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Quarterly labour force underutilisation rate

The Australian labour market has experienced significant changes in the past few decades. Among these is the increase in the proportion of employed people working part-time (from 15% in 1978 to 28% in 2008). As part-time employment has become more prevalent, so too has underemployment since underemployment is largely associated with part-time work.

With the decline in the unemployment rate, underemployment has become an increasingly important social and economic issue, and as such the labour force underutilisation rate (unemployed plus underemployed as a proportion of the labour force) is becoming an important indicator of labour supply.

The quarterly labour force underutilisation rate was released by the ABS in July 2008. The quarterly rate replaces the annual labour force underutilisation rate. The quarterly time series is based on improved methodology, and provides more frequent and timely measures of changes in underemployment and, in turn, underutilisation than the previous annual measure.

Components of the quarterly labour force underutilisation rate

Graph 1 shows the relative contributions of unemployment and underemployment to the labour force underutilisation rate.
Graph 1: Quarterly measures of labour force underutilisation, Persons: Trend - May 2001 - Nov 2008



In May 2001, the trend quarterly unemployment rate and trend quarterly underemployment rate contributed almost equally to the labour force underutilisation rate (6.8% and 7.1% respectively). That is, there were roughly equal numbers of unemployed and underemployed.

Since that time, however, the trend quarterly unemployment rate has fallen by approximately 2.5 percentage points (to 4.4% in November 2008, after a low of 4.2 in May 2008). The trend quarterly underemployment rate also fell over the period, although the decline was much less pronounced (0.9 percentage points to 6.2% in November 2008, after a low of 5.9% in May 2008).

This highlights that underemployment has assumed greater importance to labour force underutilisation over this time. Given that these trends have occurred mostly during a period of sustained economic growth, this may reflect the fact that unemployment is more sensitive to fluctuations in this stage of the economic cycle than underemployment.

A recent spotlight on underutilisation which discusses the latest movements in these measures was included in the January 2009 issue of Australian Labour Market Statistics (cat. no. 6105.0).

The underutilisation rate and its components tell different stories for men and women, for various age groups and for location (states and territories). Further analysis of underutilisation using the new quarterly rate can be found in the feature article, Quarterly labour force underutilisation rate in the July 2008 issue of Australian Labour Market Statistics (cat. no. 6105.0).

The quarterly measures of labour underutilisation are released in Australian Labour Market Statistics (ABS cat. no. 6105.0), tables 4.1 to 4.4 (from the October 2008 issue onwards).

For more information please contact us on (02) 6252 7206 or email labour.statistics@abs.gov.au