1301.0 - Year Book Australia, 2007

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 24/01/2007

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Contents >> Labour >> Article - Barriers and incentives to labour force participation

BARRIERS AND INCENTIVES TO LABOUR FORCE PARTICIPATION

Data about barriers and incentives to labour force participation were collected in a module of the Multi Purpose Household Survey, conducted by the Australian Bureau of Statistics (ABS) from August 2004 to June 2005, as a supplement to the monthly Labour Force Survey. The data collected provide information on the characteristics of the potential labour force in Australia.

To better understand the reasons why people are not fully participating in the labour force, there are several groups of people who are of particular interest. These are the unemployed, persons not in the labour force and people who usually work 15 hours or less, who for the purpose of this article are referred to as people who work few hours. The survey included only those working 15 hours or less, rather than all part-time workers, as this group of people has the potential to increase their labour force participation by a greater amount than other part-time workers. Results from this survey will help to obtain a better understanding of the factors that influence people to join or leave the labour force.

OVERVIEW

In 2004-05 there were 15.1 million people aged 18 years and over, of whom 9.7 million (64%) were employed, 465,000 (3%) were unemployed and 4.9 million (32%) were not in the labour force. Of those employed, 951,700 (10%) usually worked relatively few hours per week, that is, 15 hours or less. Women comprised the majority of this group and of those not in the labour force (75% and 64% respectively), while proportionally more men than women were unemployed (56% of unemployed people were men).

Of the 6.3 million people not employed or who worked few hours, approximately 1.8 million (or 28%) indicated that they would like a job or more hours. This group comprised:

321,700 (or 18%) people who usually worked few hours per week;
465,000 (or 26%) people who were unemployed; and
977,300 (or 55%) people who were not in the labour force.

The remaining 4.5 million people (or 72%) did not want a job or did not want to work more hours, or were undecided.

PEOPLE WHO WANTED A JOB OR MORE HOURS

Of the 1.8 million people who wanted a job or preferred more hours:

348,500 people indicated that they were not available to start a job, or work more hours, within four weeks;
813,700 were not looking for work (includes 25,300 persons who were also not available); and,
627,000 people were available and looking for work or more hours.

Women represented the largest proportion of those who wanted a job or more hours (62%), which is consistent with the fact that more women are underemployed or not in the labour force.

Not available to start a job or work with more hours

Determining the availability of those who are not employed or who work few hours is important because those who are available to work have a greater potential to increase labour force participation than those who are not available. Of the 1.8 million people who were not employed or who worked few hours and wanted a job or more hours, 1.4 million (80%) were available to start work within four weeks. The remaining 348,500 people (20%) were not available. People not in the labour force represented approximately 92% of those not available, while the remaining 8% comprised people who worked few hours. About two-thirds (232,900 or 67%) of those who were not available were women.

Men and women who were not in the labour force differed in their reasons why they were not available to start work within four weeks. Of the 107,100 men not in the labour force who wanted to work, the most commonly reported reason for not being available was long-term sickness or disability (55% or 58,900), followed by short-term sickness or injury (10% or 10,600) (graph 6.23). In contrast, a large proportion of the 213,100 women not in the labour force who wanted a job were not available due to child care, pregnancy or home duties (46%), followed by long-term sickness or disability (16%), and studying commitments (13%).

6.23 PEOPLE NOT IN THE LABOUR FORCE, WANTED JOB BUT WERE NOT AVAILABLE(a), Main reason for not being available

The main reason for not being available to work varied between age groups. For instance, a large proportion of people not in the labour force aged 25-44 years (mainly women) who wanted to work, reported caring for children, pregnancy or home duties as the main reason that they were not available (61%); while a large proportion of young people (aged 18-24 years) were not available due to study commitments (70%); and many of those aged 45 years and over were not available due to long-term sickness or disability (46%) (graph 6.24). Such differences reflect the effect that various life stages can have on labour force participation.

6.24 PEOPLE NOT IN LABOUR FORCE, WANTED JOB BUT WERE NOT AVAILABLE(a), Selected main reasons not available by age group

Not looking for a job or work with more hours

Of the 1.8 million people who were not employed or who worked few hours and wanted a job or more hours, an estimated 813,700 people (46%) indicated that they were not looking for a job or more hours. Most of this group were women (574,100 or 71%) and most were not in the labour force (642,700 or 79%).
Like those who were not available, the most commonly reported reason for not looking for work, or more hours, was caring for children, pregnancy or home duties (22% or 180,900 people). Once again, women made up most of this group (89% or 160,500) and people who gave this response were mostly concentrated in the 25-44 year age group (70% or 126,100). Over 40% of people in this age group were not looking for work, or more hours, due to this reason. Another common reason given for not looking for work, or more hours, was studying or returning to studies (13% or 106,000 people). Of people who gave study as their main reason for not looking for work, most (69% or 73,000) were aged 18-24 years, with 52% of this age group citing study as their main reason. Being considered too old by employers was given as the main reason for not looking for work, or more hours, by 9.7% of those who were not looking. Of people who gave this as their main reason 92% (or 72,600) were aged 55 years and over, with 30% of this age group citing it as their main reason.

Looking and available to start a job or work with more hours - difficulties encountered

There were 627,000 people who were available to start a job, or work more hours, and were looking for work, of whom:

465,000 were unemployed (74%);
147,700 usually worked few hours (24%); and
14,400 were not in the labour force (2%).

(People in the last mentioned group are defined as not in the labour force because they were not available to start work in the reference week, but were available to start within four weeks).

There were varied responses from those people who were available and looking for a job or work with more hours regarding the difficulties they have in finding a job or work with more hours. Overall, the most common main difficulty reported by this group was that they lacked the necessary training, qualifications and experience (106,800 people or 17%) (graph 6.25). Over 60% (or 67,700) of the people who reported this as their main difficulty held no non-school qualifications, of whom 43% were aged 18-24 years. No jobs with suitable conditions was also a commonly reported main difficulty (80,200 people or 13%), of which 62% were women. Most of those who reported unsuitable conditions as their main difficulty in obtaining work, or more hours, were aged 18-44 years (71,800 or 90%). Approximately 44% (or 35,700) of those who reported their main difficulty as being considered too old by employers were aged 55 years and over, and 60% of this group were men. This reflects the larger proportion of men aged 55 years and over who were available and looking for work or more hours (14% of men compared with 8% of women).

6.25 PEOPLE AVAILABLE AND LOOKING FOR A JOB OR WORK WITH MORE HOURS, Selected main difficulties

Preferred weekly hours

The preferred number of hours of work were collected from people not in the labour force who wanted a job and people who usually worked few hours and wanted to work more. Men and women who usually worked 15 hours or less per week displayed different preferences in the number of hours they would like to work. Among the 95,500 men who wanted more hours, 62,400 (65%) indicated that they would like to work full-time hours (35 hours or more). In contrast, a greater proportion of women preferred to work part-time hours (68% or 154,400 women). Older people who usually worked 15 hours or less preferred to work less hours than their younger counterparts. For instance, the average preferred number of hours for people aged 55 years and over was 25 hours per week, compared with 30 hours for those aged 18-34 years.

Of the 977,300 people not in the labour force who wanted a job, 73% reported that they would prefer to work part-time hours (57% of men and 81% of women). The average preferred number of hours was 22 (25 hours for men and 20 hours for women).

PEOPLE WHO DID NOT WANT MORE WORK

Over 70% of people (or 4.5 million) who were not employed or who worked few hours indicated that they did not want a job or more hours. This comprised 630,100 people who usually worked few hours, and 3.9 million people not in the labour force. By definition all unemployed people wanted a job and were actively looking. Almost two-thirds (65%) of those who did not want a job or more hours were women.

The men and women who usually worked few hours and did not want to work more had very different characteristics and reasons for not wanting more hours. Approximately 45% (or 219,700) of women who did not want more hours were aged 25-44 years and 23% (or 110,700) were aged 55 years and over. The most common main reason women gave for not wanting more hours was related to caring for children, pregnancy or home duties (48% or 233,300 women gave this response) (graph 6.26). This was a major factor for women aged 25-44 years with 85% (or 186,600) of them giving this as a reason for not wanting more hours. This indicates that part-time work is particularly important for women who are raising children. Other common reasons for women not wanting more hours were 'no need/retired from full-time work (for now)' (24% or 118,800), with 56% of this group aged 55 years and over, and 'studying/returning to studies' (19% or 93,400) with 72% of this group aged 18-24 years.

Of the 141,600 men who usually worked few hours, 44% (or 62,100) were aged 18-24 years and 35% (or 50,200) were aged 55 years and over. The most common reason given for not wanting more hours was study commitments (40% or 56,200), which reflects the large proportion of men aged 18-24 years who did not want to work more hours. Other reasons commonly reported were 'no need/retired from full-time work (for now)' (23% or 32,900), of whom 83% were aged 55 years and over, and long-term sickness or disability (13% or 18,000), of whom 59% were aged 55 years and over.

6.26 PEOPLE WHO USUALLY WORK FEW HOURS(a), Selected reasons for not wanting to work more hours(b)

The age composition of people not in the labour force was quite different to people working few hours and it also differed for men and women. Of the 4.9 million people not in the labour force almost two-thirds (64%) were aged 55 years and over. Of men not in the labour force 75% were aged 55 years and over. Of women not in the labour force 58% were aged 55 years and over and 25% were aged 25-44 years.

The different age structure of people not in the labour force means that the reasons given for not wanting to work were quite different to the reasons people working few hours gave for not wanting to work more hours. Of the 3.9 million people not in the labour force who did not want to work, the most common reason for them not wanting a job was being 'permanently retired from work' (32% or 1.3 million), followed by 'no need/retired from work (for now)' (30% or 1.2 million), and 'long-term sickness/disability' (22% or 856,200) (graph 6.27). 'Long-term sickness/disability' was reported by 31% of men (or 456,300) and was common for all age groups. For women, 22% (or 546,900) indicated they did not want to work due to 'pregnancy or home duties'. Most of these women were in the age group 25-44 years (73%).

6.27 PEOPLE NOT IN THE LABOUR FORCE, Selected reasons not wanting a job(a)

REFERENCES

Australian Bureau of Statistics, 2006, Barriers and Incentives to Labour Force Participation, Australia, August 2004 to June 2005 (6239.0), ABS, Canberra
Australian Bureau of Statistics, 2006, Underemployed Workers, Australia (6265.0), ABS, Canberra
Australian Bureau of Statistics, 2006, Persons Not in the Labour Force, Australia (6220.0), ABS, Canberra