6302.0 - Average Weekly Earnings, Australia, Nov 2012 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 21/02/2013
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EXPLANATORY NOTES
5 Also excluded are the following persons who are not regarded as employees for the purposes of this survey:
6 The sample for AWE, like most Australian Bureau of Statistics (ABS) business surveys, is selected from the ABS Business Register which is primarily based on registrations to the Australian Taxation Office's (ATO) Pay As You Go Withholding (PAYGW) scheme. The population is updated quarterly to take account of:
7 The estimates include an allowance for the time it takes newly registered businesses to be added to the survey population. 8 Businesses which have ceased employing are identified when the ATO cancels their PAYGW registration. In addition, businesses which have not remitted under the PAYGW scheme for the previous five quarters are removed from the population. SURVEY DESIGN 9 A sample of 5,500 employer units is selected from the ABS Business Register to ensure adequate state, industry and sector representation. The sample is updated each survey period to reflect changes in the ABS Business Register. These changes arise from the emergence of new businesses, takeovers and mergers, changes to industry classification, changes in the number of employees, and businesses which have ceased operations. Such updating of the register can contribute to movements in the AWE estimates. 10 A sample redesign of the AWE survey was implemented in August 2009 incorporating the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 1.0) (cat. no. 1292.0). 11 The statistical unit for the survey comprises all the activities of an employer in a particular state or territory based on the Australian Business Number (ABN) unit or Type of Activity Unit (TAU). Each statistical unit is classified to an industry which reflects the predominant activity of the business. The statistical units are stratified by state, sector, industry division and employment size, and within each stratum, statistical units are selected with equal probability. INDUSTRY CLASSIFICATION 12 The statistics in this release are classified to industry in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 1.0) (cat. no. 1292.0). This replaced the 1993 edition of ANZSIC in the August 2009 issue of this publication, which had been in use since 1994. 13 The 2006 edition of ANZSIC was developed to provide a more contemporary industrial classification system, taking into account issues such as changes in the structure and composition of the economy, changing user demands and compatibility with major international classification standards. SURVEY FREQUENCY 14 Prior to 2012, Average Weekly Earnings was conducted on a quarterly basis. However, the frequency of the AWE survey has been reduced to biannual with the May 2012 publication being the last quarterly issue and the November 2012 publication the first produced on a biannual basis. AWE data will be produced twice a year relating to the May and November reference periods only. Data will continue to be collected and released on the same basis as before for the May and November reference periods. For full details on the change in frequency, refer to the Information Paper: Changes to Average Weekly Earnings, Australia, April 2012 (cat. no. 6302.0.55.002) 15 As a result of the change in frequency, new seasonally adjusted and trend estimate series have been produced (refer to paragraphs 40-47 below). IMPACT OF STATISTICAL CHANGES IMPLEMENTED IN AUGUST 2009 16 With effect from the August 2009 edition, this publication presents data on the basis of the 2006 edition of ANZSIC. At this time the ABS also implemented a sample redesign. The changes resulted in a shift in the level of the series from ANZSIC 1993 to ANZSIC 2006 estimates. The difference in the level of the two series was measured and backcast into the historical series to make a time series of estimates on an ANZSIC 2006 basis. Because of the changes to level estimates, quarterly and annual percentage change movements for the ANZSIC 2006 AWE series are not identical to those under ANZSIC 1993. Differences at the State, Sector and Australia levels are generally insignificant and within standard errors for each series. 17 Published industry series have been backcast and data from August 1994 to May 2009 are available on the basis of both editions of ANZSIC on the ABS website. More information about theses changes can be found in the Information Paper: Changes to Average Weekly Earnings, Australia, Aug 2009 (ABS cat. no. 6302.0.55.002). CHANGES TO THE ABS BUSINESS REGISTER 18 The introduction of The New Tax System in July 2000 had a number of significant implications for ABS business statistics, including changes to the populations for most business surveys. These implications are discussed in general terms in the Information Papers: ABS Statistics and The New Tax System, 2000 (cat. no. 1358.0) and Improvements in ABS Economic Statistics [Arising from The New Tax System], 2002 (cat. no. 1372.0). In relation to AWE, these changes caused a greater than normal rotation of businesses included in the sample for the May 2001 and August 2002 surveys. STATISTICAL UNITS DEFINED ON THE ABS BUSINESS REGISTER 19 The ABS uses an economic statistics units model of the ABS Business Register to describe the characteristics of businesses, and the structural relationships between related businesses. The units model is also used to break groups of related businesses into relatively homogeneous components that can provide data to the ABS. 20 The current units model was introduced into the ABS in mid 2002, to better use the information available as a result of The New Tax System. The model allocates businesses to one of two sub-populations. The vast majority of businesses are in what is called the ATO Maintained Population, while the remaining businesses are in the ABS Maintained Population. Together, these two sub-populations make up the ABS Business Register population. ATO Maintained Population 21 Most businesses and organisations in Australia need to obtain an ABN, and are then included on the ATO Australian Business Register. Most of these businesses have simple structures; therefore the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO Maintained Population, and the ABN unit is used as the economic statistics unit in economic collections. ABS Maintained Population 22 For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with businesses. These businesses constitute the ABS Maintained Population. This population consists typically of large, complex and diverse businesses. The statistical units model described below was introduced to cover such businesses. 23 Enterprise Group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts, and partnerships. Majority ownership is not required for control to be exercised. 24 Enterprise: The enterprise is an institutional unit comprising (i) a single legal entity or business entity, or (ii) more than one legal entity or business entity within the same Enterprise Group and in the same institutional subsector (i.e. they are all classified to a single Standard Institutional Sector Classification Australia subsector). 25 Type of Activity Unit (TAU): The TAU comprises one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment data for similar economic activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry subdivision. 26 For more information please refer to the Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System], 2002 (cat. no. 1372.0). GENERAL NOTES ON ESTIMATES 27 AWE statistics represent average gross (before tax) earnings of employees and do not relate to average award rates or to the earnings of the 'average person'. AWE estimates are derived by dividing estimates of weekly total earnings by estimates of the number of employees. Changes in the averages may be affected not only by changes in the level of earnings of employees but also by changes in the overall composition of the wage and salary earner segment of the labour force. 28 There are several factors which can contribute to compositional changes, including variations over time in the proportions of full-time, part-time, casual and junior employees; variations in the occupational distribution within and across industries; variations in the distribution of employment between industries; and variations in the proportion of male and female employees. Such effects may apply differently within different states and territories, and over time. AVERAGE WEEKLY CASH EARNINGS 29 The definition of earnings currently used in the AWE survey is, broadly, current and regular payments in cash to employees for work done. Thus, earnings series from the AWE survey historically excluded amounts salary sacrificed, as these have been considered conceptually as payments in kind. However, under the revised conceptual framework for measures of employee remuneration, as presented in Information Paper: Changes to ABS Measures of Employee Remuneration, 2006 (cat. no. 6313.0), amounts salary sacrificed are now considered conceptually to be wages and salaries in cash. Accordingly, the AWE questionnaire was redesigned, and from August 2007, the collection of information on amounts salary sacrificed by employees commenced. However, the AWE series has continued to be published on the old conceptual basis (i.e. exclusive of amounts salary sacrificed) to maintain long term comparability of the time series. 30 Although the AWE survey has conceptually excluded amounts salary sacrificed, in practice, there was evidence that earnings series from the AWE survey had inadvertently included some amounts salary sacrificed. The ABS worked closely with data providers to identify any instances of misreporting, and to amend their reporting practices where necessary. 31 As a result of the separate collection of salary sacrificed amounts from August 2007, and other analyses, the ABS was able to quantify the extent of mis-reporting that had occurred, and to estimate the impact of this mis-reporting on the historical series. Consequently, AWE data series for August 1996 through to May 2008 were revised to exclude all amounts salary sacrificed. For further information see Information Paper: Revisions to the Average Weekly Earnings Series, Aug 2008 (cat. no. 6302.0.55.001) released 11 November 2008. 32 Since the May 2011 issue of this publication, an Average Weekly Cash Earnings (AWCE) series has also been released as an additional (not replacement) series of the AWE series. The difference between the AWCE and the AWE series is the average weekly amount salary sacrificed. Data relating to the AWCE series are available in Excel spreadsheets on the ABS website Downloads tab. For more information relating to the AWCE series, refer to the Information Paper: Release of Average Weekly Cash Earnings Series, May 2011 (cat. no. 6302.0.55.003) and for broad level analysis and findings refer to the Information Paper: Changes to Average Weekly Earnings, Australia, April 2012 (cat.no. 6302.0.55.002). COMPARABILITY OF SERIES 33 The current AWE series, based on information obtained from a sample survey of employers, was introduced in August 1981. Prior to August 1981, the AWE series was based principally on information from payroll tax returns. Revised estimates of AWE for the period August 1981 to November 1983 were included in Average Weekly Earnings, States and Australia, March 1984 (cat. no. 6302.0) published on 12 July 1984 and available on the ABS website. Users who need a measure of the movement in earnings for a period which spans both the payroll tax based and employer survey series should refer to Table 3 in that publication which presents both series linked to a common index base (August 1981 = 100.0). COMPARABILITY WITH WAGE PRICE INDEX 34 Period-to-period movements for the AWE series are not comparable with those for the Wage Price Index (WPI). It is important to recognise that the two series have different purposes and concepts and use different sample selection and estimation methodologies. 35 The AWE survey is designed to measure the level of average earnings in Australia at a point in time. It does this by collecting information from businesses on their number of employees and their total gross weekly earnings for a specific pay period each quarter. The WPI is a price index designed to measure the change over time in the price of labour. It does this by pricing specific jobs, in terms of wage and salary payments to employees occupying the jobs, and collecting information from businesses each quarter on price changes in those jobs. It is unaffected by changes in the quality and quantity of labour purchased by employers. 36 In addition to changes in the price of labour, AWE estimates are affected by changes in hours worked and by compositional changes in the employee workforce (see paragraphs 27 and 28). The WPI prices a fixed quantum of labour services for each job, and hence changes to base earnings resulting from increases in hours worked or from changes in the composition of the employee workforce will not be reflected in the index. 37 For further information on the WPI, please refer to the Explanatory Notes of Labour Price Index, Australia (cat. no. 6345.0) and Labour Price Index: Concepts, Sources and Methods, 2004 (cat. no. 6351.0.55.001) which are available on the ABS web site. EFFECTS OF ROUNDING 38 Estimates of average weekly earnings are rounded to the nearest 10 cents. 39 Percentage changes are calculated on the actual values and may differ from calculations based on rounded estimates. SEASONAL ADJUSTMENT 40 Seasonal adjustment is a means of removing the estimated effects of normal seasonal variation from the series so that the effects of other influences 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 series. Influences that are volatile or unsystematic can still make it difficult to interpret the movement of the series even after adjustment for seasonal variation. If a time series has no identifiable seasonality it is not seasonally adjusted. 41 As part of the transition to a biannual frequency, an assessment was conducted on the feasibility of releasing biannual seasonally adjusted and trend estimates. It was determined that reducing the frequency of collection did not eliminate observed seasonality for some time series leaving 27 biannual series needing seasonal adjustment. Producing seasonally adjusted estimates for biannual time series poses challenges as producing seasonally adjusted estimates for this frequency is non-standard in ABS and other international agency publications. As a result, the seasonal adjustment has been performed using an experimental methodology. 42 The new biannual seasonally adjusted series, commencing with the November 2012 issue, uses the ABS's existing quarterly seasonal adjustment method. Original data series are synthesised from actual data collected for reference periods and data for the 'missing' observations imputed using linear interpolation based on the succeeding and proceeding survey estimates. These synthesised estimates are used in the seasonal adjustment process and are not released. The seasonally adjusted statistics in this publication use the concurrent seasonal adjustment technique and Autoregressive Integrated Moving Average (ARIMA) modelling to estimate factors from this quarterly synthesised original data. 43 Under concurrent seasonal adjustment, the estimates of seasonal factors are refined as new or revised original estimates become available each period. However, for this collection, the seasonally adjusted estimates up to and including May 2012 presented in the May 2012 issue will not be revised as they were based on actual quarterly observations. TREND ESTIMATES 44 Seasonally adjusted estimates can be smoothed to reduce the impact of irregular or non-seasonal influences. Smoothed seasonally adjusted series are called trend estimates. 45 The ABS considers that trend estimates provide a more reliable guide to the underlying direction of the original estimates and are more suitable than either the seasonally adjusted or original estimates for most business decisions and policy advice. 46 The trend estimates in this publication, obtained by dampening out the irregular component from the seasonally adjusted series, are calculated using a centred 7-term Henderson moving average of the seasonally adjusted estimates of quarterly synthesised original data. Estimates for the two most recent periods cannot be calculated using this centred average method: instead an asymmetric average is used. This can lead to revisions in the trend estimates for the last two observations when data become available for later periods. Revisions of trend estimates will also occur with revisions to the original data and re-estimation of seasonal adjustment factors. If a series is highly volatile then the trend estimates will be subject to greater revision for the latest few observations as new data become available. However, it is important to note that this does not make the trend series inferior to the seasonally adjusted or original series. 47 Please note that calculating seasonally adjusted and trend estimates on the synthesised quarterly series has resulted in a slight change in the level of the data. RELATED PUBLICATIONS 48 The following publications contain related information:
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