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Income related measures

Australian System of National Accounts: Concepts, Sources and Methods
Reference period
2020-21 financial year

20.64    The various measures calculated include:

  • wages share of total factor income
  • profits share of total factor income
  • average compensation per employee
  • non-farm compensation of employees
  • average non-farm compensation per employee.

Wages share of total factor income

20.65    Total factor income (TFI) is the sum of compensation of employees, gross operating surplus and gross mixed income. Wages share of TFI is the percentage of TFI that is made up by compensation of employees (COE).

20.66    Wages share of TFI is calculated as:

    \(\large Wages \ share \ of \ total \ factor \ income = \frac{{COE}}{{TFI}} \times 100\)

Profits share of total factor income

20.67    Profits share of TFI is the percentage of TFI that is made up by gross operating surplus (GOS) of financial and non-financial corporations.

20.68    Profits share of TFI is calculated as:

    \(\large Profits \ share \ of \ total \ factor \ income = \frac{{GOS}}{{TFI}} \times 100\)

Average compensation per employee

20.69    Average COE is a key analytical indicator of the returns to labour from production. It is calculated as:

    \(\large Average \ COE = \frac{{Total \ COE}}{{Total \ employees}}\)

20.70    For national accounting purposes, COE excludes unpaid and self-employed workers. Therefore, the national accounts employment measure also excludes self-employed, volunteer, and family workers and is the average of three months’ estimates. It may differ from other employment estimates published by the ABS. 

20.71    An employee is defined as someone who works for cash or payment in kind and has a formal agreement with their employer.

20.72    Total employees include:

  • Civilian – an average of three months’ employee estimates; sourced from the Labour Force Survey as a special dataset
  • Defence – permanent forces split by Navy, Air Force and Army; sourced from the Department of Defence
  • Farm – employee estimates from ANZSIC Division A, Subdivision 01 Agriculture; sourced from the Labour Force Survey.

Non-farm compensation of employees

20.73    Due to the highly seasonal and variable nature of the agricultural industry, it can be useful to remove farm COE from total COE. Non-farm COE is calculated as:

    \(\large Non \ farm \ COE \ = \ total \ COE \ - farm \ COE\)

where farm COE is equal to the COE for ANZSIC Subdivision 01 and is sourced from estimates of income by industry.

Average non-farm compensation per employee

20.74    Average non-farm COE is calculated as:

    \(\large Average \ non \ farm \ COE = \frac{{Non \ farm \ COE}}{{Non \ farm \ employees}}\)

where non-farm employees equals civilian employees plus Defence employees

Gross entrepreneurial income

20.75    Gross entrepreneurial income (GEI) is the national accounting equivalent of the concept of profit and loss as understood in commercial accounting. It is calculated as a balancing item and is a close approximation of before tax profits.

20.76    GEI for a corporation, quasi-corporation, or an institutional unit owning an unincorporated enterprise engaged in market production, is defined as its gross operating surplus (or gross mixed income), plus property income receivable on the assets owned by the enterprise, less interest payable on the liabilities of the enterprise and rent payable on land or other tangible non-produced assets rented by the enterprise.

20.77    GEI for non-financial corporations is calculated by summing gross operating surplus and total property income receivable, then subtracting interest payable and rent on natural assets payable.

20.78    GEI for financial corporations is calculated by summing gross operating surplus and total property income receivable, then subtracting interest payable, rent on natural assets payable, and property income attributable to insurance policyholders.

20.79    GEI for households is derived by summing gross operating surplus from dwellings, gross mixed income and total property income receivable, then subtracting interest payable and rent on natural assets payable.