Employee Earnings and Hours, Australia methodology

1 This release contains estimates from the 2021 Survey of Employee Earnings and Hours (EEH) which was conducted with respect to the last pay period on or before 21 May 2021.

2 The EEH survey is conducted every two years and designed to provide detailed statistics on the composition and distribution of employee earnings, hours paid for and the methods used to set employees' pay. It was postponed from May 2020 to May 2021, due to the labour market impacts and disruption from the first wave of the COVID-19 pandemic. The survey will continue it's biennial cycle from 2021. Information is collected from a sample of employers about characteristics of both the employers (such as industry and sector) and their employees (such as occupation, type of employee, and method of setting pay). This information is used to provide comprehensive statistics about earnings and hours paid for, for various groups of employees, classified by, for example, industry, occupation or pay setting method.

3 The feature article A Guide to Understanding Employee Earnings and Hours Statistics, May 2021 provides further information on how the data are collected, what statistics are produced, key data available and factors to consider when using the data.

4 Descriptions of the underlying concepts of employee earnings, hours paid for and methods of setting pay, and the sources and methods used in compiling these estimates, are presented in Labour Statistics: Concepts, Sources and Methods.

5 Estimates of employee earnings produced from the EEH Survey presented in this publication are based on the Australian conceptual framework for measures of employee remuneration. From 2006, the measure of employee earnings for estimates produced from the survey is regular wages and salaries in cash (including amounts salary sacrificed, where it is the choice of the employee to forgo part of wages and salaries in cash in return for goods and services), that is, cash earnings.

6 The survey covers all employing organisations in Australia (public and private sectors), except:

• the Australian permanent defence forces;
• enterprises primarily engaged in agriculture, forestry and fishing;
• private households employing staff; and
• foreign embassies, consulates, etc.

7 The employees of employers covered in the survey are in scope if they received pay for the reference period, except:

• employees paid solely under the Australian Government's Paid Parental Leave Scheme;
• employees who did not receive pay for the reference period (e.g. casuals who did not work during the reference period);
• non-salaried directors;
• working proprietors and partners of unincorporated businesses;
• self-employed persons such as subcontractors, owner/drivers or consultants;
• persons paid by commission only;
• employees based outside Australia; and
• employees on workers’ compensation who are not paid through the payroll.
   

8 The survey uses a two-stage sample selection approach. The first stage involves selecting a probability sample of employer units from the ABS Business Register (ABSBR). The statistical unit for the first stage comprises all activities of an employer in a particular state or territory based on the Australian Business Number (ABN) unit or Type of Activity Unit (TAU) (see paragraphs 14 - 27). Each statistical unit is classified to an industry which reflects the predominant activity of the business. The statistical units are stratified by state/territory, sector (private/public), industry, and employment size. Within each stratum statistical units are selected with equal probability. A sample of approximately 8,100 employer (selection) units was selected to ensure adequate industry and state/territory representation.

9 In the second stage the selected employers are asked to select a random sample of employees from their payrolls using instructions provided by the ABS. Data for approximately 52,000 employees contributed to the results in this publication.

10 The Economic Units Model is used by the ABS to determine the structure of Australian businesses and other organisations. The model consists of:

• The Enterprise Group (EG)
• Legal Entities (LEs)
• Type of Activity Units (TAUs)
• Location Units.
   

11 The EG and LE are institutional units and the TAU and Location are producing units.

12 The LE and the TAU are the main institutional and producing units used by the ABS to produce statistical outputs.

13 Diagram 1 illustrates the nature of the relationships between the different units within the model.

* The legal entity (LE) statistical unit is generally equivalent to a single Australian Business Number registration.

14 The Legal Entity (LE) is an institutional unit covering all the operations in Australia of an entity which possesses some or all of the rights and obligations of individual persons or corporations, or which behaves as such in respect of those matters of concern for economic statistics. Examples of legal entities include companies, partnerships, trusts, sole (business) proprietorships, government departments and statutory authorities. Legal entities are institutional units. In most cases the LE is equivalent to a single ABN registration.

15 The Enterprise Group (EG) is an institutional unit that covers all the operations within Australia's economic territory of legal entities under common control. Control is defined in Corporations legislation. Majority ownership is not required for control to be exercised.

16 The Type of Activity Unit (TAU) comprises one or more Legal Entities, sub-entities or branches of a Legal entity that can report productive and employment activities. TAUs are created if accounts sufficient to approximate Industry Value Added (IVA) are available at the Australian and New Zealand Standard Industrial Classification (ANZSIC) subdivision level.

17 A Location is a producing unit comprised of a single, unbroken physical area from which an organisation is engaged in productive activity on a relatively permanent basis, or at which the organisation is undertaking capital expenditure with the intention of commencing productive activity on a relatively permanent basis at some time in the future.

18 Various classifications are applied to the units in the ABS Economic Units Model. The main classifications applied are:

• ANZSIC
• Type of Legal Organisation (TOLO)
• Type of Business Entity (TOBE)
• Standard Institutional Sector Classification of Australia (SISCA)
• Public / Private classification.
   

19 ANZSIC is used to classify the industry in which the TAU has productive activity. Further information on this classification can be found in Australian and New Zealand Standard Industrial Classification, 2006 (Revision 2.0).

20 SISCA provides a framework for dividing the Australian economy into institutional sectors. Further information on this classification can be found in Standard Economic Sector Classifications of Australia (SESCA), 2008 (Version 1.1).

21 The ABSBR is a list of businesses and organisations operating in Australia and is based on the Australian Business Register (ABR). Organisations are included on the ABR when they register for an ABN. The Commonwealth Government requires all government departments and agencies to make use of the ABR to reduce government imposed reporting load, and to use the ABN as the primary reference number for all dealings between government and business. The ABSBR is used to create frames for the various business surveys run by the ABS.

22 It is not practicable for the ABS Economic Units Model to be applied to all ABR registrants and the Model is organised into two parts; the profiled population, and the non-profiled population.

23 Profiled Population: Businesses and other organisations which are considered sufficiently complex and economically significant, are profiled according to the Economic Units Model. These enterprise groups typically have multiple legal entities, multiple TAUs and are among the largest contributors within industries.

24 Non-Profiled population: Businesses and other organisations with less complex structures. They are regarded as an enterprise group with a single legal entity and a single TAU in accordance with the Economic Units Model. Information for units in the non-profiled population is largely sourced from the ABR.

25 The two populations are mutually exclusive and cover all organisations in Australia which have registered for an ABN.

26 The results of these studies are based, in part, on ABR data supplied by the Registrar to the ABS under A New Tax System (Australian Business Number) Act 1999 which requires that such data is only used for the purpose of carrying out functions of the ABS. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ABR’s core operational requirements.

27 Legislative requirements to ensure privacy and secrecy of this data have been followed. In accordance with the Census and Statistics Act 1905, results have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation.

28 The statistics in this release are classified to industry in accordance with the Australian and New Zealand Standard Industrial Classification, 2006 (Revision 2.0). This replaced the 1993 edition of ANZSIC in the August 2009 issue of this publication, which had been in use since 1994.

29 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.

30 Each employee in the survey is classified to an occupation based on their job title and duties. The classification used in this release is Australian and New Zealand Standard Classification of Occupations, 2013, Version (1.3). The classification used in EEH issues from May 2014 to May 2018 is the Australian and New Zealand Standard Classification of Occupations, 2013 (Version 1.2). The classification used in EEH issues from May 2006 to May 2012 is the Australian and New Zealand Standard Classification of Occupations (First Edition). Data in EEH issues from 1996 to 2004 are based on the Australian Standard Classification of Occupations 1997 (Second Edition).

31 Employees have been classified as managerial if they have strategic responsibilities in the conduct or operations of the business and/or were in charge of a significant number of employees. These employees usually did not have an entitlement to paid overtime.

32 Care should be taken when comparing survey estimates based on ANZSCO groups with estimates based on the managerial status of employees. Estimates for employees with managerial status include employees classified to ANZSCO categories other than the ANZSCO major group Managers; e.g. employees classified as Professionals according to ANZSCO may be categorised by employers as having managerial status. Conversely, tables in this publication which contain estimates for non-managerial employees (as defined by employers) include some employees classified to the ANZSCO major group Managers.

33 Since the May 2000 survey, data on how employees' pay was set in the survey reference period have been collected along with data on whether agreements (individual or collective) were certified, approved or registered with an industrial tribunal or authority.

34 Since the May 2010 issue, EEH estimates of employees covered by the various pay setting methods and their associated pay outcomes have been compiled based on the workplace relations environment following the introduction of the Fair Work Act 2009 and the subsequent introduction of the Fair Work (State Referral and Consequential and Other Amendments) Act, which allowed for the extension of the Fair Work Act to states and territories that refer workplace relations related matters to the Commonwealth. Data in previous publications of this series issued since 2000 are based on the workplace relations environment prior to the introduction of this legislation. The Fair Work system replaced the Workplace Relations Amendment (Work Choices) Act 2005 that was in place for the August 2008 Survey of Employee Earnings and Hours.

35 Under the Fair Work system, the majority of employees come under the national workplace relations system. The following employers are generally covered by the national system:

• constitutional corporations (including a financial corporation - generally a financial or trading corporation formed in Australia or a foreign corporation that does business in Australia);
• the Commonwealth and Commonwealth authorities;
• all employers in the Australian Capital Territory or the Northern Territory;
• all employers in Victoria except for those that provide essential services of core government functions, including state infrastructure services such as electricity and gas.
• private sector employers in New South Wales, Queensland or South Australia;
• private sector or local government employers in Tasmania.
   

36 The following employers are generally not covered by the national system (unless the employer has a registered agreement in the national system):

• the Western Australian state public sector and non-constitutional corporations, in either local government or private industry in the state;
• the state public sector and local government in New South Wales, Queensland and South Australia;
• the state public sector in Tasmania.
   

37 Employers not covered by the national system are covered by the relevant State Industrial Relations Commission.

38 Since 2010, information about the proportions of employees of employers in the national or state jurisdictions, as well as jurisdiction of registered agreements, are no longer published.

39 From May 2010, estimates of numbers of employees by method of setting pay are presented in this release, to add context to other estimates by method of setting pay. Care should be taken in the interpretation and use of such estimates, as the Survey of Employee Earnings and Hours is not designed specifically to produce estimates of numbers of employees. Consideration should be given to the level of variance of the estimates of numbers of employees, which are available from the standard error tables in the Excel spreadsheet available from the Data downloads section of this release. Users are directed to Labour Force, Australia as the primary source for official ABS estimates of employment.

40 Caution should be exercised when comparing estimates of numbers of employees from the Survey of Employee Earnings and Hours with those published monthly in Labour Force, Australia as there are a number of differences between the two collections. The Survey of Employee Earnings and Hours is a business survey that collects information from a sample of employers about their employees, whereas the Labour Force Survey is a household survey that collects information from the occupants of selected dwellings. The two collections use different sample design and survey methodologies and there are differences in scope and coverage. Users are directed to Labour Force, Australia as the primary source for official ABS estimates of employment. Detailed information about the concepts, sources and methods of the Survey of Employee Earnings and Hours and Labour Force Survey can be found in Labour Statistics: Concepts, Sources and Methods.

41 From May 2006, estimates of employee earnings from the Survey of Employee Earnings and Hours have been produced on a cash basis, that is, inclusive of amounts salary sacrificed. This differs from estimates provided in previous issues, which excluded amounts salary sacrificed by employees. Estimates from the May 2004 and May 2002 surveys were reproduced on the new conceptual basis, and broad level estimates for these years were included in the electronic data release accompanying the May 2006 publication.

42 Care should be taken when comparing estimates of average weekly earnings from the Survey of Employee Earnings and Hours with those published biannually in Average Weekly Earnings, Australia. Headline estimates of average weekly earnings in that publication are presented on the previous conceptual basis (i.e. exclusive of amounts salary sacrificed), although Average Weekly Cash Earnings (inclusive of salary sacrifice) are available in data cubes accessed via the Data downloads section of Average Weekly Earnings, Australia. Additionally, the two collections use different sample design and survey methodologies. The Survey of Average Weekly Earnings collects information relating to the total gross earnings and the total number of employees of employer businesses selected in the survey. The average weekly earnings measures are derived by dividing total gross earnings by the number of employees. The Survey of Employee Earnings and Hours collects information about weekly earnings of a sample of employees within the employer businesses selected.

43 In addition to the Survey of Employee Earnings and Hours, the ABS produces earning statistics from a number of different sources (both household and employer surveys) which provide a wide range of data for a variety of purposes. The decision on which data to draw upon depends on the purpose and type of analysis to be undertaken. For further information on these other sources, please refer to the feature article Understanding Earnings in Australia Using ABS Statistics published in Employee Earnings, Benefits and Trade Union Membership, Australia, August 2013.

44 For the May 2014 Survey of Employee Earnings and Hours, the item Adult or Junior employee was modified, and further categories included. The new item 'rate of pay' has the following categories: adult rate; junior rate; apprentice or trainee rate; and disability rate. The previous Adult category included those employees aged 21 years and over who are not paid the full adult rate of pay for their occupation, which includes those paid an apprentice/trainee or disability rate of pay. To a lesser extent, the previous Junior category included some employees aged under 21 who, while not paid an age related rate of pay, were not paid the full adult rate of pay, such as those paid an apprentice/trainee or disability rate of pay. This conceptual change has little impact on the estimate of earnings for employees paid at the Junior rate and is not statistically significant when the Adult rate is compared to the Adult category.

45 However, previous estimates for Employees paid at the adult rate of pay are not directly comparable to estimates produced in prior cycles for Adult Employees. In particular, results for Full-time non-managerial employees paid at the adult rate of pay are not directly comparable to results for Full-time non-managerial adult employees, due to the reasons described above. The closest approximation to allow comparison with data from 2012 and before would be to apportion those employees paid at the Apprentice/Trainee Rate and Disability Rate to the Adult or Junior categories based on the employee's reported age. Data on this broader aggregation of the rate of pay data item are presented in the Supplementary Analysis in the May 2014 release in order to assist users interpret the difference between the two concepts.

46 In addition for May 2014 Survey of Employee Earnings and Hours, two further changes were made to data collection. Actual age replaced age range reporting and enabled the derivation of average age data. Collection of hours paid for was extended to include Managerial employees where possible.

47 A TableBuilder and detailed microdata product will be available for the 2021 Survey of Employee Earnings an Hours. Further information about EEH microdata can be found in Microdata and TableBuilder: Employee Earnings and Hours, Australia.

48 Users may also wish to refer to the following publications:

• Australian Labour Market Statistics;
• Average Weekly Earnings, Australia - issued biannually;
• Characteristics of Employment, Australia;
• Employment and Earnings, Public Sector, Australia - issued annually;
• Labour Force, Australia - issued monthly;
• Labour Statistics: Concepts, Sources and Methods;
• Household Income and Wealth, Australia;
• Wage Price Index, Australia - issued quarterly; and
• Weekly Payroll Jobs and Wages in Australia.
   

49 Estimates of average earnings shown in the tables and data cubes are rounded to the nearest 10 cents and those of average weekly hours paid for are rounded to the first decimal place. Where figures have been rounded, discrepancies may occur between sums of the component items and totals. Cell annotations have been applied based on unrounded data for tables in this release.

1 As the estimates in this release are based on information relating to a sample of employers and employees, rather than a full enumeration, they are subject to sampling variability. That is, they may differ from the estimates that would have been produced if the information had been obtained from all employers and all employees. The difference, called sampling error, should not be confused with inaccuracy that may occur because of imperfections in reporting by respondents or in processing by the ABS. Such inaccuracy is referred to as non-sampling error and may occur in any enumeration whether it be a full count or a sample. Efforts have been made to reduce non-sampling error by careful design of questionnaires, detailed checking of returns and quality control of processing.

2 The sampling error associated with any estimate can be estimated from the sample results. One measure of sampling error is given by the standard error, which indicates the degree to which an estimate may vary from the value that would have been obtained from a full enumeration (the ‘true value'). There are about two chances in three that a sample estimate differs from the true value by less than one standard error, and about nineteen chances in twenty that the difference will be less than two standard errors.

3 An example of the use of a standard error is as follows. If the estimated average weekly total cash earnings for all employees paid by individual arrangement is $1,663.90, with a standard error of $17.70, there would be about two chances in three that a full enumeration would have given an estimate in the range $1,646.20 to $1,681.60 and about nineteen chances in twenty that it would be in the range $1,628.50 to $1,699.30.

4 The difference between two survey estimates is also an estimate and it is therefore subject to sampling variability. The standard error on the difference between two survey estimates in the one time period (i.e. x-y) can be calculated using the following formula:

5 The formula above will overestimate the standard error where there is a positive correlation between two estimates (e.g. average weekly earnings for male and female school teachers). While this formula will only be accurate where there is no correlation between two estimates (e.g. estimates from different states), it is expected to provide a reasonable approximation of the standard error for the difference between two survey estimates.

6 The estimated average weekly total cash earnings for all male employees is $1,625.40, with a standard error of $14.50. For all female employees the estimated average weekly total cash earnings is $1,166.90, with a standard error of $9.40. Thus the difference between the estimate of male and female earnings is $458.50. The estimate of the standard error of the difference between the average weekly total cash earnings employees of males and females is:

7 There are about two chances in three that the true figure for the difference between average weekly total cash earnings for males and females lies in the range $441.20 to $475.80 and about nineteen chances in twenty that the figure is in the range $423.90 to $493.10.

8 The formula above can be used to estimate the standard error on a difference between estimated averages in two different years. (The movement standard error will be approximately 1.4 times the standard error on the level estimate, if the standard errors on the two level estimates are similar).

9 Another measure of the sampling error is the relative standard error, which is obtained by expressing the standard error as a percentage of the estimate.

10 An asterisk appears against an estimate in this release where the sampling variability is considered high. For the tables in this release, estimates with relative standard errors above 25% have been labelled with a cell comment. Cell comments labelled on estimates with a relative standard error above 25% (i.e. relative standard error of 25% to 50% or relative standard error greater than 50%) have been applied based on unrounded data.

11 Standard errors can be used to construct confidence intervals around the estimated proportions. There are about two chances in three that the 'true' value is within the interval that ranges from the sample estimate minus one standard error (estimate - 1xSE) to the sample estimate plus one standard error (estimate + 1xSE). There are approximately 19 chances in 20 that the 'true' value lies within the interval from the estimate minus two standard errors (estimate - 2xSE) to the estimate plus two standard errors (estimate + 2xSE).

12 The above rule gives a symmetric confidence interval that is reasonably accurate when the estimated proportion is not too near 0.00 or 1.00. Where the estimated proportion is close to 0.00 or 1.00 it would be more accurate to use a confidence interval that was not symmetric around the sample estimate. If an estimate is close to 1.00, then the upper boundary of the confidence interval should be closer to the sample estimate than suggested above, while the lower boundary should be further from the sample estimate. Similarly, if an estimate is close to 0.00, then the lower boundary of the confidence interval should be closer to the sample estimate than suggested above, while the upper boundary should be further from the sample estimate. In particular, the symmetric confidence interval could include values that are not between 0.00 and 1.00. In such a case a good rule of thumb is to use a confidence interval of the same size as the symmetric one, but with the lower (or upper) boundary set to 0.00 (or 1.00).

13 Each data cube contains estimates of standard errors from which confidence intervals may be constructed.