Labour Force Explained

ABS Labour Force Estimates

Every month the Australian Bureau of Statistics (ABS) publishes Labour Force estimates from data collected in the Labour Force Survey. The estimates in Labour Force, Australia (cat. no. 6202.0) provide a comprehensive picture of the labour market characteristics of the Australian population aged 15 years and over who are:

  • employed, underemployed, unemployed and not in the labour force; and also
  • other important information, such as their sex, the hours they work, and the state and territory they live in.

The monthly Labour Force release includes original, seasonally adjusted and trend estimates of important headline labour market indicators. The detailed release and the quarterly release include a range of products that assist in further understanding the state of the labour market, such as whether patterns of work are changing.

The Labour Force Survey

The Labour Force Survey is a large survey that around 26,000 households respond to each month; the equivalent of about 50,000 people – or around one in every 312 Australians aged 15 years and over. The target survey response rate of between 93%-95% is higher than that of all other OECD countries, which ensures that Australia has highly reliable information about its labour market.

Rotation Groups

The 26,000 households surveyed in the monthly Labour Force Survey are required to complete the survey for 8 months. Each month, 1/8 of the survey households are “rotated out” and replaced by a new group, generally drawn from the same geographic area. By having 7/8 of the households the same from one month to the next, the ABS ensures the survey estimates best reflect what is happening in the labour market, rather than reflecting change in the sample. The rotation process also limits the burden on households who will only be in the sample group for eight months.

While the outgoing and incoming groups will always have different characteristics, the design of the survey, including weighting and estimation processes, ensures that these differences are generally relatively minor and do not affect the representativeness of the survey and its estimates.

Employment figures: A measure of people, not jobs

Labour Force data provides a measure the number of people who are employed. They are not a measure of the number of jobs.

How employment is measured: The one hour rule

Less than 50 people in the sample of 50,000 report they only work one hour. That works out to be 15,000 people out of around 12 million employed (or 0.1%) and movements in this number are not large enough to affect total employment.

The ABS defines people as 'employed' if they work one hour or more in the reference week. The vast majority of part-time employed people work more than 15 hours.

The 'one hour rule' is used internationally and allows employment figures to be compared with other countries. It has been used in Australia since the Labour Force Survey began, enabling comparisons to be made over a long period of time.

The ABS also has a range of other measures, such as underemployment, that help to understand how many people are fully employed, and how many would like to be working more.

Full-time and part-time employment

The ABS classifies people as employed full-time if they worked, or usually work, 35 or more hours in the survey reference week. This includes people who were employed in two or more part-time jobs and in total worked more than 35 hours.

Part-time workers are those who worked and usually work less than 35 hours in the survey reference week.

Changes in full-time and part-time employment reflects people starting and finishing jobs (with various hours of work), but also ongoing variation in the hours worked by employed people remaining in the same jobs. It is important to remember this when looking at the ‘net’ change.

Trend and Seasonally adjusted estimates

Each month the ABS publishes a range of trend and seasonally adjusted labour estimates in Labour Force, Australia. The Australian Bureau of Statistics believes the trend series provide the best measure of what is happening in the labour market.

Understanding trend data

Trend data provides the best measure of the labour market, as it specifically excludes seasonal factors (for example employment always increasing in December) and irregular effects (a one-off event, like the Commonwealth games). It also smooths out month-to-month sampling variability. Trend data therefore provides the best means of determining whether the labour market is strengthening or softening, and how the composition of the labour market is changing over time.

Understanding seasonally adjusted data

Seasonally adjusted estimates have seasonal effects removed, but they still contain the irregular elements, including month-to-month sampling variability. This means that monthly seasonally adjusted estimates provide a less reliable indication of labour market trends.

For further information see: Time Series Analysis: The Basics.

ABS unemployment figures and Government job seeker income support figures

Comparisons are often made between the official unemployment estimates published by the ABS and figures produced by the Department of Social Services on the number of people receiving government job seeker income support. These two sets of information actually tell us different but related things about people who aren’t currently working.

The ABS measure, which is based on international standards, examines whether people are working and, if they aren’t, what activities they are undertaking to find work, and whether they are available to start work right now. In contrast, the job seeker income support figures provide the number of people who aren’t working who have sought, were eligible for and are receiving income support payments.

Not all people receiving income support are 'unemployed' as defined by the ABS, while those classified by the ABS as 'unemployed' may not necessarily be receiving income support (for instance, an unemployed person may not be eligible for income support payments due to income and assets tests, or they may not choose to seek income support payments). Conversely, a person receiving income support may not be classified by the ABS as unemployed if they did more than one hour of paid work in the survey week, or are not available to start work immediately.

No data from the Department of Social Services on the number of people receiving government job seeker income support is used in compiling the Labour Force figures. Analysis generally shows that changes in persons on unemployment benefits and changes in the unemployment rate track reasonably consistently over time.

For more information on how unemployment is defined see: How does the ABS measure unemployment.