COMPARING UNEMPLOYMENT AND THE CLAIMANT COUNT


INTRODUCTION

Estimates of the number of unemployed people are of interest from several perspectives. From a social perspective, a lack of work can have a significant effect on the financial, personal and social lives of individuals and their families. From an economic perspective, there is interest in the extent of available labour, concern about a scarcity of skilled labour, the cost of labour, and the economic cost of unemployment.

A number of sources of useful information exist to inform policymakers and analysts about people without work and about people who are receiving assistance to enter the labour force. The Australian Bureau of Statistics' (ABS) monthly Labour Force Survey (LFS) has provided the official measures for employment and unemployment since February 1978, using definitions recommended by the International Labour Organisation (ILO). The key measures produced from the LFS are estimates of the number of employed and unemployed, and the unemployment rate (end note 1). The estimates are derived from a sample survey, which in 2008-09 consisted of approximately 22,800 households across Australia.

Another important source of data is compiled by the federal Department of Education, Employment and Workplace Relations (DEEWR) and relates to a count of the number of Labour Market Payment (LMP) recipients (end note 2). Within this population are 'Paid recipients', which excludes those who are not receiving a primary income support payment, and those who are not paid anything due to the application of the income test to either their own or their partner's income. Paid recipients can then be further classed as job seekers, and these are people for whom job search is their primary activity. 'Non job seekers' are exempt from undertaking job search as a primary activity (e.g. those temporarily incapacitated, undertaking training or part-time work), but they may still be looking.

Comparisons are sometimes made between the official unemployment estimates produced by the ABS and the claimant count produced by DEEWR. While both of these series have tended to move broadly in line with each other over time, the two measures differ in many ways.

The purpose of this article is to explore the key differences between the two measures. It compares the unemployment estimates from the monthly LFS with claimant count data taken from an administrative dataset, based on various types of LMP delivered by Centrelink on behalf of DEEWR. The time series information relating to the claimant count presented in the article begins from 1999 and relates to 'job seekers' (end note 3, end note 4). Job seekers were chosen for comparison as they are more conceptually aligned with the ABS definition of unemployment, in that they both need to be undertaking 'active' job search.


OVERVIEW

In 2007, there were nearly half a million (478,300) unemployed people compared with 321,800 job seekers receiving labour market payments. Graph 1 shows the movement of the two measures over the period 1997-2007, both showing a downward trend over the past ten years.

In 1999, the claimant count data was on average 54,900 persons fewer than the ABS estimate, but between 1999 and 2000, the gap widened as a result of a number of changes relating to the Newstart Allowance payment and to the compilation of the DEEWR administrative dataset (end note 5). Also from April 2001, a small population known as 'future starters' were included in the ABS estimates of unemployed people which also contributed to the difference between the two series (end note 6).

The ABS unemployed series is more sensitive to seasonal changes than the claimant count (as shown in Graph 1). The ABS estimates of unemployment are based on the number of people without work, who are actively seeking work and who are immediately available for work. The number of unemployed people generally peaks in the March quarters and troughs in the December quarters as people move in and out of unemployment due to calendar related influences such as the end of the academic year and increased economic activity at Christmas.

The DEEWR claimant count measures the number of people claiming unemployment related benefits, i.e. job seekers being paid Newstart Allowance or Youth Allowance (Other) - unemployed people aged 21 years and over (but below Age Pension Age) who are willing to undertake suitable paid employment, and those aged under 21 years who are not full-time students or full-time Australian Apprentices, both of whose primary activity is job search. The DEEWR claimant count series is not as sensitive to seasonal changes as the ABS unemployment series and shows relatively little systematic variation in level over each calendar year (see Graph 1).


SEX AND AGE ANALYSIS

An analysis of the sex and age distribution of the unemployment estimates and of the claimant count reveals a number of differences between the two groups. Overall, women accounted for 49% of all unemployed people in 2007, but just 39% of those job seekers in the claimant count. The overall difference observed in 2007 between the two measures for women has remained relatively consistent since 1999 (see Graph 2). During the period 1999-2007, there were on average around 110,000 more women who were unemployed compared to job seekers who were paid a LMP. It is apparent that many women who are 'unemployed', according to the ABS definition, do not appear in the administrative data counts. This may be because they are be unable to claim LMP due to their partner's income exceeding the amount specified in the relevant personal income test (end note 7). It is also possible that many of these women do not appear in the 'claimant count' data as they may be eligible for a different type of income support payment, such as the parenting payment.

For men, the difference between the two measures was much smaller (20,800 on average) than for women, and during 1999 there were actually more men receiving LMP than were estimated as unemployed.

he age distribution of unemployed men and women is quite different to the claimant count (see Graphs 3 and 4). In 2007, the peak age group for unemployed men and women was 15-19 years. In contrast, the peak age for claimant count males was 25-34 years while for females it was 45-54 years.

There are substantially more young men (aged 15-24 years) who are unemployed than there are in the claimant count, and this is also the case for young women.

The large difference between the number of 15-24 year olds in each measure is related to the administration of LMP to young people. In 2007, there were 191,900 persons aged 15-24 years classified as unemployed compared to only 98,700 persons in this age group who received LMP. People aged 15-24 years are likely to be full-time students and, as such, if they are eligible for any assistance (based on their parents income) they would receive a different type of payment to that which is included in the claimant count data.

For men between the ages of 25 and 59 years, there is little difference in the number of men in unemployment and the number of men in the claimant count.

In contrast, for women there is a large difference in almost all age groups in the number who are unemployed and in the number who are in the claimant count. The reasons for this have been discussed earlier in the analysis and relate to the effect their partner's income may have on their eligibility for a LMP, and the fact that they may be receiving other forms of income support.

In regards to older people, that is, men aged 65 years and over, some women aged 63-64 years, and all women aged 65 years and over, they are not included in claimant count data as they are eligible to claim the Age pension (end note 8). In contrast, the only age restriction in the ABS estimates is that people are aged 15 years and over.


CLAIMANTS WHO ARE NOT UNEMPLOYED

The previous paragraphs largely discussed people who are classified as unemployed in the monthly LFS, but who are excluded from receiving LMP. However, there are a number of people who receive LMP who would not be included in the unemployment estimates. For example, claimants are able to undertake paid work and yet continue to receive benefits until the income from that paid work reaches a specified level, at which time they become ineligible to receive further benefits. These people would not be classified as unemployed according to the ABS definition as they undertook one hour or more of paid work in the reference week; rather they would be classified as employed.


An indication of overlap between the two measures

From the LFS it is not possible to estimate how many people, unemployed or otherwise, are receiving LMP. However, we can get an indication of this from the Survey of Income and Housing (SIH) which was last run in 2005-06. The SIH collects information about people's labour force status (although not as comprehensively as the LFS) as well as their sources of income. The SIH income data is able to indicate whether people receive Newstart Allowance (NSA) and Youth Allowance (YA), but it does not separately identify those recipients who only receive YA (Other). However, by excluding full-time students from the SIH data we are left with a population that approximates YA (Other), although full-time apprentices are still included. In this analysis, therefore, the following populations in the SIH; those receiving NSA, and the approximated YA (other) population, roughly equate to the paid jobseekers population in the claimant count.

As Graph 5 indicates, not all people receiving NSA and YA (excluding full-time students) are unemployed according to the ABS definition. In 2005-06, less than half (42%) of these recipients were defined as unemployed, with the remaining recipients classed as employed (25%) or not in the labour force (33%) (end note 9).

Furthermore, the SIH indicates that only 34% of all unemployed people were receiving NSA and YA (excluding full-time students).

SUMMARY

There are a number of differences between the ABS unemployment estimates and the DEEWR claimant count and some of these have been discussed in this article. The following table summarises the key differences between the two measures by highlighting the groups of people who would be considered unemployed but not receiving LMP and vice versa (Table 6).

6. Summary of key differences between the unemployment estimate and the claimant count
	Unemployment estimate (ABS)	Claimant count (DEEWR)
Age in scope	Civilian population aged 15 years and over.	Includes all job seekers aged 15 to 64 years (upper age limit of 63-64 years for females, depending on date of birth).
Students	Includes all students aged 15 years and over as long as they meet the actively looking and availability criteria.	Excludes full-time students (receive a different type of payment).
Income and Assets	n.a.	Excludes those people whose personal/partners or parents income and assets are above the specified amount.
Paid work	Excludes all people who undertook one or more hours of paid work in the reference week.	Includes those people who have undertaken paid work in the reference week, where earnings are below the threshold for cut-off of LMP.
Active job search	Includes only those people who take active steps to find work in the four weeks prior to the survey (waived for future starters).(a)	Includes people who have been actively seeking work, or undertaking activities to improve their employment prospects. Also includes some people who have been exempt fom active job search based on personal circumstances (e.g. illness, homelessness or major personal crisis).(b)
Available to start work	Excludes those who are not available to start work in the reference week.	No specific criterion concerning availability to start work. Includes people who 'accept suitable offers of work'.
(a) For more information see end note 8.
(b) For more information see end note 7.

While the ABS unemployment measure and the DEEWR claimant count tell similar stories over time, they differ in many ways. The ABS unemployment measure is the official measure of unemployment in Australia, and is the best source for the number of unemployed persons and the unemployment rate. However the DEEWR claimant count data are useful for examining the numbers of people at the national and small area level who will be affected by changes to labour market payments.


FURTHER INFORMATION

For further information on the ABS unemployment estimates see Labour Force, Australia (cat. no. 6202.0). For further information on the concept and definition of unemployment see Labour Statistics: Concepts, Sources and Methods (cat. no. 6102.0.55.001).

For further information on the DEEWR claimant count data see Labour Market and Related Payments - a monthly profile, (LMRP), available on the DEEWR website. This publication is produced on a monthly basis by DEEWR and includes information on the history of labour market payments, as well as small area estimates of claimant count data.

For further information about this article, please contact Deepa Wright (ph (02) 6252 6149 or email <deepa.wright@abs.gov.au>).


END NOTES

1. The ABS definition of employed is: Persons aged 15 years and over who, during the reference week:

• worked for one hour or more for pay, profit, commission or payment in kind in a job or business, or on a farm (comprising employees, employers and own account workers); or
• worked for one hour or more without pay in a family business or on a farm (i.e. contributing family workers); or
• were employees who had a job but were not at work and were:
  • away from work for less than four weeks up to the end of the reference week; or
  • away from work for more than four weeks up to the end of the reference week and received pay for some or all of the four weeks up to the end of the reference week; or
  • away from work as a standard work or shift arrangement; or
  • on strike or lock out; or
  • on workers' compensation and expected to return to their job; or
• were employers or own account workers, who had a job, business or farm, but were not at work.

The ABS definition of unemployed is: Persons aged 15 years and over who were not employed during the reference week, and

• had actively looked for full-time or part-time work at any time in the four weeks up to the end of the reference week and were available for work in the reference week, or
• were waiting to start a new job within four weeks from the end of the reference week and could have started in the reference week if the job had been available then (future job starters).

The unemployment rate is defined as the number of unemployed persons expressed as a percentage of the labour force (employed and unemployed).

2. Labour Market Payment recipients had a payment status of current for receiving Newstart Allowance and Youth Allowance (Other).

3. The claimant count used in this article consists of all job seekers aged 15 to 64 years (63-64 for females, depending on date of birth) receiving Newstart Allowance and Youth Allowance (Other). These recipients include those who received income from paid work as well as those who did not receive any income.

Newstart Allowance is payable to eligible unemployed persons aged 21 years and over (but below Age Pension age) who are willing to undertake suitable paid employment and, unless exempted, participate in approved activities and/or job search.

Youth Allowance (Other) recipients are Youth Allowance recipients who are not full-time students or full-time Australian Apprentices, i.e. eligible unemployed persons aged under 21 years, looking for work or combining part-time study with job search, or undertaking any other approved activity, or temporarily incapacitated for work or study. It may also include those classified as independent, aged 15 years and above the school leaving age in their state who are satisfying or exempt from the activity test.

Youth Allowance is payable to eligible full-time students aged 16 to 25 years, and to eligible unemployed persons aged 16 to 20 years who satisfy the activity test. There are certain exceptions for some 15 to 25 year olds. Youth Allowees may be undertaking full-time study, full-time job search or a combination of approved activities. Some people will be exempt from the activity test because of their personal circumstances, e.g. illness, homelessness or major personal crisis.

The activity test must be satisfied in order for people to receive either the Newstart Allowance or the Youth Allowance (Other). To satisfy the activity test recipients must be actively seeking and willing to take up work or undertaking activities to improve their employment prospects.

DEEWR defines job seekers as all those people being paid Newstart and Youth Allowance (Other), excluding those who did not receive a payment due to their own and/or their partner's income, or where applicable, parental income, and all those known not to be required to search for work as their primary activity.

4. Due to changes in the administration of the labour market payments dataset between government departments, it only possible to obtain electronically sourced claimant count data from 1999. Data is for one week of the quarter month and therefore differs to what is published in LMRP.

5. Between 1999-2000 there was a change in the definition of Newstart Allowance that reduced the number of recipients. Those recipients who were defined as 'current clients' were included in the administrative data, and all suspended clients were excluded (those who failed to comply with the administrative requirements).

During the period 1999-2000, there were also changes to the compilation of the DEEWR administrative dataset, that is all zero paid customers (those customers still 'current' who were not paid benefit due to their own or partners' earnings exceeding the allowed amount) were excluded. In addition, those clients in the Community Development Employment Projects were also excluded.

6. The ABS definition of future job starters is: persons aged 15 years and over who were not employed during the reference week, and were waiting to start a new job within four weeks from the end of the reference week and could have started in the reference week if the job had been available then.

7. Applicants of Newstart Allowance and Youth Allowance (Other) are also subject to personal income and assets tests. Applicants of Newstart Allowance who are partnered are ineligible to receive payments if their partner earns $1,408.00 or more per fortnight. As of 1 July 2008, applicants of Youth Allowance (Other) who are partnered, away from home and job seekers are ineligible to receive payments if their partner earns $1,278.00 or more per fortnight. Applicants of Youth Allowance (Other) who are partnered, with dependents and job seekers are ineligible to receive payments if their partner earns $1,394.00 or more per fortnight.

8. The maximum age range for females receiving LMP varies between 63 and 64 years of age, depending on their date of birth.

9. The ABS definition of not in the labour force is: persons aged 15 years and over who were not classified as employed or unemployed, as defined by the ABS.