UNDERSTANDING MOVEMENTS IN EMPLOYMENT


INTRODUCTION

The recent economic downturn in Australia has prompted additional interest in understanding movements in Australia's labour force, in particular the movement between full-time and part-time employment, and people moving into and out of the labour force. This article explains the difference between full-time and part-time employment and how to use gross flows figures to assist in understanding labour force movements.

For detailed descriptions on all terms used in this article refer to Labour Statistics: Concepts, Sources and Methods, April 2007 (cat. no. 6102.0.55.001).


EMPLOYMENT

In Australia's labour force, the number of employed persons is defined as the number of persons employed full-time together with the number of persons employed part-time. Therefore, the total number of employed persons is driven by movements in full-time and part-time employment.

Classification of employment as either full-time employment or part-time employment is derived in terms of usual hours worked in a typical period rather than to a specified reference period. The concept of usual hours applies both to persons at work and to persons temporarily absent from work, and is defined as the hours worked during a typical week or day. Actual hours worked (for a specific reference period) may differ from usual hours worked due to illness, vacation, strike, overtime work, a change of job or similar reasons.


Full-time employment

A person is classified to be employed full-time if they:

• usually work 35 hours or more per week in all jobs; or
• although usually working less than 35 hours a week, actually worked 35 hours or more during the reference week.

Part-time employment

A person is classified to part-time employment if they usually work less than 35 hours per week, and either did so during the reference week, or were not at work in the reference week.


COMPARABILITY OF DATA BETWEEN SURVEYS

In the Labour Force Survey, one-eighth of the dwellings sampled in the previous month are replaced, in the current month, by a new set of dwellings from the same geographic area. The seven-eighth overlap between the dwellings selected in consecutive months maintains continuity within the population survey sample and enables more reliable measurement of change in the labour force characteristics of the population than would be possible if a new sample was introduced each month.

The matching of respondents who report in consecutive months enables analysis of the transition of individuals between the different labour force status classifications, referred to as the matched sample. The transition counts between the different labour force status classifications from one point in time to the next are commonly referred to as gross flows.


CAUTION

The figures presented in gross flows are presented in original terms only and do not align with published labour force estimates. The gross flows figures are derived from the matched sample between consecutive months, which after taking account of the sample rotation and varying non-response in each month is approximately 80 per cent of the sample.

The section titled Quality of gross flows figures discusses this and other properties of the gross flows figures, which should be kept in mind when using these data for analysis.


USING GROSS FLOWS FIGURES TO ANALYSE MOVEMENTS IN EMPLOYMENT

Gross flows figures can assist in understanding the movements in labour force status. For example, in the March 2009 labour force estimates, the number of employed persons, in trend terms, decreased 5,000 persons; comprised of a decrease in full-time employment of 14,600 persons, that was partly offset by an increase in part-time employment of 9,700 persons. However, in original terms, the number of employed persons decreased 1,500 persons; comprised of a decrease in full-time employment of 123,200 persons and an increase in part-time employment of 121,700 persons.

When attempting to interpret the decrease in full-time employment the following questions arise regarding the population:

• Are people moving from full-time employment into part-time employment?
• Are they moving from employment to unemployment?
• Are they moving from employment out of the labour force?

Movement between full-time employment and part-time employment

Referring to the following table one can observe, in original terms, the following counts for transitions between full-time employment and part-time employment:

• 250,000 persons employed part-time in February 2009 were employed full-time in March 2009;
• 311,000 persons employed full-time in February 2009 were employed part-time in March 2009; and
• a net decrease from the matched sample of 61,000 persons (311,000 minus 250,000 persons) from full-time employment to part-time employment.

In the matched sample, there were considerably more persons who moved from full-time employment to part-time employment than in the other direction. Therefore, one can observe, from the gross flows figures that a contributing factor to the March 2009 increase in part-time employment was the net transition of persons from full-time employment to part-time employment.


Movement between employment and unemployment

Referring to the following table one can observe, in original terms, the following counts for transitions between employment and unemployment:

• 119,000 persons unemployed in February 2009 were employed in March 2009
• 85,000 persons employed in February 2009 were unemployed in March 2009; and
• a net increase from the matched sample of 34,000 persons (119,000 minus 85,000 persons) from unemployed to being employed.

Therefore, one can observe from the matched sample, that there were more persons who moved from unemployment to employment than in the other direction.


Movement between employment and persons not in the labour force

Referring to the following table one can observe, in original terms, the following counts for transitions between employment and persons not in the labour force:

• 180,000 persons not in the labour force in February 2009 were employed in March 2009;
• 203,000 persons employed in February 2009 were not in the labour force in March 2009; and
• a net decrease from the matched sample of 23,000 persons from employed in February 2009 to being not in the labour force.

Therefore, one can observe from the matched sample, that a proportion of the decrease in employment was due to employed persons moving directly out the labour force.

Labour Force Status Gross Flows(a), Matched records February 2009 and March 2009 - Original
	Labour force status in March 2009
	Employed full-time	Employed part-time	Employed total	Unemployed	Labour force	Not in the labour force	Matched civilian population
Labour force status in February 2009	'000	'000	'000	'000	'000	'000	'000
Males
Employed full-time	3 855	142	3 997	37	4 034	42	4 075
Employed part-time	88	557	644	19	663	45	708
Employed total	3 943	698	4 641	56	4 697	87	4 784
Unemployed	38	33	71	166	236	52	289
Labour force	3 981	731	4 712	221	4 933	139	5 073
Not in the labour force	31	49	80	57	137	1 644	1 781
Matched civilian population	4 012	780	4 792	278	5 070	1 784	6 854
Females
Employed full-time	2 015	169	2 184	10	2 194	35	2 229
Employed part-time	162	1 568	1 730	19	1 749	81	1 830
Employed total	2 177	1 737	3 914	29	3 943	116	4 059
Unemployed	16	32	48	137	185	82	267
Labour force	2 193	1 769	3 962	166	4 128	198	4 326
Not in the labour force	15	85	100	79	180	2 580	2 760
Matched civilian population	2 208	1 855	4 063	245	4 308	2 778	7 086
Persons
Employed full-time	5 870	311	6 181	47	6 228	77	6 305
Employed part-time	250	2 125	2 374	38	2 412	126	2 538
Employed total	6 120	2 435	8 555	85	8 640	203	8 843
Unemployed	54	65	119	303	421	134	556
Labour force	6 174	2 500	8 674	387	9 061	337	9 399
Not in the labour force	46	134	180	136	317	4 224	4 541
Matched civilian population	6 220	2 634	8 855	523	9 378	4 562	13 940
(a) Gross flows figures do not match published labour force estimates. Refer to quality statements below.

QUALITY OF GROSS FLOWS FIGURES

Caution should be exercised when analysing these gross flows data. First, as noted above, the figures presented sum to approximately 80 per cent of the population values as the gross flows data are based on the matched sample only.

Second, there is no adjustment applied to account for changes due to seasonal patterns (referred to commonly as seasonal adjustment). The gross flows figures are based on original data. Therefore, residual noise, seasonal patterns and irregular influences in the series may lead to misleading conclusions where there is a strong seasonal pattern. Therefore, gross flows figures need to be interpreted in the context of the seasonal nature of the labour force.

Third, the relative sizes of each transition class are subject to bias due to the matched sample being a non-representative sample.


Bias in the estimates due to non-representative sample

The Labour Force Survey sample selection procedures aim to ensure that the individuals surveyed at each time point are a representative sample of the population, and the survey weighting procedure will largely correct for any imbalances in the sample.

The mobility of the population and non-response, in either or both consecutive surveys, means that about 10 per cent of persons in private dwellings, which are included in the sample in successive months, cannot be matched. The matched sample will tend to under-represent particular types of individuals, for example those who move between houses.

The relative size of the transition classes in the gross flows data will be subject to bias if the labour characteristics of those individuals under-represented differ from characteristics of the remainder. Differences in the labour characteristics of those under-represented appears quite related likely, since, for example, moving house can be related to a transition in labour force status.


CONCLUSION

Gross flows figures can assist in understanding the movements in labour force estimates. The figures presented in gross flows do not align with published labour force estimates and should only be used to interpret movements in published estimates.


FUTURE DEVELOPMENT

The ABS is investigating alternative methods for producing gross flows data which reduce the potential bias on the figures, therefore reducing some of the quality concerns of gross flows data.