THE UNEMPLOYED AND RECIPIENTS OF GOVERNMENT UNEMPLOYMENT BENEFITS - DIFFERENCES EXPLAINED

INTRODUCTION

Comparisons are often made between the official unemployment estimates produced by the ABS and counts of recipients of government job seeker income support produced by the Department of Social Services¹. While both measures inform policy makers and analysts about people seeking employment, the two measures differ in many ways.

This article explores the definition, scope and concepts behind the two measures and also examines the key differences between them.

THE ABS MEASURE OF UNEMPLOYMENT

The ABS classifies individuals as either employed, unemployed or not in the labour force based on their activity in the survey reference week. This is done by collecting information from a representative sample of Australians every month, in which they are asked a range of questions such as: whether or not they are working; and if they are not working, whether they looked for work; and whether they were available to start work. The answers to these questions allow the ABS to accurately estimate the number of people aged 15 years and over who satisfy the ABS definition of unemployed.

The ABS estimates of unemployment are based on the number of people without work, who are actively seeking work and who are available for work in the survey reference week². This is in line with agreed international statistical definitions, and has been measured in a consistent way since the Labour Force Survey was first conducted in 1966. For more information on how unemployment is defined see the article How does the ABS measure unemployment, in this issue of Australian Labour Market Statistics (cat. no. 6105.0).

The ABS does not use information on whether people receive a government job seeker income support payment to measure unemployment.

RECIPIENTS OF GOVERNMENT JOB SEEKER INCOME SUPPORT

The measure of recipients of job seeker income support is based on administrative data and is the count of the number of people receiving Newstart Allowance (NSA) or Youth Allowance (Other) (YAO) - which are the two primary income support payments for job seekers.

NSA is payable to eligible people aged 22 years and over (but below the Age Pension age) who are willing to undertake suitable paid employment and participate in approved activities and/or job search³. Youth Allowance is payable to eligible full-time students aged 16 to 25 years, and to eligible persons aged 16 to 21 who satisfy the activity test⁴. YAO recipients are Youth Allowance recipients who are neither full-time students nor full-time Australian Apprentices.

OVERLAP BETWEEN THE TWO MEASURES

The ABS Survey of Income and Housing (SIH) is used in this article to demonstrate the extent of overlap between the two measures. In this survey, the ABS collects detailed information from people about all of their current sources of income, including government pensions and allowances. Information collected in the survey is used to estimate the labour force status of people receiving job seeker income support payments.

The SIH data provides information on whether people receive NSA or Youth Allowance, but it does not separately identify those recipients who only receive YAO. However, excluding full-time students from the SIH data, leaves a population that approximates YAO, although full-time apprentices are still included. This analysis provides an approximation of recipients of job seeker income support by including the following populations from the SIH: those receiving NSA, and the approximated YAO population.

Figure 1 shows that while there is a group of individuals who were unemployed and received a government job seeker income support payment in 2011-12, the majority of the unemployed were not receiving NSA or YAO. It also shows that not all people receiving NSA or YAO were classified as unemployed according to the ABS definition. In 2011-12, just over one-third (36%) of these recipients were defined as unemployed, with the remaining recipients classified as employed (26%) or not in the labour force (38%). Furthermore, the SIH estimates that only 30% of all unemployed people were receiving NSA or YAO in 2011-12.

REASONS FOR THE DIFFERENCES IN THE ABS UNEMPLOYMENT MEASURE AND COUNTS OF JOB SEEKER INCOME SUPPORT RECIPIENTS

Unemployed who are not job seeker income support recipients

People who are counted as unemployed by the ABS may not receive job seeker income support for a number of reasons. In addition to activity test requirements, applicants for NSA and YAO are subject to personal income and assets tests for themselves and their spouse. Unemployed people may not be eligible to receive income support payments if their partner's income, or value of own assets, exceeds the amount specified in the relevant personal income and asset test⁵. They may also be subject to an income maintenance period where a recent leave or redundancy payment from their previous employer is treated as income for the income test.

Some unemployed people may only expect to be out of work for only a short period, and may choose to support themselves financially through savings or the income of a spouse/partner. Others may be receiving another type of income support payment (such as the Parenting Payment or Disability Support Payment).

Job seeker income support recipients who are not unemployed

As noted above, there are a number of people who receive a job seeker income support but would not be included in the ABS' unemployment estimates. A job seeker income support recipient would not be classified by the ABS as unemployed if they undertook one hour or more of paid work in the reference week, or have not actively looked for work in the previous four weeks or are not available to start work immediately.

Job seeker income support recipients are able to undertake some paid work and continue to receive their payment until the income from that paid work reaches a specified level, at which time they become ineligible to receive further benefits. Recipients who undertook one hour or more of paid work in the reference week would not be classified as unemployed according to the ABS definition; rather they would be classified as employed.

Other recipients may be engaged in training, study or full-time voluntary work as part of the activity test requirements, which may mean that they are not available to start work. These people would not be classified as unemployed according to the ABS definition as they are not available to start work in the survey reference week; rather they would be classified as not in the labour force, and could form part of the group of people described as marginally attached to the labour force⁶.

Also some recipients may be temporarily exempt from the activity test requirements due to personal circumstances such as illness, homelessness or major personal crisis. These people would not be classified as unemployed according to the ABS definition if they did not actively look for work in the previous four weeks; rather they would be classified as not in the labour force, and also could form part of those marginally attached to the labour force.

SUMMARY

While the ABS unemployment measure and counts of recipients of government job seeker income support payments both inform policy makers and analysts on people seeking employment, they differ in many ways. Not all people receiving NSA and YAO are unemployed according to the ABS definition, and conversely, only a proportion of all those classified by the ABS as unemployed received NSA or YAO in 2011-12.

The ABS unemployment measure is the official measure of unemployment in Australia and is the best source for an estimate of the number of unemployed persons and the unemployment rate. Counts of persons in receipt of government job seeker income support payments refer to those job seekers who have registered with the Department of Human Services for financial support during their search for work.

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 Chapter 6 of Labour Statistics: Concepts, Sources and Methods (cat. no. 6102.0.55.001). For more information about the information presented in this article, please contact the Labour Market Statistics Section on (02) 6252 7206 or email labour.statistics@abs.gov.au. For further information on the Department of Social Services (DSS) claimant count data see Labour Market and Related Payments. This publication is produced on a monthly basis by DSS and includes information on the history of labour market payments, as well as small area estimates of claimant count data. This publication was produced previously by the Department of Education, Employment and Workplace Relations (DEEWR).

For further information on the various types of labour market or job seeker income support payments and the eligibility criteria refer to Department of Human Services website.

END NOTES

1. The counts of recipients of government job seeker income support are produced on a monthly basis in the publication Labour Market and Related Payments - a monthly profile. This publication presents statistical information on the various types of labour market payments delivered by the Department of Human Services on behalf of the Department of Social Services. (Department of Social Services, viewed 2 July 2014, <http://www.dss.gov.au/about-the-department/labour-market-and-related-payments-monthly-profile-publications>).

2. ABS defines the unemployed as: 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.
  

3. Newstart Allowance is payable to eligible people aged 22 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. To satisfy the activity test recipients must be actively seeking and willing to take up paid employment or undertaking activities to improve their employment prospects (Department of Human Services, viewed 23 May 2014, <http://www.humanservices.gov.au/customer/enablers/centrelink/newstart-allowance/eligibility-for-newstart-allowance>).

4. Youth Allowance is payable to eligible people aged 16–21 who satisfy the activity test or aged up to 24 if undertaking full-time study. To satisfy the activity test recipients must be actively seeking and willing to take up paid employment or undertaking activities to improve their employment prospects. People aged over 24 may be eligible if they were receiving Youth Allowance as an Australian Apprentice or full-time student before turning 24 and continue in that course or apprenticeship. Youth Allowance (Other) recipients are Youth Allowance recipients who are neither full-time students nor full-time Australian Apprentices (Department of Human Services, viewed 23 May 2014, <http://www.humanservices.gov.au/customer/enablers/centrelink/youth-allowance/eligibility-for-youth-allowance>).

5. Applicants of Newstart Allowance and Youth Allowance are subject to income and assets tests and thresholds. This varies according to whether the recipient: is single; is a member of a couple; has dependent children; is a dependent young person; or is aged over 60. Recipients are also subject to: parental and personal means test or personal means test (if the person is independent and single); or the partner and personal means test (if the person is independent and a member of a couple). The parental means test applies to dependent young persons, including those required to live away from home. From 1 July 2013 the rate reduces by 20 cents for every $1 the parent’s income exceeds $47,815. There is also an asset test and family actual means test (Department of Human Services, viewed 23 May 2014, <http://www.humanservices.gov.au/customer/enablers/income-test-allowances>).

6. People considered marginally attached to the labour force are those who were not in the labour force in the reference week, wanted to work and:

• were actively looking for work but did not meet the availability criterion to be classified as unemployed; or
• were not actively looking for work but were available to start work within four weeks.