SPOTLIGHT ON UNDERUTILISATION


QUARTERLY LABOUR FORCE UNDERUTILISATION RATE


INTRODUCTION

The Australian labour market has experienced significant changes in recent decades. Among these is the increase in the proportion of employed people working part-time (from 15% in 1978 to 28% in 2007). As part-time employment has become more prevalent, there is an increasing scope for underemployment, that is part-time workers who would prefer to work more hours. With the increase in part-time employment, underemployment has become an important social and economic issue, and as such the quarterly labour force underutilisation rate (QLFUR) (unemployed plus the underemployed as a proportion of the labour force) is an increasingly important indicator of spare capacity in the labour market.


UNDERUTILISATION IS INCREASING

In seasonally adjusted terms the QLFUR was 10.8% in November 2008, an increase of 0.9 percentage points from August 2008 (9.9%). This was the largest quarter to quarter movement of the seasonally adjusted data since the series started in May 2001. As a result of this increase, the trend QLFUR was 10.6% in November 2008, an increase of 0.5 percentage points from the trend series low observed in May 2008 (10.1%), indicating a turning point in the series. However this will only be confirmed when more time points become available, after which the seasonally adjusted and trend series will be revised (end note 1).

Components of underutilisation

The QLFUR can also be thought of as the sum of the quarterly unemployment rate and the quarterly underemployment rate. Since May 2008, increases in both the trend quarterly unemployment rate and the trend quarterly underemployment rate have contributed to the increase in the QLFUR.

The trend quarterly unemployment rate increased from 4.2% in May 2008 to 4.4% in November 2008, while the trend underemployment rate increased from 5.9% to 6.2%, respectively.

OTHER USEFUL MEASURES

ABS produces a number of measures that are useful in gauging the extent and volume of labour market slack. Each month the ABS publishes the unemployment rate and the long-term unemployment rate, and each quarter the QLFUR (including the quarterly underemployment rate) is produced. Furthermore, the extended labour force underutilisation rate is produced annually and this measures the degree of labour underutilisation that exists within and outside of the labour force.

In addition, in the July issue of Australian Labour Market Statistics (cat. no. 6105.0), the ABS publishes volume or hours based measures of labour underutilisation. These measures provide estimates of the number of (additional) hours that the unemployed and underemployed have to offer.


FURTHER INFORMATION

For further data regarding the quarterly measures of labour underutilisation please see Tables 4.1 to 4.4 in this publication. For further information about any of the measures mentioned in this article, please contact Tracey Chester (ph (02) 6252 5609 or email <tracey.chester@abs.gov.au>).


END NOTES

1. Research Paper: Some Aspects of Turning Point Detection in Seasonally Adjusted and Trend Estimates (Methodology Advisory Committee, June 2006 ( cat. no. 1352.0.55.079)