This document was added or updated on 26/05/2020.

OVERVIEW OF LABOUR STATISTICS


PURPOSE

This publication provides a comprehensive account of the concepts and definitions underpinning Australian labour statistics, and the data sources and methods used to compile them. It explains:

• What the statistics measure;
• How they can be used;
• How they relate to other economic series;
• How they are produced;
• Where they are published; and
• Why they are subject to varying degrees of accuracy and reliability.

It is designed to assist users in their understanding of Australian labour statistics, and thereby allow better analyses and interpretations of the resulting data.


WHAT ARE LABOUR STATISTICS?

Labour statistics are some of Australia’s key economic statistics. Labour is the aggregate of all human physical and mental effort used in the creation of goods and services. Labour statistics are, put simply, about people, their participation in the labour force, their success in finding employment, their earnings and other benefits, their type of work, their working hours and conditions.

Labour statistics provide insight into the economy and the effects of labour market policy settings, through measures related to the demand for labour (employment, job vacancies); to its supply (unemployment, underemployment, labour force participation); and to its price (labour costs).

Education and training statistics could also be included as a part of labour market statistics. Education and training are aspects of people's preparation for the labour market, and their maintenance of skills once in the labour market. However, the wide variety of issues in this field usually causes it to be treated as a separate area of statistics; accordingly, education and training statistics have largely been excluded from this publication.


SCOPE OF AUSTRALIAN LABOUR STATISTICS

Australian labour statistics provide information on four key components of labour: people, jobs, volume of labour and labour payments (income and costs). Below is a brief and non-exhaustive summary of the information collected by Australian labour statistics on each of these topics:

• People: the total numbers of persons working, looking for work and not working; their demographic and personal characteristics; the efforts they have undergone to find work; their experience in employment, and the amount of work they do.
• Jobs: the number of filled and vacant jobs in the economy; the duration of the jobs; the number of jobs held by employed persons.
• Volume: the number of hours worked by persons in jobs; the number of hours paid for by employers; hours sought by the unemployed and additional hours preferred by the underemployed.
• Payments: average weekly earnings; earnings distribution; compensation of employees and wage price indexes.

The concepts of supply and demand are integral to each of these four topics. Labour statistics provide information on the total demand for and supply of labour; filled and vacant jobs; underemployment; the price of labour; and many other topics.

Boundaries are necessary to define the scope and treatment of activities that occur within the economy and within the labour force. In Australia, the concept of economic activity underlies measures of the economically active population, which in turn is used to define the labour force as well as employing enterprises. For more information on economic activity, enterprises, and the economically active population, see the section: Institutional Units and the Economically Active Population. Labour statistics predominately provide information about the labour force and employing enterprises, however they also inform about groups outside of the labour force, such as those not in the labour force.

The labour force framework classifies the in-scope population into three mutually exclusive categories, at a given point in time: employed, unemployed and not in the labour force. The employed and unemployed categories together make up the labour force, which gives a measure of the number of persons contributing to, or actively looking and immediately available for, the supply of labour at that time. The third category (not in the labour force) represents the currently economically inactive population. Figure 1.1 shows these concepts. For more information on the labour force framework, see the section: Labour Force Framework.

The labour demand framework classifies demand for labour by employing business into job vacancies and filled jobs.





AUSTRALIAN LABOUR STATISTICAL OUTPUTS

The expansion of the labour statistics program since the 1960s has resulted in the Australian Bureau of Statistics (ABS) producing a wide range of labour statistics. Australian labour statistics comprise a large number of measures relating to the Australian labour market. Figure 1.2 illustrates the range of ABS labour statistics, their sources, and broadly how they relate to the labour market.

Household Surveys

Household surveys and population censuses constitute the primary sources of ABS labour statistics on persons and households. In addition to information about current and previous labour force participation, information collected also includes demographic data, such as age, sex, family characteristics and country of birth. Labour statistics collected about persons provide insight into the supply of labour to the Australian labour market.

Household surveys falling within the labour statistics program include:

• The monthly Labour Force Survey (LFS) and its labour related supplementary topics:
  • Characteristics of Employment;
  • Participation, Job Search and Mobility;
  • Education and Work;
  • Pregnancy and Employment Transitions; and
  • Multipurpose Household Survey - labour related topics include Retirement and Retirement Intentions, Barriers and Incentives to Labour Force Participation, and Work Related Injuries.

• Special Social Surveys collecting information on aspects of the labour market - the Survey of Employment Arrangements, Retirement and Superannuation.

The ABS household survey program also includes Household Income and Expenditure Surveys, a General Social Survey, an Indigenous Social Survey, and other social surveys that contain a labour force status module. While some components do not fall specifically within the labour statistics program, they yield a variety of labour statistics about the Australian population.

Business Surveys

Business surveys are the primary source of data on labour costs, earnings, filled jobs, job vacancies and industrial disputes, all of which provide insight into the demand for labour in the Australian labour market. Other sources of labour statistics include administrative data sets, which are the primary source for information on occupational injury.

There are a number of ABS collections that produce labour statistics but do not fall within the ABS labour statistics program, as their primary purpose is not to produce labour market data. These collections nevertheless represent important sources of labour statistics and include various household, industry, and activity specific collections.

Business surveys falling within the labour statistics program collect information from employing businesses on a range of topics. The program includes:

• Average Weekly Earnings Survey;
• Employee Earnings and Hours Survey;
• Survey of Job Vacancies;
• Survey of Major Labour Costs;
• Industrial Disputes Collection;
• Wage Price Index;
• Survey of Employment and Earnings (public sector only from 2002);
• Economic Activity Survey; and
• Quarterly Business Indicators Survey.

Administrative Data Collection

The Administrative data collection has been used in some ABS business surveys as a way to collect information about businesses and reduce respondent burden. More recently, the ABS has utilised large administrative datasets such as taxation data to produce new products and fill gaps not covered by traditional collections. As they are the by-product of existing processes, administrative data sources are typically cost effective as they do not require expensive survey collection. Administrative data typically includes records for entire populations or sub-populations, compared to surveys which collect information on only a sample of the population. As a result, administrative data are able to produce highly granular information such as statistics for small areas. However, because they are not typically designed and created with statistical production in mind, the quality, accuracy, and representativeness of statistics from administrative sources is likely to be of lower quality than survey estimates. The cost effectiveness and increased detail provided by administrative data is balanced against lower quality statistics.

An example of an administrative dataset is the Linked Employer-Employee Dataset (LEED), a key source of detailed information about areas of the labour market including jobs and income. Drawing on personal income tax (PIT) data provided by the Australian Taxation Office (ATO) in combination with business data from the Business Longitudinal Analytical Data Environment (BLADE), the LEED provides information on matched labour demand and supply in terms of reported employer-employee job relationships. The LEED is used to provide annual statistics on jobs and employed persons at both aggregate and detailed industry and regional levels.

USES AND USERS OF LABOUR STATISTICS

Labour statistics are used to study the economic behaviours of employers and employees in response to changing prices, profits, wages and working conditions. They also provide information about the structure of the labour force and its relationship with the wider economy.

Labour statistics have two broad objectives:

• The measurement of the extent of available and unused labour capacity, in time and human resources, for the purpose of macro-economic monitoring and human resources development planning; and

• The measurement of the relationships between employment, income and other social and economic characteristics, for the purpose of formulating and monitoring employment policies and programs, income-generating and maintenance schemes, vocational training and other similar programs.

The first broad objective in collecting data on the economically active population may be labelled as the economic perspective, and the second as the social perspective.

Under each perspective, there are several more specific measurement objectives (footnote 1).

Macro-economic monitoring

From an economic point of view, a major objective of collecting data on the economically active population is to provide basic information on the size and structure of a country's workforce. Data collected at different points in time provide a basis for monitoring current trends and changes in the labour market and in the employment situation. These data, supplemented by information on other aspects of the economy, including information on activities outside the strict definition of economic activity, provide a basis for the evaluation and analysis of the macro-economic policies of a country. The unemployment rate, in particular, is widely used as an overall indicator of the current performance of a country’s economy.

Workforce planning and development

Another objective in collecting data on the economically active population is to provide a basis on which to measure labour supply, labour input and the extent to which available human resources are being utilised in the production process of the economy. Such information is essential for planning and formulating policies on the development of human resources.

Labour supply refers to the population which furnishes the supply of labour for the production of goods and services during a given period; the amount of time that the population works or is available for work during that period; the intensity of work; and the level of training and skill of the population. Labour input is related to labour supply, and refers to the actual utilisation of the available labour. It corresponds to the number of workers at work, their actual time input, productivity and use of skills.

Information on persons outside of the economically active population (e.g. persons not in the labour force) or certain activities outside of economic activity (e.g. home duties or volunteering) supplements these data and allows for a more complete analysis of available human resources. Most of these elements for measuring labour supply and labour input are obtainable from household surveys, but others, such as productivity, use of skills and intensity of work may be better obtained from other sources of data, or from combinations of data from different sources.

Employment policies

Statistics on the economically active population are essential to the design and evaluation of overall government policies aimed at promoting and creating employment. These may include training programs, schemes to help people start or return to work, community work programs, assistance in setting up an enterprise, wage subsidies, tax exemptions and other positive incentives for employment promotion.

The relevant statistics, when broken down by sex, age group, occupational categories and branches of economic activity, also provide essential material for assessing the social effects of government employment policies. Further to this purpose, information is needed on changes in the level of employment and unemployment among women, young persons, elderly workers, Aboriginal and Torres Strait Islander peoples, and other population groups of particular social concern.

Information on activities outside of economic activity, such as the supply of voluntary labour or the care of children at home, provide further information to support the development of effective employment policies.

Income and wealth policies

Employment is the main source of income for most people, and therefore employment statistics constitute a major element in formulating and evaluating government policies on income generation and maintenance, alleviation of poverty and redistribution of income. They can also be used in assessing the effects of price stabilising, structural adjustment and fiscal consolidation policies on the employment and income situation of the working population and its different subgroups. The joint measurement of employment and income provides the basis for analysing the adequacy of employment of different categories of workers, the income-generating capacity of different types of economic activities and the incidence of different forms of employment related economic hardships.

Data on employment and income, disaggregated by occupation, branch of economic activity and other socio-demographic characteristics, are needed in particular for negotiations among social partners, such as collective bargaining and programs for equal opportunity and treatment in employment. Data on labour provided by the persons not in the economically active population supplements information on income and wealth, particularly as it relates to decisions around labour force participation and domestic expenditure (e.g. the decision to care for children at home rather than to work and to pay for childcare).

Other uses

Statistics on the economically active population may also serve a variety of other analytical purposes. Data may be used to explain the past growth of an economy and to study the demographic and socio-economic factors affecting the size and composition of a workforce, or they can be used to make projections of the economically active population and its components as a basis for socio-economic planning. Employment characteristics can serve as explanatory variables in many fields of research, ranging from testing theories on the segmentation of the labour market to formulating demographic models.

Data may be used to inform the public about the state of employment or to focus attention on particular issues, such as child labour or race or gender based discrimination, or alternatives to economic activity such as volunteering. Employment statistics may give useful indications to business planners on the future course of the economy. Statistics about persons not in the labour force and certain non-economic activity (e.g. childcare) may indicate structural changes in the composition of the labour force.

Labour statistics: A user perspective The unemployment rate provides an important gauge of spare capacity in the labour market and the economy more generally. However, other factors also affect unemployment, which complicates its interpretation when informing monetary policy. Statistical methods can be used to estimate the extent to which the unemployment rate reflects spare capacity versus more enduring structural factors. Reserve Bank of Australia: ‘Unemployment and Spare Capacity in the Labour Market’, 2014

Wide spectrums of users require information about labour statistics. These range from users with broad, general needs for information about the main aggregates, to those with highly specialised needs relating to particular data items. The main categories of users, and their likely needs, are set out below:

• The Commonwealth Treasury, the Reserve Bank of Australia (RBA), the Productivity Commission and other public sector economists - a reasonably detailed understanding of Australian sources and methods to support their interpretation of the estimates and forecasting of economic aggregates.
• Financial sector economists, economists working for interest groups, national and international investors, public sector economists in other countries and international credit rating agencies - a reasonably detailed understanding of the conceptual framework, the sources and how the estimates are compiled, to support their interpretation of the statistics and provision of advice to their organisations and clients.
• Trade unions, employer associations, industrial tribunals and lobby groups - a reasonably detailed understanding of the conceptual framework, the sources, and how the estimates are compiled, with more detail on particular items to support research.
• Financial journalists - a broad understanding of the conceptual framework, how the estimates are compiled, and the main outputs, to support media commentary on the current performance of the Australian economy. These users may occasionally require a more detailed understanding of particular aspects.
• Academic researchers - a reasonably detailed understanding of the conceptual framework, the sources and how the estimates are compiled, with more detail on particular items to support research and modelling.
• International agencies such as the International Labour Organisation (ILO), the Organisation for Economic Cooperation and Development (OECD), the World Bank and the United Nations Statistics Division - generally these agencies require a reasonably detailed understanding of all aspects of the statistics. Their uses encompass monitoring the extent of country adherence to international standards and practices, the compilation of country groupings and world economic statistics, assisting in understanding differences in the economic performance of countries, and modelling work to support the preparation of country reports.
• Students at upper high school level or undergraduate level at university - a broad understanding of the conceptual framework, how the estimates are compiled and the main outputs (publication tables, written and graphic analysis, and explanatory notes), to understand the role of education in employment outcomes in the Australian economy.
• Teachers/teaching academics - a broad understanding of the conceptual framework, how the estimates are compiled and the main outputs, to support teaching about Australia’s economy.
• Labour statisticians in other countries - a reasonably detailed understanding of Australian sources and methods, with more detail on particular accounts or items to compare with their own practices.

Labour statistics are used extensively in both economic and social analyses. They are used in the analysis, evaluation, and monitoring of: the economy; the labour market; a wide range of government policies (relating in particular to employment, income support, industrial relations); and population groups of particular concern (women, younger persons, older persons, indigenous people, etc.).


HISTORY OF INTERNATIONAL STANDARDS

The ILO was founded in 1919, at the time of the Peace Conference that followed the end of the First World War. The ILO Constitution was written by the Labour Commission, which was set up by the Peace Conference. The Commission was composed of representatives from nine countries, and was chaired by the head of the American Federation of Labour. It resulted in a tripartite organisation, bringing together representatives of governments, employers and workers in its executive bodies. The ILO is unique among world organisations, in that employers' and workers' representatives have equal voice with those of governments in shaping its policies and programs. The ILO Constitution became Part XIII of the Treaty of Versailles.

The International Labour Conference (ILC) meets annually. It provides an international forum for the discussion of world labour and social issues, and sets minimum international labour standards and broad policies of the ILO. Each member country has the right to send four delegates to the Conference: two from the government and one each representing workers and employers, each of whom may speak and vote independently.

The most important instruments for the work of the ILO are the International Labour Conventions and Recommendations. These are adopted by the ILC and set international labour standards. Through ratification by member States, Conventions create binding obligations to implement their provisions. Recommendations provide guidance on policy, legislation and practice. In the field of labour statistics, the Labour Statistics Convention (No. 160) was adopted by the ILC in 1985, replacing an earlier and more restricted convention regarding wages and hours of work (No. 63, 1938).

The 1985 Convention lays down principles, obligations and recommendations for the collection and publication of labour and related statistics in the fields of employment, unemployment, earnings, hours of work, wage structure and distribution, labour costs, consumer prices, household income and expenditure, occupational injuries and disease, and industrial disputes. Australia ratified the 1985 Convention in 1987.


HISTORY OF AUSTRALIAN LABOUR STATISTICS

Some statistics relating to wage levels, hours of work, labour organisations and unemployment were available in the separate self-governing colonies of Australia in the nineteenth century, when separate statistical bureaux were set up in the various states. However, it was only after Federation in 1901, the subsequent enactment of the Census and Statistics Act in 1905, and the establishment of the Commonwealth Bureau of Census and Statistics in 1906 (footnote 2), that the ground was prepared for the compilation of uniform labour statistics for the whole country. In the first national census of 1911, information was collected on occupation, wage rates, unemployment and duration of unemployment. In the same year a Labour and Industrial Branch was set up within the Commonwealth Bureau of Census and Statistics, with the responsibility for publishing a report 'Trade Unionism, Unemployment, Wages, Prices and the Cost of Housing 1891-1912’.

Responsibility shortly thereafter extended into the fields of industrial disputes, trade unions and industrial accidents. This established the pattern of labour statistics that was to be followed more or less unchanged until the early 1960s. The principal sources of information available during this era were:

• Population censuses – undertaken in 1911, 1921, 1933, 1947 and 1954;
• Trade unions – details of wage rates, numbers of unemployed union members and industrial disputes; and
• Administrative sources – details of awards, determinations, industrial agreements and industrial accidents provided in State and Federal statutory reports were all used in the production of labour statistics.

The first regular statistical measure of 'employment' in Australia dates from the introduction of Payroll Tax in 1941. This provided an administrative source of information suitable for deriving civilian employment by industry for each state and Australia, and average weekly earnings for employed wage and salary earners.

The Commonwealth Employment Service (CES) was established in 1947 to assist people seeking employment to obtain jobs best suited to their qualifications, skills, training and experience, and to assist employers seeking additional labour to obtain people best suited to their needs. As a by-product, the CES produced measures of unemployed persons awaiting placement, as well as measures of vacancies notified by employers. The unemployment measure of the CES remained the official measure of unemployment in Australia until the 1970s. Since one of the principal requirements for qualifying for unemployment benefits was registration with the CES, a high degree of coverage resulted.

The integration of the separate State Statistics Bureaux with the Commonwealth Bureau in the late 1950s (though the Tasmanian integration agreement had been reached in 1924) allowed the resultant statistical organisation to place more emphasis on direct collections (more in line with international practices), and less emphasis on administrative by-product data.

The Commonwealth Bureau of Census and Statistics introduced household surveys in 1960, primarily to provide more detailed and comprehensive measures of the labour force than could be provided from administrative data sources (such as the CES series). Initially the program of household surveys comprised only the LFS, which was conducted in capital cities and on a quarterly basis. In 1964 the LFS was extended to the whole of Australia, and in 1978 it was expanded to a monthly frequency, when the Commonwealth Government decreed that it would provide the official measures for employment and unemployment. A supplementary topic was included with the LFS for the first time in November 1961, and this concept has been gradually extended so that a number of months in each year now include supplementary questions on one or more topics. In 1994 the LFS also became the vehicle for a continuous survey of income and housing costs.

In the 1980s the program of household surveys was further expanded to include a program of Special Social Surveys. These surveys collect in-depth information about a population group or subject area of interest, as well as a range of labour force data for the population in scope. In recent years two Special Social Surveys have focussed on labour topics - the longitudinal Survey of Employment and Unemployment Patterns (1994-1997), and the Survey of Employment Arrangements, Retirement and Superannuation (2007). In 1993, the quarterly Population Survey Monitor was introduced. This survey vehicle was designed to collect small amounts of data about simple topics at a reasonable cost, and to output results in a timely manner. It was discontinued in 2000.

In addition to household surveys, the Commonwealth Bureau of Census and Statistics also introduced labour employer surveys in the 1960s. The program of employer surveys initially comprised an annual survey of employing businesses, which was designed to supplement data being derived from payroll tax records to produce a quarterly average weekly earnings series. Conducted each October, the survey collected detailed dissections of earnings and hours paid for, for various categories of jobs (adult and junior, full-time and part-time, managerial and non-managerial) for both males and females. The quarterly series of average weekly earnings provided limited information about the composition of earnings, and no information on occupational earnings or the distribution of earnings. To supplement the quarterly series, a more extensive survey producing this information was introduced in 1974. Currently conducted biennially, this survey is known as the Survey of Employee Earnings and Hours. A survey of job vacancies was also launched in 1974.

By 1981 it was recognised that the payroll tax series used to produce the average weekly earnings and civilian employee series had deteriorated significantly in terms of coverage, due to increasing payroll tax exemptions. Both series were discontinued and replaced with new series based on two new quarterly surveys of employers - the Survey of Average Weekly Earnings (introduced in 1981 and subsequently modified in 1983), and the Survey of Employment and Earnings (introduced in 1983). The mid 1980s also saw the introduction of an irregular survey of labour costs in 1985-86, which in the early 1990s was supplemented by a series of surveys on training expenditure (1989, 1990, 1993, and 1996). In 1997 the quarterly Wage Cost Index was introduced.

As described in the Information Paper: Outcomes of the Labour Household Surveys Content Review, 2012 (cat. no. 6107.0), the ABS conducted a review of content included in the labour household survey program in 2010-11. The review aimed to improve the relevance of data released, maximise the coherence of interrelated topics and minimise the duplication of content. The scope of the review included the LFS, labour supplementary surveys and labour Multipurpose Household Survey topics. A major outcome of the review was the consolidation of a range of content collected across labour supplementary surveys into two annual collections. Content collected in the supplementary Employee Earnings, Benefits and Trade Union Membership and Forms of Employment surveys was combined and is now included in the content of the Characteristics of Employment supplementary survey, conducted annually each August from 2014. Content collected in the supplementary Persons not in the Labour Force, Underemployed Workers, Job Search Experience and Labour Mobility surveys was also combined and is now included in the content of the Participation, Job Search and Mobility supplementary survey, conducted annually each February from 2015.


STRUCTURE OF THE PUBLICATION

The remaining sections in this publication are organised into two parts. The first part (concepts and sources) explains the concepts that underlie labour statistics, outlines the major classifications used in labour statistics, and overviews the sources for a number of key labour statistics. The second part (methods) focuses on the various labour statistics surveys, describing the data collected in each, methodologies used, and changes to collections over time.

The concepts part of the publication includes the following broad topics: Populations, Work and Hours (Chapters 2-8); Jobs, Remuneration, Conditions, Occupational Injury and Productivity (Chapters 9-14).

Methods part of the publication includes: Other classifications used in labour statistics (Chapter 15); Overview of Survey Methods (Chapter 16); Methods Used in ABS Household Surveys (Chapter 17) and Methods used in ABS Business Surveys (Chapter 23).

Sources provides a brief overview, survey design, history and output for: Labour Force Survey (Chapters 19, 19.1, 20); Labour Force Supplementary Surveys (Chapter 21 and Chapters 21.1-21.5); Multipurpose Household Surveys (Chapter 22 and Chapters 22.1-22.4), ABS Business Surveys (Chapters 24-31) and Australian Labour Account and Linked Employer-Employee Database (Chapter 33).

PREVIOUS AND RELATED PUBLICATIONS

This is a comprehensive and detailed publication produced by the ABS on concepts, sources and methods in the field of labour statistics.
Summary information on the collection methodology, survey definitions and conceptual frameworks are contained in the explanatory notes of every ABS statistical publication.
The ABS also periodically releases information papers, occasional papers etc. on various labour statistics and their associated sources, concepts, definitions and collection methodologies.


FOOTNOTES

1. Hussmanns, R., Mehran, F., Verma, V., Surveys of Economically Active Population, Employment, Unemployment and Underemployment: An ILO manual on concepts and methods, International Labour Office, Geneva 1990. <Back
2. In 1974 the Commonwealth Bureau of Census and Statistics was abolished and replaced by the Australian Bureau of Statistics. <Back

ATTACHMENT ONE: LABOUR STATISTICS IN A POLICY CONTEXT – FROM THE RESERVE BANK OF AUSTRALIA

The Reserve Bank of Australia published an article in 2014, which analysed spare capacity in the labour market from a monetary policy perspective. The article examines the causes of unemployment (frictional, structural or cyclical), and how each relates to the level of spare capacity in an economy.

The article also looks at the relationship between unemployment and inflation, and the extent to which each cause of unemployment influences wages and prices.

The article further explores the idea of spare capacity from the point of view of the characteristics of those who are unemployed – that is, the duration of unemployment, and the reasons for or factors contributing to unemployment.

A link to the full article can be found at: https://www.rba.gov.au/publications/bulletin/2014/sep/pdf/bu-0914-2.pdf


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