the following steps:

• calculation of the periodicity (payment frequency) using the start and end date of the payment period,
• calculation of a daily pay rate by dividing the total payments by the payment frequency (for example, weekly pay is divided by seven), and
• an adjustment to the periodicity for a job to exclude the days before commencement (or after termination), where the start or termination date for a job occurs within the payment period.

Towards the end of the financial year, unadjusted STP data includes higher than usual week-to-week changes in total wages paid. In particular, some employers report lumped fringe benefits tax (FBT) payment amounts for eligible employees at the end of the financial year. This is most evident in the Health care and social assistance industry. In order to reduce the reporting variability introduced by these payments, the ABS has determined and applied an adjustment factor to accrue reported FBT amounts across the relevant financial year wages series. It is applied to all records which include reportable FBT amounts, not just those in the Health care and social assistance industry.

This adjustment factor has been applied for the 2020-21 financial year, but will be revised at the conclusion of each financial year using business reported data to ensure it remains current. This treatment enhances the existing calendarisation methodology and is consistent with the definition of wages and salaries used in the Australian System of National Accounts. More information about employer reporting of FBT is available from the ATO website.

This adjustment methodology is not possible for other extraordinary payments (such as bonuses) where they are included with the wages data in the period they are paid. Bonuses are not currently readily distinguishable from the wages component of the STP job level dataset (unlike reportable FBT amounts) and can be paid at any time.

In addition to cash reporting, the STP payment data that are extracted for a specific week cycle will be incomplete due to different payment and reporting frequencies. For example, a business with a fortnightly payroll will only report payments in alternate weeks in the STP dataset. As at mid-January 2021, the data indicated that 32% of employees are paid weekly; 51% are paid fortnightly; 12% are paid monthly; and 5% are paid quarterly or infrequently.

To produce reliable weekly statistics, an imputation method is applied to account for different payment and reporting habits which includes the following considerations:

Business reported data is included for all employees paid weekly due to the 17-day lag between the reference week and the release of estimates. Actual payments for most employees paid fortnightly and some employees paid monthly are also available. Analysis indicates that STP data for the most recent reference week at the time of initial publication is approximately 75-80% complete and can take several months to be fully complete (due to quarterly STP reporters).

• Imputation is not applied where no established pattern of payment exists to enable forward extrapolation. For example, a small proportion of employees who are paid on an ad hoc basis.
• If an employee has not yet had payment data reported and they have not been flagged for termination, it is assumed that their payment status is consistent with their previous reporting record. The previous calculated daily rate will be imputed for the current period.
• If an employee has no payment data reported for two consecutive pay periods, it is assumed that their employment has been terminated. No further imputation is applied.
• No imputation is applied for new employees without historical payment information, until a pattern can be determined. This means that there is an inherent and unavoidable lag before new payroll jobs appear in the data after their initial pay period. The lag is longer for new jobs with employers who have less frequent payment and reporting periods, which is accounted for via a coverage adjustment.

The imputation method was updated in the week ending 30 January 2021 release. For more information, see the Imputation update subsection of Methods review.

Once STP data are converted via the calendarisation method and imputation is applied, the data are aggregated for each week (ending Saturday) to produce:

• total payroll jobs, which is the average of the 7 days of payroll job counts,
• total wages, which is the sum of all daily wages for the week, except for employees who cease a job during the week where only the wages for the days worked are included, and
• average weekly wage per payroll job, which is calculated by dividing the total wages value by the total payroll jobs number.

To protect the confidentiality of individuals, data are subject to a suppression process. Data suppression is generally applied to finer level estimates, where a smaller number of individuals contribute to the estimate (such as sub-state indexes). The existing data suppression process has recently been reviewed and updated, and applied to estimates since the release on 20 October 2020. This has resulted in an improvement in the quality of the underlying data used to produce the sub-state datacube and interactive maps. Previously released national, state and territory and industry indexes were not changed by this updated process.

Estimates are supplied as indexes to provide an indication of movements (rather than level estimates) during the COVID-19 period. In order to compare changes over time, the week in which Australia recorded its 100th confirmed coronavirus case (i.e. the week ending 14 March 2020) is used as the reference period for constructing the indexes and given an index value of 100.0. These indexes differ from the ABS' suite of price indexes (including the Wage Price Index) which measure changes in price over time unaffected by quality or quantity and should not be directly compared.

Indexes allow comparison of data between two points in time, the points in time can be adjacent (this week and the previous week) or many weeks apart. Movements in the index from one period to another can be expressed as either points or percentage change and these are rounded to one decimal place. The following example illustrates the method of calculating changes in index points and percentage changes between any two periods:

The following example illustrates the method of calculating a recovery percentage change between any two periods:

STP is a dynamic administrative data source, hence these estimates may be subject to the following sources of error:

• Conceptual misalignment - The Australian tax system is purpose-built and complex, and in some cases it is difficult to determine how a particular STP item should be used to describe impact on payroll jobs and wages. While all care is taken, some income items are subject to this type of validity error. Coherence with other sources indicates that this has a low impact on the aggregate series.
• Reporting error - This is likely to be present in both person and business information used. Most reporting errors are unable to be determined or corrected; however, coherence with other similar statistics demonstrates that this has a low impact on the aggregate series.

For further information, please see Data limitations and revisions.

There are differences between these estimates and similar statistics produced by the ABS. When compared to other ABS sources, the change in payroll jobs, change in wages paid and change in average weekly wage per job in these estimates may differ due to differences in the concepts, scope and methodology used. For example, these estimates:

• contain a combination of administrative data collected for taxation purposes from businesses, whereas other ABS data sources are compiled for the explicit purpose of producing statistics,
• exclude unreported cash in hand payments which may be included in household and business surveys,
• may include information relating a reference week, rather than a particular point in time,
• are not currently able to be adjusted with respect to seasonality, unlike other Labour Force releases, and
• provide a view of payroll jobs, whereas the Labour Force survey presents a view of employed persons. The difference being those people who hold more than one job at a time (i.e. secondary jobs).

For further information, please see Differences to Labour Force employment statistics.

Payroll jobs and wages estimates (including percentage change movements and indexes) are revised in each release across the time series. These revisions arise from:

• the aim to release data as close as possible to the period when the activity occurred,
• the receipt of more complete STP data over time,
• the incorporation of newly available businesses in STP reported data. 

Revisions have the greatest impact on the most recently reported information. Over time, as more business-reported data is received, the size of revisions decreases. Analysis indicates that at the time of initial publication, the data for the most recent reference week is approximately 75-80% complete and can take several months to be fully complete (i.e. quarterly STP reporters). To reduce the impact of week on week revisions, the ABS uses historical information to impute the most recent weeks data. The ABS is taking a cautious approach to imputation as factors influencing jobs can occur unexpectedly, for example, the surge in COVID-19 cases in Victoria in July 2020.

Some component indexes may be subject to higher than usual levels of revision over longer periods than other estimates, such as employment size indexes. The ABS is currently investigating underlying data to identify the cause and establish a method to reduce the future level of revisions in this series.

As new businesses commence reporting through STP, the ABS determines when the business appears in the dataset for the first time and distributes the year to date wages across all past payment periods for the current financial year. This ensures that weekly estimates best reflect change in the labour market over time through payment activities, rather than changes in the uptake of STP reporting by the businesses. This approach necessitates revisions across the time series.

Similarly, there can be a delay for new employees to appear in the STP data. By analysing the data over time, the ABS applies a coverage adjustment for this as part of producing the indexes. 

From the 19 January 2021 release, the method used to backcast data for new reporters was adjusted to ensure that it better reflects when wages were actually paid.

Wage estimates are subject to a higher degree of reporting variability (due to seasonal variation in payments, changes in working hours and overtime) and revisions than the payroll jobs estimates. While the ABS accounts for employees being paid with different frequencies (weekly, fortnightly etc.) there are points in the year when additional reporting activity is more common, which may flow through to published estimates. 

Reduced wages which are observed through May 2020 (and are more pronounced in COVID-19 impacted industries) may reflect a combination of:

• reduced wages being paid by COVID-19 affected employers, who may also have reduced hours over the period - particularly for jobs that weren't eligible for JobKeeper support,
• seasonal changes in wages (including bonus payments), and
• potential payroll reporting changes for some employers during May 2020. This could include changes to payment frequency or payment categorisation, both of which could affect the imputation methodology and how payments are effectively apportioned onto an accruals basis.

The first 'JobKeeper' payments were received by employers in the first week of May 2020. JobKeeper monies paid to employees through STP-enabled payrolls are incorporated into the wages index. Further information on the treatment of JobKeeper in ABS economic statistics can be found in Economic measurement during COVID-19: Selected issues in the Economic Accounts, May 2020. 

The dynamic nature of STP data can result in revisions to payroll jobs and wages indexes, caused by the re-submission of payroll data for historical pay periods (including prior financial years) by STP-enabled businesses. When re-submission results in an update to payroll jobs and wages levels at the index base reference period (of 14 March 2020), a revision across the index time series in component indexes may be observed.

These estimates are presented as an ‘original’ data series, and do not include seasonally adjusted or trend data time series found in other labour statistics releases (e.g. Labour Force). 

STP is a relatively new program (and data source). Generally, three to five years of data are required before good seasonally adjusted data can be produced, hence it is not yet possible to produce a seasonally adjusted series (with seasonal elements removed) or trend series (with both the seasonal elements and irregular fluctuations removed). This means that variations in these estimates may reflect COVID-19 related impacts in the economy in addition to seasonal changes in the labour market.

Examples of seasonal characteristics which may be observed in the data include:

• High degree of seasonal change in the payroll jobs and wages data from November to February. Summer is a period of pronounced seasonality in Australia, with considerable labour market activity before Christmas, and a combination of public holidays, school holidays and lower business activity in the period after Christmas.
• Bonuses, which may be paid at any time during the year but often have an industry prevalence, e.g. bonus payments are more prevalent in the Mining and Financial and insurance services industries in March and September than other industries.
• Public and school holidays in late April 2020 where variation in employment activity may have affected the level of wages paid during this period.

STP data is linked to other information held by the ABS to derive demographic and business characteristics such as age group, sex, geography and industry. If a specific characteristic cannot be linked or derived, and does not appear on the STP file, it is assigned an 'unknown' category (for that characteristic).

Records with 'unknown' characteristics are included in the calculation of index totals for that category. As 'total' and 'component' indexes are calculated independently, the inclusion of records with 'unknown' characteristics in a 'total' index can result in independent movement from 'component' indexes. For example, the ‘total’ index of Persons is calculated from the combined levels of Males, Females and 'unknown’ (persons for whom a Male/Female sex cannot be determined). As a result, the Persons index can move independently from Male and Female indexes, which do not include ‘unknown’ persons. While the proportion of unknown characteristics vary by characteristic, their impact will be compounded in components of finer indexes (such as in State and territory by sex by age group).

Since the 19 January 2021 release, business data with an ‘unknown’ industry characteristics have been included in all index calculations (with the exception of industry indexes as the characteristic is ‘unknown’). These data were previously excluded from the total payroll jobs and total wages time series. 

STP data does not include information on hours worked or hours paid for. Analysis of monthly hours worked can be found in Labour Force, Australia, and Labour Force, Australia, Detailed. STP data are also unable to account for job attachment where a payment has not been made, where a jobholder was temporarily stood down without pay.

The estimates do not include information on the employment status of employees, i.e. full time or part time. This will be explored as part of ongoing work between the ABS and the ATO. In the interim, this information is also available within the suite of Labour Force releases.

STP data is supplied by the ATO to the ABS under the Taxation Administration Act 1953, which requires that such data is only used for the purposes of administering the Census and Statistics Act 1905. Any discussion of data limitations or weaknesses is made within the context of using the data for statistical purposes, and is not related to the ability of the data to support the ATO's core operational requirements.

These estimates also include Australian Business Register (ABR) data supplied by the Registrar to the ABS under A New Tax System (Australian Business Number) Act 1999, which requires that such data is only used for the purpose of carrying out functions of the ABS. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ABR’s core operational requirements.

The ABS would like to acknowledge the critical support from the Australian Taxation Office (ATO) in enabling the ABS to produce these statistics.

Week ending 30 January 2021

• Imputation update - to deliver a reduced magnitude of future revisions, particularly in the most recent week's data

Week ending 16 January 2021

• Age derivation update - a person is aged at the start of their birthday month instead of redefining age each reference week

Week ending 2 January 2021

• Update of characteristics variables in Data limitations and revisions - Employers with unknown industry included in estimates

Week ending 14 November 2020

• Week on week revisions - persons aged 15 years excluded from the under 20s age group

Recording wages when they are earned, accrued or incurred regardless of when payment is made or received.

A register of all Australian businesses and organisations maintained by the Australian Bureau of Statistics (ABS) for the purpose of producing statistical frames and business demography outputs. It contains identifying and classificatory data for each business and organisation.

Information to populate the ABS Business Register is largely sourced from the Australian Business Register.

The ABS Business Register consists of two subpopulations, the profiled population and the non-profiled population. The ABS Business Register uses an economic units model to describe the characteristics of businesses and the structural relationships between related businesses.

A unique identifier. To be entitled to an Australian Business Number (ABN), an organisation must be one or more of the following:

• a company registered under the Corporations Act 2001
• an entity carrying on an enterprise in Australia
• a government entity
• a non-profit sub-entity for Goods and Services Tax purposes
• a superannuation fund.
   

A non-resident entity may be entitled to an ABN if they are carrying on an enterprise in Australia and/or, in the course of carrying on an enterprise, the entity makes sales that are connected with Australia.

The data store containing details about businesses and organisations that have registered for an Australian Business Number. More information can be found on the ABR website.

Recording the wage payment in the pay period when the payment was received by the employee.

Commencement and termination dates associated with each job as reported through Single Touch Payroll.

Persons who work for a private or public sector employer, where the employee has received payment in the reference week through Single Touch Payroll (STP) enabled software and reported to the Australian Taxation Office (ATO).

An organisation with an Australian Business Number that provides employment income to one or more people, and reports through the ATO STP system.

Based on residential address as sourced from either the ATO Client Register or STP data. See also Statistical area entries. For more information, see the Australian Statistical Geography Standard (ASGS): Volume 1 – Main Structure and Greater Capital City Statistical Areas.

A homogenous grouping of economic activities undertaken to produce goods and services. The Australian and New Zealand Standard Industrial Classification is used to classify an entity to an industry based on its dominant activity.

The broadest grouping of industries within the Australian and New Zealand Standard Industrial Classification. The main purpose of the industry division level is to provide a limited number of categories, which give a broad overall picture of the economy. There are 19 mutually exclusive divisions. For more information see the Australian and New Zealand Standard Industrial Classification.

The second broadest grouping of industries within the Australian and New Zealand Statistical Industrial Classification. Industry subdivisions are built up from the industry groups which, in turn, are built up from industry classes. For more information see the Australian and New Zealand Standard Industrial Classification.

See payroll job.

Statistic is not available. This can be to protect the confidentiality of data providers or to prevent misinterpretation of statistics due to poor quality.

A person who operates their own unincorporated enterprise, which does not possess a separate legal identity to that of its owner(s), or engages independently in a profession or trade.

OMUEs can also be referred to as self-employed. Owner managers of unincorporated enterprises are not included in these estimates as they are not in scope of STP-enabled software reporting to the ATO.

Unincorporated enterprises are further defined in the Standard Economic Sector Classifications of Australia.

A payroll job is a relationship between an employee and their employing enterprise, where the employee is paid in the reference week through STP-enabled payroll or accounting software and reported to the ATO. Where an employee is paid other than weekly, the established payment pattern is used to identify jobs in weeks outside the payment week.

The Single Touch Payroll (STP) system sends taxation and superannuation information from a business' STP-enabled payroll or accounting software to the ATO as a business runs its payroll.

Self reported sex (i.e. male/ female) of a person as reported through the ATO taxation system. Categories other than male or female are not published separately in this release but are included in published totals.

Statistical area level 3 (SA3) regions are designed to provide a regional breakdown of Australia. They generally have a population of between 30,000 and 130,000 people. In regional areas, SA3s represent the area serviced by regional cities that have a population over 20,000 people. In the major cities, SA3s represent the area serviced by a major transport and commercial hub. They often closely align to large urban Local Government Areas (e.g. Gladstone, Geelong). In outer regional and remote areas, SA3s represent areas which are widely recognised as having a distinct identity and similar social and economic characteristics.

Statistical area level 4 (SA4) regions are specifically designed to reflect labour markets within each state and territory within population limits. In regional areas, SA4s tend to have lower populations (100,000 to 300,000), while in metropolitan areas, SA4s tend to have larger populations (300,000 to 500,000).

The statistical unit for more significant and diverse businesses in the profiled population. A type of activity unit (TAU) is a constructed unit that can practically group and report on homogenous production activities at the industry sub-division level.

In this publication, the TAU is used to represent employers in the profiled population.

All legal entities on the ABS Business Register are classified according to their type of legal organisation, of which there are three types:

• incorporated private sector entities
• unincorporated private sector entities
• public sector entities.
   

The type of legal organisation indicates whether a business is part of the private or public sector and the type of ownership structure. For more information see the Standard Economic Sector Classifications of Australia.

Wages include salary payments and allowances, labour hire payments and foreign income, as well as the value of payments in kind (where a fringe benefit amount is recorded). Bonuses are typically included where they are reported in the same field as normal payments. Wages are calculated as gross amounts, prior to taxation and deductions.

Wages exclude payments to employee's superannuation as well as severance and termination payments. Wages are only available for payroll jobs and do not include income from own businesses or other sources.