QUALITY DECLARATION - SUMMARY

INSTITUTIONAL ENVIRONMENT

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.


RELEVANCE

The biannual Survey of Average Weekly Earnings (AWE) is designed to produce estimates of the level of average gross weekly earnings associated with employee jobs in Australia, at a point in time. While AWE is not designed for movement in earnings, the frequency of collection supports a time series of these level estimates. In practice, AWE is used for estimates of both the level of earnings and movement in earnings; level estimates and estimates of movement in AWE are linked to both state and federal legislation for adjusting a variety of government payments. AWE data are also used for analysing average earnings, framing and supporting wage claims/submissions, monitoring wage equity and developing taxation and social policies.

The key earnings series produced from the survey are:

• full-time adult ordinary time earnings (commonly referred to as AWOTE);
• full-time adult total earnings;
• all employees total earnings.

Each of the above series is available for males, females and persons. Estimates are available by state/territory, industry and sector. Seasonally adjusted, where there is observed seasonality, and trend estimates are produced for key series. Cash series estimates, which are inclusive of amounts salary sacrificed, are also available.


TIMELINESS

AWE is produced for the June and December quarters. The reference period for the survey is the last pay period ending on or before the third Friday of the middle month of the reference quarter (i.e. May and November). Where a pay period is fortnightly or monthly, etc., the employer is requested to report only one week's proportion.

Up until May 2012, Average Weekly Earnings was conducted on a quarterly basis. The frequency of the AWE survey was changed to biannual with effect from the 2012/13 financial year. The May 2012 publication was the last quarterly issue and the November 2012 the first produced on a biannual basis.

AWE estimates are released approximately 13 weeks after the reference date for the May edition and 14 weeks after the reference date for the November edition due to the Christmas and New Year period.


ACCURACY

Information for the AWE survey is collected via web form questionnaires which are distributed to approximately 5,700 employers. The population of employers is stratified by state, sector, industry division and employment size to ensure adequate state, sector and industry representation. The target minimum response rate is 96% for the survey as a whole and 90% for each state, sector and industry.

There are two principal sources of error in surveys: sampling error and non-sampling error. Non-sampling error arises from inaccuracies in collecting, recording and processing the data. Every effort is made to minimise non-sampling error by the careful design and testing of questionnaires, detailed checking of the reported data and direct follow up with providers where significant errors are detected.

Sampling error occurs when a sample or subset of the population is surveyed rather than the entire population. One measure of the likely difference resulting from not including all of the population 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 the whole population had been included in the survey.

As the primary purpose of AWE is to estimate the level of average earnings in Australia, the standard errors for period-to-period movements are much higher proportionally than for level estimates. Estimates of movement should be interpreted with this in mind.

AWE estimates are seasonally adjusted to remove the estimated effects of normal seasonal variation from the series. The seasonally adjusted series are further smoothed to reduce the impact of irregular or non-seasonal factors. Smoothed seasonally adjusted series are called trend estimates. As data becomes available for the next period there are usually revisions in the seasonally adjusted and trend estimates for the previous periods.

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.


COHERENCE

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 primarily on information from payroll tax returns.

Data collection methodology has been improved over time, including survey definitions and sample design. Seasonally adjusted estimates were introduced in 1983 and trend estimates were introduced in 1993.

The AWE survey uses Australian standard classifications to facilitate data comparability across statistical series. From the August 2009 issue of the AWE publication, data is presented using the 2006 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC). 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.

Industry data from August 2009 is only available on an ANZSIC 2006 basis. Published industry series were backcast and data from August 1994 to May 2009 are available on the ABS website on the basis of both the 2006 edition and the previous 1993 edition of ANZSIC.

The ABS conducts a number of sample surveys of businesses which collect information about wages and salaries. One of these, the Wage Price Index, is designed to measure the change over time in the price of wages and salaries. Period-to-period movements for the AWE series are not comparable with those for the Wage Price Index as the two series have different purposes and concepts and use different sample selection and estimation methodologies. For further information on comparability between AWE and WPI, refer to the feature article Average Weekly Earnings and Wage Price Index - What do they measure? published in the May 2014 AWE issue.


INTERPRETABILITY

Average weekly earnings statistics represent average gross earnings of employees and do not relate to average award rates nor to the earnings of the 'average person'. 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.

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.

AWE statistics closely follow the International Labour Organisation's concept of 'Statistics of average earnings'. The data is collected in respect of a typical week and, therefore, may not reflect events such as Christmas trading. Further, the data excludes irregular and infrequent payments, such as annual bonuses. For these reasons, caution is advised if using AWE to derive annualised average earnings.

For further information on understanding Average Weekly Earnings statistics, please refer to the feature article A Guide to Understanding Average Weekly Earnings Statistics, published in the November 2014 release.

Average Weekly Earnings, Australia (cat. no. 6302.0) contains Explanatory Notes, a Glossary and a Technical Note which provide further information about data sources, terminology and other technical aspects of the series.


ACCESSIBILITY

Average Weekly Earnings, Australia (cat. no. 6302.0) is available electronically from the ABS website and includes downloadable Excel data files for time series data.