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EXPLANATORY NOTES


INTRODUCTION

1 This publication contains estimates of the civilian labour force derived from the Labour Force Survey component of the Monthly Population Survey. The full time series for estimates from this publication are also available electronically. More detailed estimates are released one week after this publication in various electronic formats - see Labour Force, Australia, Detailed - Electronic Delivery (cat. no. 6291.0.55.001) and Labour Force, Australia, Detailed, Quarterly (cat. no. 6291.0.55.003).


CONCEPTS, SOURCES AND METHODS

2 The conceptual framework used in Australia’s Labour Force Survey aligns closely with the standards and guidelines set out in Resolutions of International Conferences of Labour Statisticians. Descriptions of the underlying concepts and structure of Australia's labour force statistics, and the sources and methods used in compiling the estimates, are presented in Labour Statistics: Concepts, Sources and Methods (cat. no. 6102.0.55.001) which is available on the ABS website <https://www.abs.gov.au>.


LABOUR FORCE SURVEY

3 The Labour Force Survey is based on a multi-stage area sample of private dwellings (currently approximately 29,000 houses, flats, etc.) and a list sample of non-private dwellings (hotels, motels, etc.), and covers approximately 0.33% of the civilian population of Australia aged 15 years and over.

4 Information is obtained from the occupants of selected dwellings by specially trained interviewers using computer-assisted interviewing.

5 Households selected for the Labour Force Survey are interviewed each month for eight months, with one-eighth of the sample being replaced each month. The first interview is conducted face-to-face. Subsequent interviews are conducted by telephone (if acceptable to the respondent).

6 The interviews are generally conducted during the two weeks beginning on the Sunday between the 5th and 11th of each month. The information obtained relates to the week before the interview (i.e. the reference week). Each year, to deal with operational difficulties involved with collecting and processing the Labour Force Survey around the Christmas and New Year holiday period, interviews for December start four weeks after November interviews start, and January interviews start five weeks after December interviews start. As a result, January interviewing may commence as early as the 7th or as late as the 13th, depending on the year. Occasionally, circumstances that present significant operational difficulties for survey collection can result in a change to the normal pattern for the start of interviewing.

7 Estimates from the Labour Force Survey are published first in this publication 32 days after the commencement of interviews for that month, with the exception of estimates for each December which are published 39 days after the commencement of interviews.


SCOPE OF SURVEY

8 The Labour Force Survey includes all persons aged 15 years and over except members of the permanent defence forces, certain diplomatic personnel of overseas governments customarily excluded from census and estimated population counts, overseas residents in Australia, and members of non-Australian defence forces (and their dependants) stationed in Australia.


COVERAGE

9 In the Labour Force Survey, coverage rules are applied which aim to ensure that each person is associated with only one dwelling, and hence has only one chance of selection. The coverage rules are necessarily a balance between theoretical and operational considerations. Nevertheless, the chance of a person being enumerated at two separate dwellings in the survey is considered to be negligible.


POPULATION BENCHMARKS

10 The Labour Force Survey estimates are calculated in such a way as to add up to independent estimates of the civilian population aged 15 years and over (population benchmarks). These population benchmarks are projections of the most recently released quarterly Estimated Resident Population (ERP) data. For information on the methodology used to produce the ERP see Australian Demographic Statistics (cat. no. 3101.0). To create the population benchmarks for the Labour Force Survey, the most recently released quarterly ERP estimates are projected forward one quarter past the period for which they are required. The projection is based on the historical pattern of each population component - births, deaths, interstate migration and net overseas migration (NOM). By projecting one quarter past that needed for the current population benchmarks, demographic changes are smoothed in, thereby making them less noticeable in the population benchmarks.

11 Commencing March 2010, the ERP series is revised twice-yearly in the March and September quarter issues of Australian Demographic Statistics (cat. no. 3101.0). This biannual revision cycle incorporates more up to date information available for NOM. The revised ERP estimates are used to update the quarterly population projections used in creating the Labour Force Survey population benchmarks.

12 Every five years, the ERP series are revised to incorporate additional information available from the latest Census of Population and Housing (Census). Following the incorporation of census information, the ERP series prior to the latest census are final and subject to no further revision. Labour Force Survey population benchmarks, and the estimates, are revised following this 5-yearly revision in the ERP. From the February 2009 issue of this publication, labour force estimates have been compiled using population benchmarks based on the results of the 2006 Census. Revisions were made in the February 2009 issue to historical labour force estimates from June 2001 to January 2009.

13 As noted, Labour Force Survey population benchmarks are derived from ABS' ERP series. In the past, ABS has revised the Labour Force Survey population benchmarks every five years in order to incorporate additional information from the latest Census. However, in the July 2010 issue of this publication the Labour Force Survey population benchmarks were revised back to July 2006 to accommodate earlier revisions to ERP.

14 From October 2010 onwards, the net overseas migration component of the Labour Force Survey population benchmarks has been derived using assumptions that take into account a range of available supplementary data sources and relevant information to forecast population changes in the short-term. See articles in Labour Force, Australia (cat. no. 6202.0) titled: Labour Force Survey Population Benchmarks in the September 2010 issue; and Changes in this issue in the October 2010 issue. In the future, the ABS may occasionally rebenchmark and revise Labour Force Survey estimates to take account of changes in ERP as additional information becomes available. Where revisions are undertaken, these will be communicated in this publication.


ESTIMATION METHOD

15 The estimation method used in the Labour Force Survey is Composite Estimation, which was introduced in May 2007. Composite Estimation combines data collected in the previous six months with current month's data to produce the current month's estimates, thereby exploiting the high correlation between overlapping samples across months in the Labour Force Survey. The Composite Estimator combines the previous and current month's data by applying different factors according to length of time in the survey. After these factors are applied, the seven months of data are weighted to align with current month population benchmarks. For details see Information Paper: Forthcoming Changes to Labour Force Statistics, 2007 (cat. no. 6292.0).


COMPARABILITY OF SERIES

16 From April 1986, the definition of employed persons was changed to include persons who worked without pay between 1 and 14 hours per week in a family business or on a farm (i.e. contributing family workers). For further information, see paragraphs 22 and 23 of the Explanatory Notes in the February 2003 issue of Labour Force, Australia (cat. no. 6203.0).

17 The ABS introduced telephone interviewing into the Labour Force Survey in August 1996. Implementation was phased in for each new sample group from August 1996 to February 1997. During the period of implementation, the new method produced different estimates than would have been obtained under the old methodology. The effect dissipated over the final months of implementation and was no longer discernible from February 1997. The estimates for February 1997 and onwards are directly comparable to estimates for periods prior to August 1996. For further details, see the feature article in the June 1997 issue of Labour Force, Australia (cat. no. 6203.0).

18 From April 2001 the Labour Force Survey has been conducted using a redesigned questionnaire containing additional data items and some minor definitional changes. The definition of unemployed persons was changed to include all persons who were waiting to start work and were available to start in the reference week. This change was introduced in February 2004, when historical unit record data were revised from April 2001 to January 2004. This revision created a small trend break at April 2001 in unemployed persons and unemployment rate series. For further details, see Information Paper: Forthcoming Changes to Labour Force Statistics (cat. no. 6292.0), released in December 2003.

19 Core labour force series were revised in April 2001 for the period April 1986 to March 2001 for the remaining definitional changes introduced with the redesigned questionnaire, to reduce the impact of the changes on labour force series. For further details, see Information Paper: Implementing the Redesigned Labour Force Survey Questionnaire (cat. no. 6295.0) and Information Paper: Questionnaires Used in the Labour Force Survey (cat. no. 6232.0).

20 In May 2007, an improved method of estimation, known as composite estimation, was introduced into the Labour Force Survey. In introducing this change, the ABS revised unit record data from April 2001 to April 2007 based on the new estimation method. While estimates for periods prior to April 2001 are unrevised and were compiled using a different estimation method, no trend break was identified in the employed persons series. Also, no change was identified in the trend breaks in the unemployed persons and unemployment rate series which arose with the introduction of a redesigned survey form in April 2001 (as noted above in paragraph 18). For further details, see Information Paper: Forthcoming Changes to Labour Force Statistics, 2007 (cat. no. 6292.0).


LABOUR FORCE SURVEY SAMPLE

21 The current Labour Force Survey sample has been selected using information collected in the 2006 Census of Population and Housing.

22 The majority of this sample was phased in over the period November 2007 to June 2008, with one-eighth of this portion of the sample being introduced every month. Such a pattern of implementation means that any changes to labour force estimates due to differences between the two samples, or any other influences, were spread over the eight months. The remainder of the sample (about 20% of the total), which covers less settled areas and non-private dwellings was rotated in full for New South Wales, Western Australia, Northern Territory and Australian Capital Territory in March 2008, and for Victoria, Queensland, South Australia and Tasmania in April 2008.

23 As one of a range of ABS savings initiatives for the 2008-09 financial year, there was a 24% reduction in the LFS sample size for the period July 2008 to August 2009, relative to the June 2008 sample size. The sample reduction was reversed from September 2009 to December 2009, with December 2009 estimates being the first produced under the fully reinstated sample.

24 For further details, see Information Paper: Labour Force Survey Sample Design (cat. no. 6269.0).


RELIABILITY OF ESTIMATES

25 Two types of error are possible in an estimate based on a sample survey: sampling error and non-sampling error.

26 Sampling error occurs because a sample, rather than the entire population, is surveyed. One measure of the likely difference resulting from not including all dwellings in the survey is given by the standard error. There are about two chances in three that a sample estimate will differ by less than one standard error from the figure that would have been obtained if all dwellings had been included in the survey, and about nineteen chances in twenty that the difference will be less than two standard errors. Standard errors of key estimates for the latest month and of movements since the previous month of these estimates are shown in the standard errors section of this publication. Standard errors for other estimates and other movements may be calculated by using the spreadsheet contained in Labour Force Survey Standard Errors, Data Cube (cat. no. 6298.0.55.001) which is available free of charge on the ABS website <https://www.abs.gov.au>.

27 Non-sampling error arises from inaccuracies in collecting, recording and processing the data. Every effort is made to minimise reporting error by the careful design of questionnaires, intensive training and supervision of interviewers, and efficient data processing procedures. Non-sampling error also arises because information cannot be obtained from all persons selected in the survey. The Labour Force Survey receives a high level of co-operation from individuals in selected dwellings, with the average response rate over the last year being 97%. See Glossary for definition of response rate.

28 Due to flooding in Queensland, operational difficulties were experienced in conducting the Labour Force Survey in January 2011. While the disruption to survey operations will have slightly reduced the quality of some Queensland estimates, the impact on the estimates is not statistically significant for most series. However, a noticeable impact on aggregate monthly hours worked was observed for Queensland and a large extreme correction has been applied to stabilise the trend estimate. A similar treatment has been applied to the Australian total series. See article in January 2011 issue of Labour Force, Australia (cat. no. 6202.0) titled: Impact of the Floods on the Labour Force Survey.


SEASONAL ADJUSTMENT AND TREND ESTIMATION

29 Seasonal adjustment is a means of removing the estimated effects of normal seasonal variation from the series so that the effects of other influences on the series can be more clearly recognised. Seasonal adjustment does not aim to remove the irregular or non-seasonal influences which may be present in any particular month. This means that month-to-month movements of the seasonally adjusted estimates may not be reliable indicators of trend behaviour.

30 The Labour Force Survey uses the concurrent seasonal adjustment method to derive seasonal factors. Concurrent seasonal adjustment uses data up to the current month to estimate seasonal factors for the current and all previous months. This process can result in revisions each month to estimates for earlier periods. However, in most instances, the only noticeable revisions will be to the seasonally adjusted estimates for the previous month and one year prior to the current month.

31 The revision properties of the seasonally adjusted and trend estimates can be improved by the use of Autoregressive Integrated Moving Average (ARIMA) modelling. ARIMA modelling relies on the characteristics of the series being analysed to project future period data. The projected values are temporary, intermediate values, that are only used internally to improve the estimation of the seasonal factors. The projected data do not affect the original estimates and are discarded at the end of the seasonal adjustment process. The Labour Force Survey uses an ARIMA model for 95% of the individual time series. The ARIMA model is assessed as part of the annual reanalysis. For further details, see the feature article in the October 2004 issue of Australian Economic Indicators (cat. no. 1350.0).

32 Seasonal adjustment is able to remove the effect of events which occur at the same time in the survey every year. However, there are some events, like holidays, which are not always at the same time in the survey cycle or which are not at the same time across Australia. The effects of these types of events on Labour Force Survey estimates cannot in all cases be removed, because the pattern of their effects cannot be determined. However, two events for which adjustment is made in the seasonally adjusted series are the January interview start date and the timing of Easter. For further details, see Information Paper: Forthcoming Changes to Labour Force Statistics (cat. no. 6292.0) released in December 2003.

33 While seasonal factors for the complete time series are estimated each month, they will continue to be reviewed annually at a more detailed level to take into account each additional year's original data. This annual review will not normally result in significant changes to published estimates. Whilst the review is usually conducted in February each year with the results released in the February issue of this publication, for 2011 the review was conducted in May with the with the results released in the May issue.

34 The smoothing of seasonally adjusted series to produce 'trend' series reduces the impact of the irregular component of the seasonally adjusted series. These trend estimates are derived by applying a 13-term Henderson-weighted moving average to all months except the last six. The last six monthly trend estimates are obtained by applying surrogates of the Henderson average to the seasonally adjusted series. Trend estimates are used to analyse the underlying behaviour of a series over time.

35 While this smoothing technique enables estimates to be produced for the latest month, it does result in revisions in addition to those caused by the revision of seasonally adjusted estimates. Generally, revisions due to the use of surrogates of the Henderson average become smaller, and after three months have a negligible impact on the series.

36 Trend estimates are published for the Northern Territory in table 10 and for the Australian Capital Territory in table 11. Unadjusted series for the two Territories have shown, historically, a high degree of variability, which can lead to considerable revisions to the seasonally adjusted estimates each month when seasonal factors are estimated. For this reason, seasonally adjusted estimates are not currently published for the two Territories. In addition, caution should be exercised in the interpretation of trend estimates for the two Territories, particularly for the three most recent months, where revisions may be relatively large.

37 For further information, see A Guide to Interpreting Time Series - Monitoring Trends (cat. no. 1349.0) or contact the Assistant Director, Time Series Analysis on (02) 6252 6345 or email time.series.analysis@abs.gov.au.


RELATED PUBLICATIONS

38 Users may also wish to refer to the following publications:

• Labour Force Survey Standard Products and Data Item Guide (cat.no. 6103.0). This publication is a reference guide for users of Labour Force Survey data standard products.
• Australian Labour Market Statistics (cat. no. 6105.0). This publication presents key indicators of the labour market, articles on a range of labour market issues, and information about the latest developments in the labour statistics program. For further information about this publication, please contact Labour Market Statistics on (02) 6252 7206.

	Symbol	Definition
	'000	thousands
	%	percentage
	ABS	Australian Bureau of Statistics
	CAI	computer assisted interviewing
	cat. no.	catalogue number
	ERP	estimated resident population
	f/t	full time
	LFS	Labour Force Survey
	p/t	part time
	pts	percentage points
	Seas adj.	seasonally adjusted
	TAFE	Technical and Further Education