AGGREGATE MONTHLY HOURS WORKED


AGGREGATE MONTHLY HOURS WORKED PER EMPLOYED PERSON


INTRODUCTION

Anecdotal evidence abounds of employers partially weathering the storm of the recent economic downturn by reducing employee hours rather than retrenching workers. To investigate the hours worked per month by employed persons, the measure of aggregate monthly hours worked per employed person is examined.

Aggregate monthly hours worked per employed person is derived from the aggregate monthly hours worked, that is, the total number of hours worked by all employed persons in a calendar month, and from estimates of employed persons. The ABS has developed estimates of aggregate monthly hours worked by gender, full- or part-time status, and broad industry grouping, available as seasonally adjusted and trend estimates (for the period July 1978 onwards) in Labour Force, Australia (cat. no. 6202.0), and these estimates are not directly collected from respondents. The methodology used to produce aggregate monthly hours worked means that these are “synthetic” estimates, i.e. they are derived from information collected in the survey using analytical techniques (see the article "Aggregate Monthly Hours Worked" in Labour Force, Australia (cat. no. 6202.0), July 2009).

Detailed information about the labour force in Australia has been collected in the monthly Labour Force Survey since February 1978. Since this time, in line with an increase in total employed persons, the aggregate monthly hours worked has risen. While the aggregate monthly hours worked per full- and per part- time employed person has risen, the aggregate monthly hours worked per employed person has fallen, and this will be investigated in this article.

The aggregate monthly hours worked per employed person experienced significant changes during the economic downturns of the early 1980s, the early 1990s, in 2000-01 and in 2008-09. However, the behaviour of aggregate monthly hours worked per employed person during the most recent economic downturn was markedly different from that during previous economic downturns.

Between July 1978 and May 2010, aggregate monthly hours worked closely tracked total employed persons until approximately July 1998, but after this, total employed persons increased more rapidly than aggregate monthly hours worked.

From July 1978 to May 2010, the aggregate monthly hours worked increased by 71% (from 909.6 million to 1553.2 million), while the total number of employed persons increased by 83% (from 6.0 million to 11.0 million). While the total number of employed males has increased by 56% (from 3.9 million to 6.0 million), the total number of employed females has increased more dramatically, by 132% (from 2.2 million to 5.0 million).


AGGREGATE MONTHLY HOURS WORKED PER EMPLOYED PERSON

While the aggregate monthly hours worked measures the total hours worked in the Australian labour market, the aggregate monthly hours worked per employed person indicates how many hours employed persons work per month, and how this changes over time. It is calculated by dividing aggregate monthly hours worked by the number of employed persons. Note that while aggregate monthly hours worked are based on the hours worked in the survey reference period, the measure of employed persons includes both those who were at work, and those who were away from work but still employed (for example, on holiday leave, sick leave, long service leave or maternity/paternity leave).

Between July 1978 and May 2010, the aggregate monthly hours worked per employed person has decreased by 7% for all persons (from 150.8 to 140.6 hours), with employed males experiencing a 4% decrease (from 164.8 to 158.8 hours), and employed females a 6% decrease (from 125.7 to 118.7 hours).

The aggregate monthly hours worked per employed person declined more sharply during periods of economic downturn. Following the early 1980s economic downturn, the aggregate monthly hours worked per employed male recovered to previous levels, while that for employed females did not.

Again, following the early 1990s economic downturn, the aggregate monthly hours worked per employed male recovered, while that for employed females stabilised. In contrast to the recovery in aggregate monthly hours worked per employed male following these economic downturns, there was no such recovery following the 2000-01 and 2008-09 economic downturns.

The early 2000s economic downturn affected aggregate monthly hours worked per employed male most notably, with a 4% decrease (from 171.2 hours in December 1999 to 163.9 hours in November-December 2001), which was a larger percentage decrease than in any previous (or subsequent) downturn. In all economic downturns, aggregate monthly hours worked per employed female showed a smaller percentage decrease than those of males (for example, the aggregate monthly hours worked per employed female decreased by 3%, from 123.1 hours in January 2000, to 119.0 hours in December 2001).

While separation of aggregate monthly hours worked per employed person by gender proves interesting, a different story emerges when considering the aggregate monthly hours of those employed either full- or part-time. This is particularly relevant when considering the high proportion of females employed part-time.

Aggregate monthly hours worked per employed person can be looked at by full- or part-time status. In the Labour Force Survey (and many other ABS household surveys), an employed person is classified as full- or part-time based on the number of hours usually worked per week (worked on average across all weeks), and this contributes to the measure of the number of full- or part-time employed persons. However, in an actual, or reference week, an employed person may work either more than 35 hours (“full-time hours”) or less than 35 hours (“part-time hours”), and it is these actual hours worked in the reference week which contribute to either full- or part-time aggregate monthly hours worked. Therefore, while an employed person may be classified as full- or part-time based on the hours usually worked, the hours they worked may contribute to either full- or part-time hours worked, based on the actual hours they worked in the reference week.


AGGREGATE MONTHLY HOURS WORKED PER FULL-TIME EMPLOYED PERSON

The aggregate monthly hours worked per full-time employed male and female are shown in the graph below. Aggregate monthly hours worked per full-time employed males and females show similar trends, in that they decreased slightly between 1978 (from 170.0 hours for males, and 156.9 hours for females, in July 1978) and 1982, then rose until the early 1990s economic downturn. Recovery from this downturn began in about 1992, and aggregate monthly hours worked per employed person peaked in 2000. Following a brief recovery from the early-2000s economic downturn, the aggregate monthly hours worked per full-time employed person has in general trended down, with a current value of 176.3 hours for males, and 160.2 hours for females (in May 2010).

Over this 32 year period, the aggregate monthly hours worked per full-time employed male has been on average almost 17 hours higher than that of full-time employed females. This difference was smallest in February 1983, when full-time employed males worked per month on average just 10.4 hours more than full-time employed females, and was highest in August 1994, when full-time employed males worked per month on average 21.0 hours more than full-time employed females. In May 2010, the aggregate monthly hours worked per full- time employed male was 16.0 hours more than that of a full-time employed female.


AGGREGATE MONTHLY HOURS WORKED PER PART-TIME EMPLOYED PERSON

Over the same 32 year period, the variation in aggregate monthly hours worked per part-time employed male and female tells a very different story to that of aggregate monthly hours worked per full-time employed male and female.

In July 1978, the aggregate monthly hours worked per part-time employed male was 68.9 hours per month, and that for a part-time employed female was 64.4 hours per month. In May 2010, the aggregate part-time monthly hours worked per part-time employed male was 69.8 hours (only a 1% increase since July 1978), however for part-time employed females it was 69.8 hours (an 8% increase since July 1978).¹

From July 1978 to mid-1986, the aggregate monthly hours worked per part-time employed male was greater than that of part-time employed females. The greatest difference in aggregate monthly hours worked per part-time employed males and females was in January 1983, when part-time employed males worked 6.6 more hours than part-time employed females. Aggregate monthly hours worked per part-time employed male fell from this high to achieve parity with aggregate monthly hours worked per part-time employed female around April 1986, at approximately 63.5 hours. Since then the aggregate monthly hours worked for part-time employed males and females have both trended up, but those of females have largely been higher than those of males. The average difference in aggregate monthly hours worked per part-time employed males and females over the period September 1990 to May 2010 is approximately one hour, that is, part-time employed males work, on average, approximately one hour less per month than part-time employed females.

In May 1994, aggregate monthly hours worked per part-time female was almost three hours greater than that of part-time employed males. As of May 2010, part-time males and part-time females work almost exactly the same aggregate monthly hours per employed person.


AGGREGATE MONTHLY HOURS WORKED PER FULL- AND PART-TIME EMPLOYED PERSON: RATIO

Another perspective looks at how many more hours full-time employed persons work than part-time employed persons, using the ratio of full- to part-time hours for both males and females. On average, aggregate monthly hours worked per full-time employed male are 2.7 times that of part-time employed males. This ratio has varied from a low of 2.4 (in January 1983) to a high of 2.9 (in May 1994), and as at May 2010 was 2.5. For employed females, the trend over the past 32 years was similar, with a maximum also in the early 1990s (May 1992), with a ratio of 2.6, and a decrease since then (to a low of 2.3 in February 2008). The average over this period was 2.4, and as of May 2010 was 2.3.

AGGREGATE MONTHLY HOURS WORKED PER EMPLOYED PERSON: TOTAL

Previously in this article, the aggregate monthly hours worked per full- and part-time employed person were separated by gender, but now aggregate monthly hours worked for both genders and both full- and part-time employed persons are compared to the aggregate monthly hours worked per full- and per part-time employed persons (without gender division).

Between July 1978 and May 2010, the aggregate monthly hours worked per full-time employed person has increased 3% from 166.3 to 170.7 hours. Aggregate monthly hours worked per part-time employed person has increased 7% from 65.4 to 69.8 hours. However, for all employed persons (both full- and part-time), the aggregate monthly hours worked per employed person has decreased 7% from 150.8 to 140.6 hours.

While both aggregate monthly hours per full- and part-time employed person have increased, neither aggregate monthly hours worked per full-time employed person, nor per part-time employed person, have trended exclusively up. Aggregate monthly hours worked per full-time employed person decreased to mid-1983, increased to end-1999, and has declined steadily since. Aggregate monthly hours worked per part-time employed persons has behaved differently: it decreased until the early 1990s, and since then has steadily climbed.

These different trends over time are one factor in explaining how aggregate monthly hours per employed person has decreased despite increases in both aggregate monthly hours per full- or part-time employed person.

Another factor in explaining the decrease in aggregate monthly hours worked per employed person despite increases in aggregate monthly hours worked per full- or part-time employed person is the changing composition of full- or part-time status of all employed persons.

Over the last 32 years the number of employed persons has increased by 82%. However, the proportion of those employed people working part-time has increased steadily (with minor variations during periods of economic downturn) from 15% in July 1978 to 30% in May 2010.

As discussed previously, since 1978, the number of employed females has increased, and many of these females work part-time: in July 1978 there were 2.0 full-time employed females for every part-time employed female (or 33.8% of females were employed part-time), and by May 2010 this ratio had fallen to 1.2 full-time employed females for every part-time employed female (45.9% of females were employed part-time).

For employed males this trend of decrease in ratio of full- to part-time employed is more dramatic: in July 1978, there were 18.3 full-time employed males for every part-time employed male (5.2% of males were employed part-time), yet in May 2010 this had decreased to a ratio of 5.1 full-time employed males for each part-time employed male (16.4% of males were employed part-time).

So the full-time to part-time ratio for both males and females has fallen. For males, whose percentage participation in the workforce has grown more slowly, the part- to full-time ratio has grown dramatically, resulting in a large increase in the number of part-time employed males, and for females, whose percentage participation in the workforce has grown rapidly, even a slow increase in the part- to full-time ratio results in a large increase in the number of part-time employed females.

These two factors in combination: the movements over 32 years in aggregate monthly hours worked per full- and part-time employed person, and the increasing proportion of part-time employed persons, combine to result in a decrease in aggregate monthly hours worked per employed person despite an overall increase in both aggregate monthly hours worked per full- and part-time employed persons.


AGGREGATE MONTHLY HOURS WORKED PER EMPLOYED PERSON, UNEMPLOYMENT AND UNDEREMPLOYMENT

Aggregate monthly hours worked per employed person are now briefly considered in conjunction with the unemployment and underemployment rates. During economic downturns, unemployment and underemployment rates rise, sometimes quite rapidly, and this is sometimes accompanied by a significant decrease in aggregate monthly hours worked per employed person. In the most recent economic downturn, between mid-2008 and mid-2009:

• the aggregate monthly hours worked per employed person fell 2.3% (from 143.9 hours in June 2008 to 140.6 hours in June 2009);
• the aggregate monthly hours worked per full-time employed person fell 1.5% (from 172.8 in June 2008 to 170.1 hours in May 2009);
• the aggregate monthly hours worked per part-time employed person fell 1.3% (from 70.6 in May 2008 to 69.7 hours in May 2009);
• the percentage of employed persons working part-time rose 1.2 percentage points (from 28.3% in June 2008 to 29.5% in June 2009);
• the unemployment rate rose 1.7 percentage points (from 4.1% in March 2008, to 5.8% in July 2009); and
• the underemployment rate rose 1.9 percentage points (from 5.9% for the quarter ending May 2008, to 7.8% for the quarter month August 2009).

These movements were clear, rapid, and well-synchronised, and contrast strongly with trends in these measures during other economic downturns.

For example, in the early 2000s economic downturn, aggregate monthly hours worked per part-time employed person rose steadily in concert with the increase in unemployment rate. A rise in the underemployment rate was slightly delayed with respect to this, while the aggregate monthly hours worked per full-time employed person had already begun a rapid decline at least six months beforehand. Despite a rapid rise in unemployment and underemployment rates, the early 1980s and early 1990s economic downturns were accompanied by much more ambiguous behaviour in the aggregate monthly hours worked per employed person (for both full- and part-time employed people), showing considerable variations for the duration of the downturns with neither clear upwards nor downwards trends.

In the most recent economic downturn, the decrease in aggregate monthly hours worked per both full- and part- time employed persons, and the clear trends of the relatively small increase in unemployment rate (compared to that experienced during other economic downturns, or by other countries during the same time period) and a relatively large rise in underemployment rate (larger than the unemployment rate rise), combined with the simultaneity of these movements, lends credence to claims that Australian employers responded to the recent economic downturn by decreasing the hours of both full- and part-time employed persons rather than by retrenching workers.


SUMMARY

This article described how, over the 32-year period from July 1978 to May 2010, despite a decrease in the aggregate monthly hours worked per employed person, the aggregate monthly hours worked per full- and per part-time employed person have both increased. This was explained through looking at the changes in part-time employment of both males and females over the period.

Aggregate monthly hours worked per employed person, for both all, and full- and part-time employed persons, was also compared to the unemployment and underemployment rates, particularly during the most recent economic downturn. This analysis lent support to theories that during this time, employers reduced the hours worked of full- and part-time employed persons instead of retrenching workers.


FURTHER INVESTIGATIONS

One limitation of the analysis in this article is the division of employees into either full- or part-time status. This division (on the basis of hours worked) does not consider other work conditions, such as entitlement to paid leave entitlements (one or more of sick leave, holiday leave, long service leave, or maternity/paternity leave). In some ABS surveys, employees without such leave entitlements are used as a proxy for “casual” employees. A further decomposition of aggregate monthly hours worked per employed person into those with or without paid leave entitlements would enable investigation of the validity of reports of an increasing “casualisation” of the labour force over time, and particularly how the distribution of aggregate monthly hours worked per casual employee varies during economic downturns and recoveries. A further decomposition of aggregate monthly hours worked by age groups, state or territory, industry and occupation may also yield interesting results.


NOTE

¹ The decrease in trend data in April 1986 reflects a change in the number of part-time employed persons due to a change in definition. In March 1986, the definition of employed persons was extended to include persons who worked without pay between 1 and 14 hours per week in a family business or on a farm. This extension in definition has resulted in the number of employed persons increasing by 34,900 in this month, all of these being classified as part-time employed persons.


FURTHER INFORMATION

For further information about the information presented in this article, data supporting the article or the methodology used to construct these estimates, please contact Felicity Splatt in the Labour Market Statistics National Statistical Centre on (02) 6252 7031 or email felicity.splatt@abs.gov.au.

Estimates of aggregate monthly hours worked, employed persons, the unemployment rate and the underemployment rate are available in Labour Force, Australia (cat. no. 6202.0), monthly in Labour Force, Australia, Detailed - Electronic Delivery (cat. no. 6291.0.55.001) and quarterly in Labour Force, Australia, Detailed - Electronic Quarterly (cat. no. 6291.0.55.003).