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CHAPTER 8. MEASURES OF UNDERUTILISED LABOUR
8.4 While these specific measures provide important information about labour underutilisation, individually they are narrow and thus in isolation do not provide a comprehensive picture of the degree to which labour is being underutilised in the labour market as a whole. By bringing different measures together a broader picture of the degree to which labour is being underutilisation can be attained. 8.5 The labour force underutilisation rate and the extended labour force underutilisation rate are both aggregates of the narrower measures that provide a broader picture of labour underutilisation. MEASURES OF LABOUR UNDERUTILISATION 8.6 Labour underutilisation measures can be divided into two broad types of measurements, headcount measures and volume measures. Headcount measures of labour underutilisation are based on the number of people who are underemployed, unemployed or marginally attached to the labour force. Volume underutilisation measures relate to the number of potential hours of labour that are not utilised. Whether people are unemployed or underemployed, not all people who are in search of work (or more work) are seeking the same number of hours of work. For this reason, volume measures of underutilisation are often more relevant for analysing the spare capacity of the labour force than headcount measures. The various measures that the ABS produces are discussed below. UNDEREMPLOYED 8.7 Measures of underemployment provide important information on the degree to which labour is being underutilised in the employed population of the labour market. The ABS produces both headcount and volume measures of underemployment. The underemployment rate is the number of underemployed workers expressed as a percentage of the labour force. The volume underemployment rate is the additional hours of labour preferred by underemployed workers expressed as a percentage of the potential hours in the labour force. For more information on underemployment please refer to Chapter 5. UNEMPLOYED 8.8 Measures of unemployment provide important information on the supply of labour that is immediately available from people who are currently not employed. The ABS produces both headcount and volume measures of unemployment. The unemployment rate is the number of people that are unemployed expressed as a percentage of the labour force. The volume unemployment rate is the hours of labour sought by unemployed people expressed as a percentage of the potential hours in the labour force* (those hours worked by employed persons and those sought by unemployed persons). For more information on underemployment please refer to Chapter 6. Note: Potential hours in the labour force refers to the sum of hours sought by unemployed people, additional hours preferred by underemployed people working part-time, and the hours usually worked by all employed people. BROADER MEASURES OF LABOUR FORCE UNDERUTILISATION 8.9 The labour force underutilisation rate is an aggregate measure of underutilisation. It is defined as the sum of the number of persons unemployed and underemployed, expressed as a proportion of the labour force. It can also be viewed as the sum of the unemployment rate and the underemployment rate. 8.10 The labour force underutilisation rate is also expressed as a volume measure in the volume labour force underutilisation rate. The volume labour force underutilisation rate is expressed as the total volume of underutilised labour in the labour force (hours sought by unemployed people, plus additional hours preferred by underemployed people), as a percentage of the potential hours in the labour force. 8.11 The extended labour force underutilisation rate is the broadest measure of underutilisation the ABS currently produces and takes the measure of underutilised labour beyond what is conventionally measured in the labour force. The measure includes, in addition to the unemployed and the underemployed, two groups of people with marginal attachment to the labour force:
8.12 The extended labour force underutilisation rate is expressed as the sum of all the above groups (unemployed, underemployed, and the two marginally attached groups), as a proportion of the labour force augmented by the number of people in the two marginally attached groups. 8.13 The population with marginal attachment to the labour force is a relatively large and heterogeneous group. It includes people who may have a strong likelihood of joining the labour force in the near future, as well as some who have little or no commitment to finding employment. The ABS does provide statistics about this large and diverse group, but does not include the whole group in its broadest supplementary measure of labour underutilisation. However, there may be other subgroups (in addition to the two marginally attached groups identified above) which fit the requirements of underutilised labour resources. This is currently being investigated by the ABS. DATA SOURCES 8.14 Official estimates of employment and unemployment are derived from the monthly Labour Force Survey (LFS), while detailed information relating to underemployed workers and persons not in the labour force is collected in LFS supplementary surveys (see Chapter 21.10 and Chapter 21.14 for further information). The ABS measures of labour underutilisation draw on data from the LFS as well as data from LFS supplementary surveys. 8.15 Estimates of labour underemployment, unemployment and underutilisation are available from the following ABS releases: Australian Labour Market Statistics (cat. no. 6105.0) (annual)
FURTHER INFORMATION 8.17 For further details contact the Labour Market Statistics Section, on Canberra (02) 6252 7206 or email <labour.statistics@abs.gov.au>. FOOTNOTES 1. Beyond the measurement of unemployment and underemployment; The case for extending and amending labour market statistics, International Labour Organisation (ILO) Underutilisation Working Group Report (2011), http://www.ilo.org/stat/Publications/WCMS_166604/lang--en/index.htm <back.
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