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INTRODUCTION

The purpose of this information paper is to advise of the upcoming release of the new Average Weekly Cash Earnings (AWCE) series for the period May 2010 to May 2011 inclusive. The paper provides background and information relating to the Average Weekly Cash Earnings estimates that will be released with the May 2011 issue of Average Weekly Earnings, Australia (cat. no. 6302.0) on 18 August 2011. The new AWCE series complement the existing series by providing estimates of average weekly earnings which include salary sacrificed earnings.


BACKGROUND

The Survey of Average Weekly Earnings (AWE) provides estimates of employee earnings based on information obtained from a sample survey of employers. Estimates of average weekly earnings and changes in average weekly earnings are published quarterly in original, seasonally adjusted and trend terms. Average weekly earnings estimates from the AWE survey are referenced extensively in Commonwealth, state and territory legislation, including for the indexation of a number of government benefit payments. AWE series may also be used in escalator clauses in contracts.

International standards and guidelines provide the broad principles behind the ABS' conceptual framework for statistics relating to employee remuneration. The definition of earnings currently used in the AWE survey is, broadly, current and regular payments in cash to employees for work done.

Salary sacrifice is defined as an arrangement where an employee agrees to forgo part of their pre-tax salary in return for benefits. Common types of salary sacrifice arrangements include pre-tax contributions to superannuation funds and novated leases for motor vehicles. The salary forgone in the reference week is collected in the AWE survey. Earnings series from the AWE survey have historically excluded amounts salary-sacrificed, as these were previously considered as payments in kind.

In the years prior to 2006, changes in the nature of employee remuneration led to the need for the ABS to review its measures of employee remuneration, to ensure that the conceptual basis of the measures was still sound. Of particular interest was the increase in use of salary sacrifice arrangements. The review led to a revised conceptual framework for measures of employee remuneration, where amounts salary-sacrificed were conceptually considered to be wages and salaries in cash, as presented in Information Paper: Changes to ABS Measures of Employee Remuneration (cat. no. 6313.0). However, as explained in 6313.0, the ABS has continued, and will continue, to publish the AWE series on the old basis (i.e. exclusive of amounts salary-sacrificed) to maintain long term comparability of the time series.

Due to the 2006 revisions in the conceptual framework, the ABS expanded the AWE survey from August 2007 to collect amounts salary-sacrificed by employees, with the intention of releasing a new series of earnings which was inclusive of salary-sacrificed amounts. However, although estimates of earnings from the AWE survey should have excluded amounts salary-sacrificed, there was evidence that some data providers had been inadvertently including it. The ABS worked closely with data providers to identify instances of mis-reporting, and to amend their reporting practices where necessary. Furthermore, the ABS was able to quantify the extent of mis-reporting that occurred and could then estimate the impact of this mis-reporting on the historical series. As a result, AWE data series for August 1996 through to May 2008 were revised to exclude all amounts salary-sacrificed. The revised estimates were published in the August 2008 issue of the Average Weekly Earnings, Australia (cat. no. 6302.0) released on 13 November 2008. A broad indication of the data impacts, including the key series affected by the revisions, was provided in the Information Paper: Revisions to Average Weekly Earnings Series (cat. no. 6302.0.55.001), released 11 November 2008.


RELEASE OF AVERAGE WEEKLY CASH EARNINGS ESTIMATES

A quality assessment of the earnings estimates based on the revised conceptual framework for measures of employee remuneration (i.e. inclusive of amounts salary-sacrificed) has now been completed. Based on this assessment the ABS has determined that it is feasible to release the AWCE estimates for May 2010 to May 2011 inclusive, and then on a continuing basis.


DATA AVAILABILITY

The new Average Weekly Cash Earnings series will be released as an additional (not replacement) series. The difference between the Average Weekly Cash Earnings and Average Weekly Earnings series is the average weekly amount salary-sacrificed.

The new series will have different labels to the current AWE series, to clearly distinguish them from the current series (see table 1 below). Both sets of series will be available for males, females and persons; and for composition of earnings: full-time adult ordinary time earnings, full-time adult total earnings and all employees total earnings.


Table 1: Series Labels of AWE and AWCE